After five, 10 or 20 years, many business owners finally wake up and start questioning their results, efforts and methods. Their repeat customers ask them to add more services, work cheaper, finish faster, do more and accept slower pay. They’ve been in business for years, but don’t have much to show for their efforts except negative attitudes, tired bodies, more wrinkles, lots of aches and pains, less hair and more stress. In fact, they’ve lost their passion and enthusiasm, and have forgotten the real reason they went into business in the first place—to get paid for doing something they love—creating, growing and building. Does this sound familiar?
My study of small- to medium-size construction company owners show that only one out of 20 get their business to work for them, enjoy the benefits of business ownership, become highly profitable, build their net worth and become financially independent. The rest must keep working well into their retirement years because they have to, and never made tough decisions to fix or improve their business.
Take a Hard Look at your Business!
Dave is a general contractor and one of my coaching clients. I have been working with him for years trying to get him to change how he does business. He almost never keeps his coaching commitments and hasn’t gotten better. Dave doesn’t really know his numbers. His cost estimates never seem to be right. He micromanages his field crews and won’t delegate decisions. He doesn’t manage paperwork properly and isn’t tough enough to get his change orders signed before he does the work. He wins most of his work by cutting prices lower than his competition. And to make matters worse, his project manager/estimator isn’t accountable for results. The only thing great is that he gets the work done properly and customers like him.
When we regularly meet to review progress on changes and ideas he has committed to implement, he always has an excuse about why he didn’t make things happen. Recently, he called for another coaching session. Reluctantly I agreed. After listening to his problems and reasons why he had another bad year, I asked him the ultimate question: “Since what you’ve been doing for many years isn’t working and you’re running out of money, why don’t you close and get a job as a project manager or general superintendent?”
He didn’t like that question, so I asked him another: “What are you going to do drastically different to grow your business and make more money?” After discussing his predicament, he committed to make some drastic and radical changes. He needed to find an experienced business partner who could run his construction operations, project management and estimating. He agreed to replace his estimator, find better customers, and he should focus on running the field and calling on customers. Time will tell if he really does what he needs to do.
What do you Need to do to Grow and Profit?
Take a hard look in the mirror, and take this test! What do you need to do to reach your goals, get organized, reduce stress, delegate, hire the right people, make lots of money, and get your business to grow and be profitable? Take this true–false test to determine what you need to work on.
- We have a written vision, mission, purpose statement and core values.
- We have a written strategic business plan with one-year targets and goals.
- We track our company and project targets and goals monthly.
- We have a list of things we want to improve and fix in our company.
- We have a good handle on our numbers, financials, job costs and estimating accuracy.
- We have a clearly defined organizational chart with accountable job descriptions for each position.
- We have the right players in the right positions.
- We have a strong management team and company leaders accountable to meet our goals.
- Every manager, department head and project team has key success factors with updated scorecards to track their financial results, job costs, production and performance.
- Our management team meets monthly to focus on strategic objectives and ways to achieve results.
- We have regular meetings with project managers, superintendents and foremen to review their progress, job costs and results.
- We have written and trained operational systems defining how we do business everyone follows.
- We have a detailed written business development, marketing and sales plan.
- We continually seek profitable growth, higher margin projects and better customers versus low bid to win more work.
- We have a target customer list we track to develop loyal customer relationships.
- We have a marketing and customer activity calendar to implement our sales plan.
- We have an ongoing strategy to set our company apart from the competition.
- We have a great place to work that attracts the best employees possible.
- Our business creates high profit, equity, growth and wealth.
- We seek wealth-building investments to grow our net worth and cash flow.
How were your Test Results?
If you answered FALSE to more than one of the statements, you need to start rethinking how to:
- Run your construction business.
- Get off the ‘work-work-work’ stay busy treadmill.
- Take your business to the next level.
- Get organized, systemized and structured for growth.
- Change your role and replace yourself with key people.
- Find better customers at higher margins.
- Stop selling low-bid prices to win work.
- Increase your profits and achieve the results you want.
- Start building wealth and growing your equity.
If you answered false to several of the statements, your business isn’t working! You’re stuck and going nowhere fast. Radical changes are needed. You can’t keep doing the same things over and over and hope the economy or another miracle makes your business better. Decide what to do and commit to do what you must do! Create a solid business plan with structure, people and systems working together to make your company profitable.
George Hedley, CSP, CPBC, is a certified professional construction BIZCOACH and popular industry speaker. He helps contractors grow, make more profit, build management teams, improve field productivity, and get their businesses to work for them. Visit www.hardhatpresentations.com for more information.