I just returned from a 10-day trip working directly with four construction company coaching clients at their offices. The common denominator? They were all super busy but still not making the profit margins they should. Why? Their increased workloads have stretched most of their managers and staff beyond the ability to be proactive managing projects, watching field productivity carefully, and maximizing their profit potential. Additionally, the company owners were taking on too much of the workload themselves including performing estimating and take-offs, supervising or scheduling crews, ordering materials, managing projects, and even preparing the monthly progress payment invoices in their spare time.
Hard Work Won’t Make You Rich!
One of these clients was so busy, he had a stack of subcontractor bills on his desk he hadn’t had time to approve, thus causing subs to not show up when needed. Another company was estimating their labor cost and then adding 30% additional dollars to cover for their inability to go back and check how many labor hours it was really taking to complete the work. Many owners also had several repeat customers who wanted them to build projects, but they hadn’t time to go out and see the customers or provide proposals. The common problem was company owners were not focused on the BIG stuff. They were focused on doing tasks and getting things done instead of focusing on the big picture and managing their company’s bottom line. Being busy causes companies to miss opportunities to grow or make more money, and therefore not reach their potential.
It’s About Results!
Owning a construction business is not about working hard, keeping busy, spending as little as possible, not hiring enough people to get the work done, providing for your family or paying taxes. The purpose of your business is to deliver what the owners want. I’ve never met a business owner whose goal is to work more hours, worry about details, make every decision, always be strapped for cash and sweat the small stuff.
Most owners want a business that delivers big results including best-in-class profits, strong business equity and growing high margin revenues. These results will deliver the freedom and wealth owners deeply want before they get too old to make it happen. Significant profits and steady high margin growth will also allow for:
- Building a strong management team
- Winning teamwork
- Developing great superintendents and foreman
- Accurate estimating with no missed items
- Weekly field job-cost tracking scorecards
- Elimination of profit-fade
- On-budget labor production
- On-time construction schedules
- Quality workmanship with no call-backs or punch lists
- Pro-active change order management
- Safety experience mod rate below 100
- High margin loyal customers
- Lots of investments which provide passive monthly income
The More You Do, the Less You Make!
Nobody gets rich doing work or handling the little things that don’t deliver BIG results. What would allow your company to achieve the results you want? Spending your time:
- Doing work or winning work?
- Finding great people or ordering materials?
- Meeting with potential customers or negotiating with suppliers?
- Implementing an accurate job cost system or scheduling crews?
- Coaching emerging leaders or telling people what to do?
- Focusing on top priorities or sweating the small stuff?
When you’re focused on doing work, BIG picture items fall to the back burner and remain a low priority. Overworked business owners tend to do too much themselves, don’t let go, don’t hire, don’t have an assistant, don’t trust others with decisions, and don’t make much money for all their efforts. Wealthy business owners who focus on the BIG stuff and top priorities, have a team of accountable managers dedicated to winning the right work, operating the business profitably, and providing excellent financial management. This allows owners to focus on the top priorities which deliver results, allow them to enjoy their business, and reap the benefits of a great company that works they are proud of.
What Are Your Top Priorities?
After facilitating a two-day management team strategic planning session, many of my clients have identified over 100 things they want to improve, eliminate or work on over the next 12 months. Next, we all vote to prioritize and select the most important things to fix that will make the biggest impact on company results. These items become goals for the upcoming year. But then we sit back and determine which three improvement item will be our top priority for the upcoming year. Almost always, the same priorities appear at the top of the lists:
Successful Company Top Priorities:
- Profit First!—Increase net profit to best-in-class level.
- Strong management team accountable for results which allows the owner to focus on developing high margin loyal customer relationships.
- Eliminate profit margin fade from bid to final job cost.
- Develop a job cost tracking system to insure accurate labor production rates.
- Accurate estimates with no missed items.
- Accounting system and financial reporting to provide management the tools to review results properly and timely.
- Organizational structure and chart with a clear chain of command, levels of authority, and written job descriptions with task deadlines.
- Fill the empty positions with great people accountable for results.
- Improve Bid-Hit-Win ratio by developing a pro-active marketing and sales strategy.
- Start a wealth-building investment program.
Ten top priorities are too many. I see the results of companies who are really into BIG priorities. They improve their bottom line quickly and achieve the results they want to hit. BIG priorities make or break you. They control your time and your whole direction. I encourage you to select your top three BIG priorities, and then start developing and implementing action plans to make them become a reality.
George Hedley, CSP, CPBC, helps contractors grow and profit as a professional business coach, popular speaker and peer group leader. He is the author of “Get Your Construction Business to Always Make a Profit!” and “Hardhat BIZSCHOOL Online University” available—on his website. Email gh@hardhatpresentations.com to get BIZ-Builder Worksheets. Visit www.hardhatbizschool.com for more information.
