The two things that kill businesses with Check the Level’s Leeroy Beeby
Leeroy Beeby, co-founder and COO of Check the Level, has a unique niche: helping contractors with bookkeeping and job pricing.
Despite the high demand for general contractors, many construction company owners fail. Leeroy believes there are two common pitfalls: not charging enough and not accounting for working capital.
Serving the construction industry means that many of Check the Level’s clients lack a business degree. Client education is an essential part of serving them.
A bit of snow isn’t going to stop Leeroy Beeby from growing his business.
Though originally from South Africa, Leeroy has had wanderlust since a young age. It led him to a two-year stint in Bermuda and then eventually Toronto, where he pursued an MBA with the hopes of one day starting his own business.
Leeroy’s entrepreneurial spirit should come as no surprise to those who know him—especially his parents, who’ve founded just under a dozen businesses in his lifetime. Seeing the good, the bad, and the ugly of business ownership while growing up perhaps positioned him for entrepreneurial success.
As co-founder of Check the Level, a SaaS company that supports contractors with bookkeeping and project management tools, Leeroy’s following in his parents’ footsteps with his tech-savvy partner Riley O’Brien. Riley takes care of the coding while Leeroy handles the accounting side of the business—and together, they’ve grown Check the Level 20x in just six months.
Leeroy joins Stuart McLeod, Karbon CEO and host of the Accounting Leaders Podcast, to talk about how he’s built and optimized his company for rapid growth.
The benefits of finding a vertical
Leeroy credits his professors at the University of Toronto for encouraging him to design a company that focuses on a niche.
“Our professors always drove this into us: What causes stress in any operational system?” Leeroy recounts to Stuart. “And the answer is variability. It puts a lot of stress on your operations, and it can create bottlenecks.”
Taking this lesson to heart, Leeroy narrowed his company to focus on helping contractors with bookkeeping and job costing.
By honing in on one particular type of client, Check the Level excels at providing top services in an efficient way. Finding a vertical has allowed Leeroy and his team to:
Streamline their compliance and regulation processes
Standardize their chart of accounts for clients
Drive margins with ease
Understand their clients’ industry and advise accordingly
Deliver above-and-beyond services and provide optimal value to their customers
Productize projects for one client and extend the learnings more broadly to the company’s customer base
Onboard employees efficiently
“Streamlining around one customer has done wonders for our business,” Leeroy says.
Check the Level’s secret sauce: ‘Holy shit graphs’
Leeroy thinks of Check the Level as pricing consultants more so than bookkeepers.
“We’re helping business owners with the most important decision in their business, which is to price a job. At the same time, we’re requiring them to upload documentation and supporting documentation to do the books,” Leeroy explains on the podcast.
We’ve completely gamified the experience.
Their in-house technology pulls data from QuickBooks Online to generate overhead costs and recommend markups to ensure that contractors are profitable for every project.
The software also supports time tracking, receipt capturing, and invoicing capabilities, allowing users to axe their CRM subscriptions and consolidate their management tools through Check the Level’s services.
Certain services are reserved exclusively for clients who also engage in Check the Level’s bookkeeping services. It’s a carefully calculated plan, not just to upsell clients but also to ensure that the data Check the Level uses to make job costing recommendations is accurate.
“In our experience, 90% of books aren’t very well done, especially when it comes to unreconciled bank transactions. It’s a little scary to me to see how people just don’t deal with that and just don’t communicate that,” Leeroy says.
By solving what he calls ‘garbage in, garbage out’ bookkeeping, Leeroy sets clients’ books up to ensure that Check the Level’s software outputs accurate pricing recommendations to clients.
Much of Check the Level’s success comes from its focus on client education. In an industry where many individuals are flying blind when providing customers with project estimates, Leeroy’s team can eliminate guesswork and show contractors how job costing can make or break a construction business.
They do this with scoreboards and what they call ‘holy shit graphs’.
With the click of a button, users can see their financial trends and determine if their job costing is setting them up for financial growth—or bankruptcy.
“Every business owner wants that. If someone can come to you and just tell you what direction you need to go or what decisions you can make, that’s huge,” Leeroy says. “Most of the time, as entrepreneurs, we’re just figuring it out.”
Recommended viewing: Designing an efficient, painless and streamlined bookkeeping process
Two things will kill any construction business
In Canada at least, the construction industry has soared since the onset of COVID-19. As a result, waitlists for home renovations are long. But despite high demand, many contractors are struggling to make ends meet.
“These guys are swinging hammers and starting a business at $100,000, but in three years, they’ve grown to $3 million,” Leeroy says. “But they don’t have a business degree. … 9 out of 10 of these businesses fail.”
Leeroy’s changing these worrying statistics by providing support expressly tailored to the industry, and has identified the two main mistakes that can kill any construction business, both of which Check the Level aims to solve.
1. Contractors are undercharging for their work
“If there is a silver bullet in this industry, it’s job costing,” Leeroy says.
Unfortunately, many contractors don’t practice tying their pricing decisions to their accounting. Check the Level helps solve this common misstep by using data to back pricing recommendations.
2. Contractors don’t plan for adequate cash flow
Another common trap that Leeroy sees is when contractors don’t plan for enough working capital. Instead, contractors are quick to take on several jobs, unaware that their money will be tied up during certain stages of one project.
When contractors don’t have enough working capital for their projects, they’re setting themselves up for bankruptcy despite having a steady flow of customers.
Check the Level uses visual aids to show their clients when they’ll run out of cash on a project.
“We can tell you the exact date and the amount that you’re financing your job costs by. So that gives you data to add another payment schedule or increase the customer deposit,” says Leeroy.
He explains that many construction companies are on a roller coaster. “The primary culprit is your production. … If you don’t have a grasp on whether that’s actually generating cash for you, you’re just shooting in the dark every time, and you’re going to run into trouble.”
Delivering real value is the ultimate reward
By creating a business model that digitizes the construction business and manages the books, Leeroy and Riley have uncovered a sustainable business model.
“Our growth has been insane,” Leeroy tells Stuart. “We’ve 20x’ed our revenue since June [of 2021]. We have a two-month waiting list just for bookkeeping.”
And while the numbers are impressive, Leeroy finds customer response to be his greatest motivator. Like many accountants, he sees the experience of helping contractors take back control of their finances as the ultimate reward.
“Our customers absolutely love us. It’s such a heartwarming experience to see how we turn these businesses around.”
Many of Check the Levels clients are family-owned businesses. As a result, a lot is at stake. Leeroy recalls a client who burst into tears during their first meeting. The contractor was on the verge of bankruptcy and had a family to support. Check the Level worked with him to establish a better pricing strategy and identify his most profitable projects. In just three months, he was able to pay himself a salary.
Dreams for the future: A ‘truckload’ of clients
Leeroy and Riley don’t plan to slow down anytime soon. Their goal is to acquire 100,000 clients.
Achieving a ‘truckload’ of customers will enable the duo to expand and finetune their services. They’ve even contemplated how Check the Level can leverage collective buying power to give easy access to credit for its clients.
The more that Check the Level can help contractors understand their data, the more Leeroy believes that his clients will have the competitive edge.
“One of my favorite sayings is, ‘You don't need to be perfect. You just need to be a little bit better than everyone else.’ And, it's pretty easy to do that in construction—if you know your numbers.”