As construction companies grow from $1 million to $5 million to $10 million or higher in annual sales, the owner’s or president’s role grows and changes right along with the increasing number of employees, projects, bids, contracts, customers and issues to handle. As a contractor business coach, company owners typically call me for help when they have grown past their ability to effectively manage all the challenges themselves as the leader of their expanding business. The overloaded owner is at a point where they have too many responsibilities, tasks, roles and accountabilities to keep all the balls in the air and their company working like a well-oiled machine.
To make matters worse, most employees think the owner is their boss. Most customers, subcontractors and suppliers want to have direct access and only talk to the owner about important matters, contracts, pricing or other issues. The owner is still pricing most of the estimates, scheduling crews and making sure jobs stay on budget.
When companies grow faster than their staff, structure, systems and ability, the next thing that happens is finances can spiral out of control. The owner doesn’t know the job costs or have a clue if they’re making any money. They run in circles faster and faster and work twice as hard for less and less money, going nowhere. The challenges of business ownership continue to mount.
Overloaded Owners Stop Progress!
There are so many details to handle being a growing contractor. The more you do, the further behind you are. You get bogged down, stuck and ineffective. When you’re busy, you don’t have time to find higher margin work, make good decisions, improve customer relationships or offer more than your competitors. So, you continue to run faster on the treadmill doing what you always done: selling low prices to compete, while knowing you’ll suffer the consequences later. Everyone likes you when you’re operating at overload capacity. You buy materials from the same suppliers without getting additional quotes, hire the same subcontractors over and over instead of getting more bids, and you keep field employees working overtime instead of hiring more workers. Your life is out of balance, your business is out of control, your company consumes your every waking moment, and you aren’t making enough money to make it worthwhile.
What Should the Owner’s Role Be to Get to the Next Level?
When your company was smaller, it had been easy to act as the ringleader, schedule crews, supervise workers, order materials, meet with inspectors and work with customers. But now it isn’t happening, and customers demand more meetings, faster service, better prices and more of your time. What should you do to take charge of you company and get it to become efficient, effective and profitable as it grows?
People tend to do what they’re most comfortable doing! The bottom-line results your business achieves are the number one indicator of your effectiveness and how you spend your time and ability to build a profitable company. Your priorities determine the importance you actually give to on-time schedules, safety, quality workmanship, finances, operational systems, motivating employees, sales, and your leadership. If you’re not getting the results you want, there’s something wrong! And chances are, it’s not your people, subcontractors, suppliers, competition, customers or the economy. It’s you!
Decide what the owner should do:
- What owner’s job description, position or role will bring the highest return?
- What is the owner best at or want to do going forward?
- What does the owner want to stop doing and doesn’t enjoy?
- What does the owner never want to do again?
- What roles, accountabilities, responsibilities and tasks should the owner focus on as their priority?
Most construction business owners/president is the best person to:
- Manage the overall company leadership and management team.
- Most owners should be the get-and-win-work person accountable for business development, customer relationships, marketing and sales.
- Meet with customers and convince them to hire their company.
- Based on the company size, the owner can also manage the price work role by supervising the estimator by reviewing final bid estimates.
- Provide overall financial leadership, know the numbers, and oversee the accounting manager and finance department performance.
- Provide leadership, innovation, vision, motivation, coaching and troubleshooting.
- Hold managers accountable and responsible to achieve expected results.
- Be involved with (but not doing) the recruitment and talent development process.
Most construction business owners/president should NOT:
- Manage construction operations, projects, or field crew and equipment scheduling from start to finish.
- Project manage any jobs.
- Supervise the field and crews.
The Answer is Up to You!
After exploring all these factors outlined above, remember bottom-line RESULTS are the number one indicator of your abilities as the leader of your company, and that includes your ability to delegate and let go. As your company grows, you will reach your personal limits and realize you can’t handle much more work than you already have going. Your calendar is full, your day is packed, you’re working 12 or more hours seven days a week and it gets more stressful every day.
Most companies stop growing when the owner reaches their maximum level of what they can DO themselves. Another bad thing happens at the STUCK level—all you have time for is to DO work and you don’t have time to go out and GET enough work to keep your company growing. This downward cycle eventually destroys a potentially great company. You have to free yourself from day-to-day supervisory activities that bog you down and hold your company back.
Put Your Priority Plan into Action!
Now’s the time to make some decisions to solve your priority problems. Decide what roles and responsibilities you should focus on exclusively. Decide what assignments you need to let go of, delegate and stop doing. Decide what new positions you need to allow your company to grow, profit and reach your goals. And decide what people you can hire or promote now to move your company to the next level.
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.
