Someone once said, “No man’s business is safe while the legislature is in session.” Here is another example.
I’m hearing that legislators in some states are trying to write laws that dictate what you must include in your contracts and disclose to your potential customers. The term they use is “transparency” – all too often, that’s a fancy, politically correct term for itemization.
I do believe many things should be disclosed to customers. Your contract should include details on exactly what you will be doing on their project, and that’s why one-page contracts don’t cut it. But your cost structure is proprietary information, and when the state starts telling you that you have to give an itemization of your costs, overhead and profit numbers to your customers, sorry, that is going way too far. That is no one’s business except the owner of the company.
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If customers want to know what items cost, they can visit one of the big box stores, prowl the aisles and look at price tags. If they want to know your overhead expenses, let them start their own company and find out.
If some bureaucrat wants to write a law that dictates you must disclose your overhead numbers or what profit you want to make, then I would suggest that law apply across the board to all businesses. Let’s see how far they get with that.
If you are in an association, be sure you keep your political action committee aware of this type of legislation. If it comes up, be sure your lobbyist gets right after it. Don’t assume that this stuff will take care of itself or that these laws won’t get passed. Too many in our country have an anti-business and anti-profit mentality, and almost anything is possible.
The knowledge and experience Michael Stone gained in his 60+ years in construction has helped thousands of contractors improve their businesses and their lives. He is the author of the books Markup & Profit Revisited, Profitable Sales, and Estimating Construction Profitably, and is available for one-on-one consultations.