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October 2023 The Contractor’s Advantage
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The Crucial Role of Surety Bonds in Construction
Many years ago, before I became a construction attorney, I’d drive on the highway and see work vans that proudly read “licensed, bonded, and insured.” I could pretty much figure out what licensed and insured meant (they had a license, and they had insurance), but I never knew what these companies meant when they’d say they were “bonded.” The only bonds people outside the construction industry ever really talk about are the ones you’d need to get out of jail. But after I became a construction attorney, I quickly learned what it meant for a company to be bonded. And to my surprise, I also learned that many companies that work in the construction industry don’t really understand what “bonded” means. To be bonded is, well, to have a bond — more specifically, a “surety bond,” which is an insurance product. With this surety bond, an insurance company essentially promises to ensure somebody’s work on a construction project gets done. The most typical bond on a project is when a general contractor on a construction project provides a “dual bond,” or a payment and performance bond. Essentially, they’re making promises in both directions: They’re promising the project owner they’ll perform pursuant to the contract and complete the project in the performance bond. If they fail to do so within the terms of the bond, the owner of the project
Now, there are three people involved in any bond. They are: • The Principal, which is the company that is supposed to be doing the work in the first place. • The Surety, which is the insurance company making the promise to pay if the Principal doesn’t do the work. • The Claimant, which is the person claiming the Principal did not pay them or meet the bond terms (like the project owner and subcontractor in our earlier examples). I should also mention that while a bond is an insurance product, it’s a specifically different kind of product than the typical insurance policies for construction projects called “Commercial General Liability Policies.” These policies, like nearly all other insurance policies we use every day, cover losses and risks due to accidents that may be foreseeable but not planned when someone enters the policy. For example, while a contractor knows a pipe bursting is always possible during a build, it’s not something they planned to happen when they acquired the policy. These general insurance policies almost never cover contract obligations because every party is inherently expected to do their jobs correctly. If something goes wrong with that expected contract performance, owners or subcontractors don’t go to the insurance company — they go to court.
can call the insurance company that issued the bond and say, “The general contractor listed on this bond didn’t do their work. I need you to step in to pay for
That’s exactly why contractors use surety bonds in the first place. It’s an investment that ensures (and assures the other parties involved) the expected project performance and payment will happen.
the project to get finished.” And, in most cases, they do. The general contractor is also making promises
It’s completely separate and unique from your general liability policy, offering an extra protection layer. And finally, I’d be remiss if I didn’t take a moment to really emphasize the importance of understanding why making a bond claim is so powerful if you’re going unpaid on a construction project. The reason insurance companies don’t just give out bonds to anyone is because insurance companies are not interested in the prospect of losing money. The
downstream (that they’ll pay them) to the subcontractors with their payment bond. So, if a subcontractor goes unpaid, they can call the insurance company and say the general contractor hasn’t paid them. And as long as the subcontractor has completed the promised work, the insurance company will pay them.
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Close More Sales by Transforming Objections Into Opportunities
A strong sales team is the root of every successful business, but sales can be challenging. You’ve probably experienced this firsthand, as many entrepreneurs got their start in sales or, at the very least, developed their sales skills to pitch their businesses and products to potential investors successfully. In most cases, after a business starts to bring in profits, the entrepreneur will step away from the sales role, hire salespeople, and delegate all sales responsibilities. But once you step away from the sales game, it can be challenging to jump back in, especially if it’s been several years since you’ve practiced your sales pitch.
rejection or probing further to find their concerns. But if your salespeople push the sale too hard, customers grow frustrated and take their business elsewhere. The trick is to find the sweet spot. How can you turn their “no” into a “yes”? Here are two fresh tactics that can deliver the results you’re looking for. Change the Topic This might sound counterintuitive, but you don’t want to push immediately after a customer rejects your offer. Instead, change the subject altogether. Take the no in stride, and ask them about something else, like a local sports team, their clothing, or literally anything else that isn’t the sale. This should open up a dialogue, allowing you to redeem yourself in their eyes. Saying something like, “Did you catch the game last night?” or “Your handbag is really cool. My wife bought a similar style over at Macy’s. Where did you get yours?” will completely change their perspective. Just like that, you’re no longer a salesperson — you’re someone they want to converse with. Once you’ve built rapport, start your pitch again and try to sell. You’ll be surprised by how many positive responses you’ll receive! Restate Their Answer Have you ever received an outlandish objection from a customer? They likely don’t even realize how crazy they sound, so repeat what they said right back to them. First, this demonstrates you were listening, but more importantly, it gives them a chance to reconsider what they just said. In most cases, the customer will change their tune and story, giving you something to work
“Just like that, you’re no longer a salesperson — you’re someone they want to converse with.”
So, why is sales such a difficult job? If you’re comfortable socializing, then trying to sell to people can feel like a normal conversation. Unfortunately, most people have developed a negative impression of salespeople. You might have that negative outlook yourself without even realizing it. When you enter a furniture or retail store, do you actively seek help, or do you push away any salesperson who tries to assist you? Most customers who shop at your store believe salespeople want nothing more than to make
a sale. They don’t think salespeople have the customer’s best interests in mind. So, how do you shake this stigma? It all has to do with sales tactics.
with. They may even open up, sharing the real reason for their immediate rejection of your sale. If you stay quiet and listen to what they say, they’ll likely give you enough ammo to make a sale without additional digging.
One of the most challenging situations salespeople face daily is hearing a customer say “no” to them. Some try to read the customer to decide if it’s worth pushing further. Others might refuse to quit until they hear “no” three times. There’s nothing wrong with asking again after an initial
Anyone can make these sales tactics work with enough dedication, practice, and charisma. Teach them to your sales team, and prepare to watch your customers say “yes” more often.
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made a website that allowed students to design their profile pages and articles, while Obrecht and Perkins printed and distributed the yearbooks to Australian schools. The couple secured an investor, and the Fusion Books application went live in 2008. Within five years, Fusion Books became Australia’s largest yearbook company. In 2010, Perkins received her big break when Silicon Valley investor Bill Tai visited Perth. Perkins, Obrecht, and Tai met briefly for dinner, and Tai invited Perkins to San Francisco to pitch her ideas. When Perkins met with Tai in California, she thought she blew the pitch. “I thought that he didn’t really like what I had to say,” she recalled. “He was
and Canva that easily, though. He encouraged her and Obrecht to take up kitesurfing and come to his unique retreat for investors and kitesurfing enthusiasts. At the retreat, Tai introduced the couple to their future tech advisor and co-founder of Google Maps, Lars Rasmussen. They also met an ex-Google employee named Cameron Adams, who would become a co-founder of Canva. With these new advisors, Canva secured $1.5 million from investors and another $1.5 million from the Australian government to keep the business in Australia.
Today, Canva is used by 125 million people every month, bringing in
on his phone, and I thought that meant he wasn’t really engaged in what I had to say about the future of publishing.” Tai was actually connecting Perkins with other investors and tech entrepreneurs. Unfortunately, Perkins’ pitches to Silicon Valley investors and executives proved fruitless. Many were concerned about a tech company starting in Australia and
over $1 billion annually in revenue. Perkins isn’t doing terribly, either. She’s worth over $6 billion and is still Canva’s CEO. Canva has continued to be at the frontline of graphic design programs, continually releasing new features and tools. With AI usage on the rise, they’re developing new ways to utilize it in Canva. Perkins’ journey proves that if you have a good idea, you should stick with it until it sells.
decided against funding it. Tai wouldn’t give up on Perkins
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When Mount St. Helens erupted in 1980, dark ash drifted to Idaho, forcing temperatures down by as much as 15 degrees F. Residents experienced a fraction of the horrors back in 536 — a time Harvard University historian Michael McCormick once called “the worst year to be alive.” For decades, the year 536 was a historical mystery. Records showed that it was a terrible time, stricken by the triple threat of: 3 REASONS 536 WAS THE WORST YEAR IN HUMAN HISTORY
Principal had to enter into a sister agreement before receiving that bond. In that agreement, they promise to pay back the insurance company in full for every dollar they pay out to the Claimant, and the Principal even has to put up collateral to prove it. This means that by filing a claim, you’re immediately securing the attention of the all-powerful insurance company and the Principal — their home or accounts receivable may be on the line, after all. However, filing a bond claim can be incredibly challenging; there are many archaic requirements and deadlines throughout the process, and even the slightest mistake will immediately void all your rights to the money you seek. So, before you send a single
1. Unexplained, unending darkness 2. Unseasonably frigid weather 3. Crop failure and famine
Those horrors ravaged the globe, and experts puzzled over the tipping point in 536. Then, in 2018, researchers discovered a Swiss glacier riddled with volcanic glass. Further study revealed enormous volcanic eruptions in
letter to anybody regarding a bond claim, call a lawyer. You want to ensure this highly effective tool works for you and not against you in pursuing the money you’re owed.
536 likely caused “The Dark Ages.” As we write this, volcanoes in Iceland and Alaska are the most likely candidates. We’ve already survived a pandemic
this century, so let’s hope both regions stay quiet for everyone’s sake!
-Jeremy Wyatt
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Jeremy Wyatt jwyatt@harrisonlawgroup.com HarrisonLawGroup.com (410) 832-0000
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Inside This Edition
1.
What Does It Mean to Be ‘Bonded’?
2. 3.
Cracking the ‘No’ Code
Step Into 536: ‘The Worst Year to Be Alive’ The Start of a Global Graphic Design Empire
4.
According to the Small Business Administration, nearly 627,000 businesses open each year, but at the same time, around 595,000 businesses close for good annually. Further, U.S. Bureau of Labor Statistics research states that 45% of new companies go out of business within their first five years. It’s no surprise that building a successful business is easier said than done, but once in a blue moon, an entrepreneur breaks the mold to reach new heights. We saw it with Jeff Bezos and Amazon, Bill Gates and Microsoft, and now, we’re watching it happen with Melanie Perkins and Canva, an online graphic design tool. While most tech startups originate in Silicon Valley, Canva’s inception took place on the other side of the Pacific Ocean. Born in 1987 in Perth, Australia, Perkins first tasted entrepreneurship as a teenager. She designed and sold scarves to shops and markets across her hometown at 14. A few years later, she enrolled at the University of Western Australia, where the idea for Canva was born. Needing extra cash, Perkins worked as a tutor, teaching fellow students how to use graphic design programs. It often took months for them to learn the basics; not only were the programs difficult to use, they were also expensive! She wondered if there was a way to How Melanie Perkins Founded a Global Unicorn
create a graphic design program that was simple, affordable, and easily accessible online. Perkins took her idea to her boyfriend, Cliff Obrecht, and the two determined that the initial concept for Canva was too ambitious. Instead, they started smaller by creating Fusion Books, an online school yearbook design business. They
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