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Don’t Win the Game and Lose Your Business! Part 2

George Hedley, Posted 04/03/2017

Read part 1 of "Don't Win the Game and Lose Your Business" here

Define What You Want and Need to Do!

A successful business over the next several years operates by knowing what it does best, why it does what it does-its purpose, and what it needs to do to stay focused and gain market share. It has a clear vision of why the business exists and what measurable results are expected to keep it winning for a long time. The purpose of a business is to give the owner what he or she wants. In publicly traded companies, stockholders want three things:

  • Quarterly earnings or profits
  • Increasing stock values
  • Revenue growth

In private companies, the owner can want a variety of things, including the three listed above. Small business owners also want their businesses to create wealth, build equity and give them freedom from handling the day-to-day operations. Some use their companies to create investment opportunities that reap fantastic returns. Others put a heavy focus on loyal customers. While others seek to maintain great place to work that attracts and retains the best people in their industry.

To reach your objectives, start by deciding what you want and what you need to do to be successful over the long term. The purpose for your company can be whatever you want it to be: freedom, finances, fun, family, community involvement, service or anything else.

In many cases, the owner works too many hours for the return he or she receives. This is common in small- and medium-size entrepreneurial companies where the owner and business are one in the same. With a clear purpose, one would have specific reasons why one owns a business and what results can be expected.

 

Expect the Results You Want!

For a business to work, expected measurable results must be clear, precise and written. Some of the clear results a commercial construction company might shoot for include the following targets:

  • Return on Equity: Minimum 15% to 20% pre-tax
  • Return on Overhead: Minimum 20% to 50% pre-tax
  • Net Profit on Sales: Minimum 1.5% to 3% pre-tax
  • Total Revenue: $12,000,000
  • Maximum Overhead: $800,000
  • Loyal Customers: Minimum 25%
  • Repeat Customers: Minimum 50%
  • New Customers: 1 per month
  • Number of Customer Referrals: 12 per year
  • Number of Contracts: 24 per year
  • Minimum Contract: $500,000
  • Employee Retention: 90%
  • Employee Training: 40 hours per year each

Set clear, measurable targets and then make people accountable and responsible to make them a reality.

 

Developing a Winning Focus!

A winning business finds and keeps customers at a profit. This must be the central theme and priority of all business operations at every level in your organization. A typical construction company experiences a constant struggle between what it sells and what its customers buy. Customers demand first-class quality and top service but often make their buying decisions based on price. The challenge is how to deliver on all three (schedule, quality and price) and still make a profit. It is difficult to be the low-bid provider while delivering the best quality and superior service.

To improve your bottom-line success, get your winning strategy and focus on-target as follows:

Your #1 priority: 

Repeat loyal customers

Make 20% minimum return on equity

What we do best:

Provide personal service

Integrity and trust

What project types we do: Commercial buildings
What size projects we do:

Over 20,000 square feet

Over $1,000,000

Where we do business: Within 60 miles from our office
Who we do business with: Manufacturing companies
How we do business: Full service and full value
Total project management: Design-build contracts

 

Jack-of-All-Trades = Losing Team!

In your business, you can't be all things to all customers. It doesn't work. A real benefit of getting focused is the ability to know when to say no. When you decide who and what you are, the opportunity to excel increases dramatically. You become laser beam focused and don't get off track, both of which improve customer loyalty and bottom line profit.

If you want to focus your top priority on creating loyal repeat profitable customers, you'll have to re-write everyone's job description to include focusing on customer satisfaction. You might also need to change your incentive plans with targeted results based on finding and keeping customers. This should result in productive and focused people, lifetime customers and above-normal profits. With continuous repeat customers, finding new opportunities can become an easy task for your business development department.

 

Call Winning Plays!

The ultimate goal in business is to be systemized and organized. This will produce the same results every time and deliver the results you want. This requires a set standard way of doing the work. Good systems determine the ultimate success of any business. Poor, unused and unmonitored systems equal sporadic results that are too dependent on people and the owner making too many of the day-to-day decisions.

To build a consistent machine, it is management's job to work on the business and develop, refine and perfect its systems. Focus on dedicating a portion of every week to improving, documenting and refining your operational systems. As you work on, rather than in your business, your role changes from doing the work to managing the systems.

An organized and systemized business allows your people to respond to customers in a consistent and predictable manner. Building a business that works, or rebuilding an existing one, is not easy. It takes a lot of dedication, hard work and forceful leadership, but the end results are well worth it-a business that works!

Your leadership decisions determine your everyday results. Weak and inconsistent actions will not get the winning results you want. Where are you now? Where do you wish you were? How can you make it happen? Be bold. Be brave. Be radical. Try something new. Set clear measurable goals and targets. Write out exactly what you will do and don't do. To build your business takes hard work, positive decisions and visionary determination. Don't and you won't. Do and you will.

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George Hedley is a professional construction BIZCOACH and popular industry speaker who helps contractors increase profits, grow and get their companies to work. To learn more, visit www.hardhatpresentations.com.

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