Grow by Leaps and Bounds
by Jonathan McGaha | 27 January 2016 12:00 am
How many hours do you spend in a week working on your business? Most contractors I know work 70- hour weeks and spend about 15 minutes working to improve the business that supplies the lifeline for their family and employees. That disparity isn’t because they don’t see the necessity of it. They value the importance of improving the business, but they just can’t seem to get the fires quenched enough to free the time to work on the business.
For the ones I speak with, that frustration ranks as one of the most aggravating parts of running a contracting business: they can see the opportunity but can’t carve out the time to make it happen.
The difficulty is especially acute during those growth periods when the business is increasing and demanding more day-to-day attention. Unfortunately, what happens during the growth period often sows the seeds for the difficulties later on. Here are some of the scenarios I see when construction companies go through major growth spurts:
- They sell more business than they can handle, and either quality slips or they alienate good customers because of poor service.
- The distraction of the increasing revenue takes managers’ eyes off the need to control costs, and profitability plummets.
- The urgency to make quick decisions to buy time and to spend money extravagantly to make good on promises leads to cash flow problems.
- Managers don’t pay attention to overworked employees and companies begin to lose key personnel.
- And, in perhaps the worst-case scenario, the company’s desire to meet increasing deadlines forces it to take shortcuts, which can undermine safety.
In Oliver Stone’s movie, “Wall Street,” the main character Gordon Gecko famously said, “Greed is good.” I don’t think anyone who isn’t a sociopath would agree with that, but we do easily accept the adage in business that “growth is good.”
And growth is good. It provides advancement opportunities for staff that encourages them to stay with your company. Larger companies are, historically, more stable, which helps ensure the long-term financial security of your family. Growth also makes your company a more vital part of the community, raising its profile and allowing you and your staff to give back.
Uncontrolled growth, though, can be dangerous. Most business owners recognize that, and they push for a sustained and predictable growth. But I don’t believe steady growth is necessarily achievable. I think growth comes in leaps, and contractors need to prepare their companies during the quiet periods to make those leaps. You don’t increase from $5 million annual revenue to $5.4 million the next year. You are more likely to leap from $5 million to $7.5 million (a 50 percent increase) in the following year.
It happens all the time, and during those leaps, all the seams in the company are stressed and ready to burst. Estimating processes break down and mistakes get made. Quality can suffer. Customer service falters. All of the areas the owner has sewn up previously now want to burst apart.
So, how much time do you spend on your business every week? Because if you are trying to grow your company and not simultaneously working hard to improve the procedures and processes to sustain it during those growth periods, you are endangering your company.
Do yourself a favor. Schedule time during the week to focus on those tasks that will ensure the longterm stability of your business. Because if all you do is put out fires all week, eventually you will run into a conflagration that you won’t be able to quench.
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