Is Your Company a Best-in-Class Business?

by Marcy Marro | 1 May 2018 12:00 am

What about you? Are you willing to analyze why your business is in the place it is and what needs to happen to move it to the next level? Many contractors do the same things year after year with the same people, same systems, same customers and same leadership strategies, which all create the same average or poor results. And then they can’t figure out what to do to get off the treadmill and get out of their rut.

What Best-in-Class Contractors Do!

By working closely with business owners who have made the changes necessary to improve their margins, find better customers, install machine-like systems, hire strong managers and move towards achieving great results, I have watched average companies become best in class. Doing what top contractors do requires a commitment to run your business differently than you currently are. You also have to spend money on experienced key people and managers, get out of your comfort zone, delegate, let go, stop controlling every decision, and start a pro-active sales and new customer target program.

To determine where your company currently sits on the path to becoming a best-in-class construction business, take a look at the traits of companies at each level of their growth shown below. Check off the traits you have implemented in each of the key success factor areas required to run your business.

Sole Practitioner Smaller Contractor Traits

• Vision: Owner wants a successful company.
• Goals: Keep busy and do a good job.
• Financial Goals: Make as much money as possible.
• Business Plan: No written business plan, targets or goals.
• Owner’s Role: Micro-manages and makes most decisions.
• Scorecards: No regular formal results tracking systems.
• People Management: Owner makes all people decisions.
• Structure: No clear chain of command. Owner decides.
• Written Systems: No written systems. Owner in charge.
• Estimates: Owner unsure of actual job costs.
• Job Cost Tracking: No regular job cost tracking.
• Financials: Owner doesn’t know the numbers.
• Accounting: Owner manages and approves all bills.
• Management Team: None. Owner makes all decisions.
• Project Management: Owner manages most jobs.
• Field Supervision: Supervisor reports to owner.
• Field Crews: Owner schedules and directs crews.
• Sales: No plan. Wait for referrals or customers to call.
• Win Contracts: Sell low price to win work.
• Regular Meetings: Owner too busy for meetings.
• Technology: Little or no technology.
• Wealth and Investments: None.

Stuck Mid-Size Construction Business Traits

• Vision: Owner wants to stop working hard for little return.
• Goals: Trying to get business to work better.
• Financial Goals: Work harder to make more money.
• Business Plan: Starting to track targets and goals.
• Owner’s Role: Delegating to responsible people.
• Scorecards: Developing company and project scorecards.
• People Management: Written job descriptions.
• Structure: Drafting organizational chart.
• Written Systems: Installing operational systems.
• Estimates: Starting job cost history.
• Job Cost Tracking: Tracking monthly and completed jobs.
• Financials: Reviewing monthly income statement.
• Accounting: Hiring full-charge bookkeeper.
• Management Team: Hiring project manager/estimator.
• Project Management: Project manager manages jobs.
• Field Supervision: Hiring full-charge job supervisors.
• Field Crews: Supervisor makes most field decisions.
• Sales: Getting on bid lists and using bid plan services.
• Win Contracts: Bidding more jobs to more customers.
• Regular Meetings: Holding weekly staff meeting.
• Technology: Implemented low-priced accounting system.
• Wealth and Investments: Thinking about starting.

Best-In-Class Construction Business Traits

• Vision: Written five-year vision, mission and core values.
• Goals: Written company targets and goals tracked monthly.
• Financial Goals: Making high profit margins and steady growth.
• Business Plan: Updated comprehensive strategic business plan.
• Owner’s Role: Focusing on priorities, growth and investments.
• Scorecards: Tracking scorecards for all projects, crews and people.
• People Management: 100 percent accountable for expected results.
• Structure: Documented organizational chart with functions.
• Written Systems: Updated standard systems and playbook.
• Estimates: Accurate project job cost history library.
• Job Cost Tracking: Updated and tracked weekly.
• Financials: Accurate updated financials and tracking.
• Accounting: Assisting company achieve targets and goals.
• Management Team: Management team runs company.
• Project Management: 100 percent accountable for project results.
• Field Supervision: 100 percent accountable for field results.
• Field Crews: 100 percent accountable for production, schedule and quality.
• Sales: Written sales action plan and customer targets.
• Win Contracts: Focus on high profit contracts and customers.
• Regular Meetings: Scheduled field, project and management meetings.
• Technology: Fully integrated accounting, estimating and PM software.
• Wealth and Investments: Ongoing wealth building investment plan.

Where are you on the journey to becoming a best-in-class contractor? Top performing construction companies, large or small, generally have all of the requirements in place to run at full speed, make the highest margins and stay at the top. The lower performing companies have excuses why they don’t move to the next level. What do you need to work on next and implement to start the process?

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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[1] for more information.

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