If I followed you around for a day, what would be your focus? Would you be spending your time scheduling crews, making sure materials are ordered and delivered, pricing bids, visiting job sites, calling subcontractors or suppliers, and telling supervisors what to do? Do these busy work activities really make you profitable or grow your business?
Ask yourself this question before you start doing the many day-to-day activities it takes to run your business: Where’s the money? Is there something else you should be doing that’ll make you more money and give you a higher return on your time? If so, then someone else in your company should be doing what you’re doing. Are you a Money Maker or a Money Saver?
Money Makers are focused on MAKING money: seeking profitable sales, developing loyal customers, implementing written standardized BIZ-Systems, building an accountable responsible management team, finding higher margin work, and investing in the future of their company.
Money Savers are focused on SAVING money: getting work done for the lowest price possible, maximizing field crew and equipment efficiency, reducing costs at every level of the operation, hiring low-cost employees with as few benefits as possible, providing the minimum acceptable service required per plans and specifications, saving as much money as possible on everything, and running their business with too few people to do a professional job.
Which type of owner or manager are you? Do you spend your time trying to save every dollar possible? Or are you focused on building a profitable construction company by investing in experienced managers, supervisors, employees, systems and great customers? Money makers make more money. They do things to increase the value of their company, build their image, increase customer loyalty, train employees to become better, improve field productivity, and allow their company to make more money.
What’s Your BIZ-Focus?
Are you a money maker investing in your future by developing a great team, going the extra mile, doing more than the minimum required, finishing projects ahead of schedule, doing your own punch list, charging fair prices on change orders, giving customers a great experience, and offering the best quality workmanship and quality? Or have you forgotten making money starts with customers who give you the opportunity to perform and meet their goals? Profit starts with revenue. And revenue comes from customers who are willing to do business with you, and are treated as valuable clients by your managers and employees. Profitable revenue comes from very satisfied, loyal customers who want what you offer and will pay a little more for your excellent service or quality from your professional managers and field crews.
What are two top reasons to own a company?
- Make high profits and return on investment for the risk taken.
- Enjoy the freedom and benefits of owning a profitable organized business.
BIZ-BUILDERS want to create an organized systemized management team run business, have loyal customers, make a huge profit, create wealth and own a business that works without them doing the work. To achieve these goals, you have to revolutionize how you think about your role and priorities. Your current company is running and you have people employed to help you get the work done. Your job is NOT to DO the work. Your job is to professionally manage the business, provide leadership, maximize profits, seek high margin loyal customers, set your company apart from the competition and grow your business.
Successful BIZ-Builders learned long ago that micromanaging people and processes doesn’t result in more profit. Profit is the result of staying focused on making money so you can grow your company. To make this happen you must know and track your numbers! Dedicate time to create financial targets, track them, and do everything possible to hit your numbers. BIZ-Builders know that cash flow, working capital, job costs, accurate estimates, fixed overhead, markup, profit and equity are collectively the key to their future.
Most business owners are so busy working on bids, delivering contract commitments, providing enough crews and equipment to get projects finished, getting paid, making payroll, and keeping employees working, that they don’t spend enough time on the BIG $TUFF.
BIG $tuff matters including sales revenue, overhead, gross profit, net profit, accounts receivables, and job costs, are the real keys to make you lots of money. Not try to save every nickel, dime and penny you can! The average construction business only makes between 2 and 4 percent pretax net profit. Not enough to grow your business and reach your long-term goals. In contrast, the “Best In Class” contractors make 5 to 10 percent net profit or more. Not focusing on BIG financial matters will keep you from making larger profits or having enough net cash flow to grow your company. Doing great work without knowing and tracking your numbers doesn’t really matter or help you achieve your goals.
Focus on the BIG $tuff First!
To build a profitable construction business, your top focus must be on your top-line and bottomline numbers. You must know how much sales and markup you need, your labor costs per unit of work, track job costs, collect your money, and always be sure you’re making a profit. You can’t rely on someone else or a bookkeeper to care about your money more than you do. You can have someone else pay your bills, send out invoices, prepare financial reports, and do accounting, but the owner or president MUST be responsible to know and track the numbers daily, weekly and monthly.
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. Visit www.hardhatbizschool.com for more information.
