Being a construction business owner today is a challenging responsibility. With the ever-changing economic conditions, employment requirements, safety concerns, aggressive competition, tight labor market, material shortages and delays, and ongoing restraints, it is difficult to know what to do and to make the right decisions with certainty. As a contractor business coach and contributor to this magazine, I get many calls for help from business owners and my clients. The randomness of the questions has never been as frequent as it seems now. The following is a question I received just in the last few days.
What should these two contractors do?
Billy owns DB Interiors and is a successful young contractor specializing in drywall, metal studs, ceilings, and doors. His business had grown quickly to more than $3 million in sales. His 20-person team includes a project manager, site superintendent, two foremen, and four field crews. Billy’s primary role is preparing five weekly bids and proposals, negotiating contracts with customers, overseeing the company, attending job meetings, invoicing and collecting payments, managing bookkeeping and finances, and finding time to supervise his managers and organize field operations. Making things worse, his profit is minimal.
Dave owns Cal-Builders General Contractors. His company simultaneously builds three to four commercial projects with budgets ranging from $250,000 to $500,000. He is the salesman, estimator, project manager, and general field superintendent overseeing a junior onsite assistant. He has a full-time office manager to help with some of the bookkeeping and administrative duties. His typical day includes keeping up with bidding, meeting customers, doing project paperwork, and visiting every job to coordinate the field crew and subcontractors. With his low overhead, he can price jobs very competitively, which doesn’t generate the net profit he should be able to earn. The dilemma is that he’s turning down some project opportunities with great potential due to his daily workload demands. In addition, his limited subcontractor base cannot keep up with the workload or growth.
Common issues and problems
Billy and Dave are overworked, unorganized, and out of control. Their companies have grown beyond their ability to manage all the demands of their success. Neither has anyone accountable to get things done without their constant direction. They keep very busy without making the profit they should. Both contractors are stuck at the level of what they can do themselves without a strong team responsible for producing results, pricing work, implementing company systems, field production, or financial management.
Without written, enforced, and monitored company-wide systems, considerable problems are occurring on a regular basis, including:
- Estimates aren’t accurate, and many jobs are coming in over budget and cost more than the estimated budget.
- Projects take too long to complete, and customers are often unhappy.
- Managers and supervisors are inexperienced, weak, or non-existent. They don’t have clear job descriptions, defined tasks, measurable targets, or deadlines to track or achieve. This creates confusion for the managers, field supervisors, crews, and subcontractors.
- Regular job cost tracking is absent. This results in not knowing current or final job costs or if they are making money until projects are completed and all invoices are paid.
- Their personal roles and workloads prevent them from getting more than one or two subcontractor or supplier bids per trade. This has caused overall prices to rise and restricted the potential to win more contracts, develop regular customers, and obtain referrals.
Both Billy and Dave are their businesses. They have no life outside work and devote too many hours running in circles. They struggle to manage their companies, grow their revenue, make higher margins, or enjoy the benefits of a well-organized business.
Recommended solutions
These owners are trying to do too much themselves, micromanaging and unwilling to hire, let go, or delegate. Their businesses are stuck as they hold back their companies from delivering the results they want. So, what should they do or not do? Here are some insights.
Hire, delegate, trust, let go, mentor and train
During our coaching sessions, we discussed what roles Billy and Dave are best at and what they should stop doing and assign to an accountable, responsible manager. This requires them to learn to let go and trust other people to make decisions. They need to hire additional staff to get organized and perform some of their current responsibilities. Part of this process is creating clear job position descriptions outlining required tasks and defined expected results. Then, they’ll have to dedicate time to coach, mentor, and train their key people.
Billy agreed he should focus on sales and develop a strong management team that is accountable for producing excellent projects on time and within budget. He must also find a professional operations manager to handle their current workload and future growth.
Dave’s strengths are finding project opportunities, estimating, and building customer relationships. He should stop supervising the field and any project management and hire a strong project manager and field supervisor. He also must find a part-time but fully responsible accounting manager to take over his current bookkeeping duties.
Install, monitor, and enforce written systems
Both contractors must get their respective construction operations to produce consistent performance and expected results. This requires installing written systems that are enforced and followed by every team member without exception. They must invest in delegating to someone to create, develop, draft, and implement written systems, processes, rules, standards, and procedures. Starting with identifying what’s causing the biggest problems and issues, they must draft a comprehensive company systems manual. Great people won’t regularly produce the same great results without enforced written systems. Without everyone following the same procedures, chaos will continue to happen.
Have issues and don’t know where to start?
It’s hard to manage a successful and profitable construction business alone—it’s like being on an island without information or advice. Every winning athlete is surrounded by the best trainer and coach available for solutions, ideas, support, accountability, systems, and guidance. Like a professional sports coach, a mentor challenges and pushes you to achieve optimum performance, plus helps you make good decisions and call the right plays.
George Hedley, CPBC, is a certified professional construction business coach, consultant, and popular speaker. He helps contractors build better businesses, grow, profit, develop management teams, improve field production, and get their companies to work. He is the best-selling author of Get Your Construction Business To Always Make A Profit! available on Amazon.com. Watch his educational videos on YouTube. To get his free e-newsletter, start a personalized program, download online courses, or use his contractor templates, visit: constructionbusinesscoaching.com or E-mail GH@HardhatBizcoach.com.
