Building a great business is not easy. It takes a burning desire to continually improve by trying new ideas, systems, and processes. You must love what you do, love your customers and not be afraid to hire people better than yourself.
To build a profitable business, you must know how to price what you do, track the costs, understand contracts, and do the paperwork required. To expand and grow, you have to market and sell, seek referrals, and then present winning proposals. To take your business to the next level, you must learn how to trust people and delegate decisions to them so you can invest your time on bigger issues. This requires you to get organized and systemized so your people can do what you want them to do.
Have you ever said to yourself:
- I am tired of "doing" all the important work myself.
- I can't find any good help.
- I've got to find a way to make more profit.
- I wish I could pay myself what I am worth.
- I wish I could find more free time.
- I can't figure out how to get rich
- How will I ever retire at this pace?
Where is you business today? Is it moving toward giving you what you expected when you started the entrepreneurial journey?
Business owners had a vision of their perfect business when they started. As they began to grow, they hit the challenges and roadblocks of time, energy, money, people, or customers. Many get stuck at the control lever and can't let go of doing the work or delegating. Some have organization and time management problems. Some don't like paperwork or accounting and leave those for later. Others just like to do the work and don't know how to run a business.
In a survey of over 5,000 business owners and managers I recently conducted, the top ten reasons business owners fail are as follows:
10. Company wins business by selling low price
9. Owner doesn't understand how to run a business
8. No passion for customers
7. Not maximizing the use of technology
6. Not offering anything different than competition
5. Trying to grow in a slow market place
4. No leadership or strong management team
3. Not enough money & too much debt
2. Owner controls everything
1. Owner doesn't change!
The downward spiral
Which of these ten factors are holding your company back from becoming a better business? Most businesses never get to the next level is because the owner is not willing to make the necessary changes to make it happen. He or she gets stuck in their "uncomfortable" zone doing the same things over and over. A downward spiral occurs when a company gets stuck at the same level.
What happens often goes like this:
- Too much work to do yourself
- Hire some cheap or untrained help
- Work gets out of control
- Customers get unhappy
- Can't make enough money
- Can't afford to hire better people
- Can't find time to train people
- No time for marketing or sales
- You spend your time putting out fires and fixing problems
- No referrals or repeat customers
- Have to sell low price to get more work
- Can't make enough profit to grow the business
- No hope for the future
The perfect business?
Imagine owning a company 100% run by your management team. You only spend a few days a week in the office while your company makes an exceptional profit and generates a lot of loyal repeat customers.
The other three or four days you are free to do what you please – hunting, fishing, golfing, spending time with your family, seeking investment opportunities, giving back to your community, or just doing nothing – all while your company runs smoothly, makes money, and you continue to get paid for being the owner.
Now imagine your company creates a lot of other business opportunities to create a financial empire which gives you a generous positive cash flow every month. Does this sound good to you? Ask yourself:
- Is your business where you really want it to be?
- Is your business headed in the right direction?
- What do you really want from your business?
- Am I willing to do what it takes to get my business on track?
Like many of you, I founded my construction company with only a pickup truck and a few dollars in the bank. With hard work, determination and drive, my business grew to $50 million annual volume. I hit my original goal of growing my company every year and became a "big" general contractor in my market. Along the way I struggled with the same problems all entrepreneurs face:
- Not enough good help
- Not enough time in the day
- Not enough profit
- Not enough patience to get my people to do it right
- Few organizational systems
- No freedom to do what I wanted to do.
In other words, my customers, employees and company were in control of my time. I had no life away from work. I was busy doing the wrong things. I was working too hard for the money. As my business grew I continued to work more and enjoy it less. Finally, at a crossroads, I realized bigger is not better.
My business wasn't working for me and I wasn't getting what I wanted from my company. Finally I woke up and discovered better is better! But, how do you build a better business? Through trial and error, research, educational seminars, coaching, consultants, and books, I discovered the step by step business success blueprint to build your business to work for you.
Step by step!
Most business owners start by trying to fix what is broken or urgently needed. For example, when you land more work than you can handle, your tendency is to hire anyone you can find to help you out. You don't have enough time to interview and screen candidates properly. So you hire the wrong people, put them to work without training, and expect perfect results.
To get good results, you need good systems before people can do good work. Great people are an asset, but when each of your employees do things their way, you end up with different and poor bottom-line results. This then makes you stress out about hiring people. It's not your people, it's the lack of systems and training that causes good people to do poor work.
When I started the process of building a better business, there was so much to fix. I didn't know where to start or have the time to do what I knew it would take. I finally decided to dedicate four hours per week and figured it would take 5 years to get my business on track and the way I wanted it to be. Surprisingly, as I started to install systems, everything fell into place and we were able to improve much faster than anticipated. As we made fewer mistakes and had fewer emergencies I found more time to work on more the important issues.
It is important to follow these steps from 1 to 10. When you jump ahead, your progress will stop. For example, I often hear construction business owners say: "I need a good estimator." Hiring a good estimator is a great idea after you have a great estimating system in place which includes job-cost tracking and a cost history library.
If you hire an estimator who brings in a lot of work, will you make any more money without trained field crews, field organizational systems, and project management controls in place? You can't grow and be profitable jumping ahead of yourself. Take it one step at a time.
Before you hire an estimator, get your finances and field management systems in order and be ready for profitable growth.
Business Success Blueprint
- On-Purpose…On-Target. Determine what you want, establish a clear vision, and set on-purpose and on-target goals aligned with your mission and values.
Identify what you what you want in the area of profit, wealth, finances, customers, employees, market area, cash-flow, and freedom. Install action plans and set goals to make your business and personal targets a reality.
- Make a Profit. Develop a profitable business model to give you a financial return for the risk you take. Calculate and track progress towards your required sales volume, break-even point, overhead, fixed cost of doing business, and profit markup to reach your goals. Install action plans to make your profit goals become a reality!
- Install Operational Systems. Replace yourself with systems and get your company organized, systemized, and in-control. Systems get everyone in your company doing things the same way and produce consistent results without your constant supervision and attention. Identify what systems you need, then create them.
- Install Financial Systems & Controls. A fully integrated accounting software package with income statements, balance sheets, job cost reporting, cash-flow projections, accounts receivable and payables aging is required. Secure a bank line of credit and establish a bonding relationship to grow a profitable business. Install financial controls to insure accuracy and accountability.
- Install Field & Project Management Systems & Controls. Operational excellence starts with a complete management system to insure on-budget projects, quality workmanship, on-time completion, and a safe workplace. Install systems to insure every crew gets the same end result upon completion. Systems must be in place for contract management and administration, field installation, and training.
- Use Accurate Estimating Systems. The key word is "accurate." Estimating and pricing jobs accurately is an outflow of good accounting systems, job cost records, and field input. Install a job cost tracking system to help you determine what things really cost. Track your profitable customers and bid-hit ratio to determine which projects make you the most money.
- Create Marketing & Sales Systems. Excellent customer systems help maximize your bottom-line by selecting the best project opportunities for your company. Create an on-going marketing and sales program to build long time repeat loyal customers. Set yourself apart from your competition, differentiate, find you niche market, create customer relationships, and seek value-added opportunities.
- Install People & Leadership Systems. Hiring and keeping good people starts with a system to build a great place to work that attracts and retains the best people available. Install an employee development and training program to motivate, recognize, and train accountable and responsible leaders, teams, and workers.
- Grow Equity & Build Wealth. Leverage your business success by seeking other business opportunities, partnerships, and ventures that will build equity, create wealth and provide positive cash-flow. Use your profitable business as a stepping stone into other businesses and investments such as real estate, rental companies, or providing other services which compliment what your company already does.
- Enjoy Freedom & Have Fun! Enjoy the benefits of business ownership, passive income, and the freedom to pursue what you want to do with all your free time and money. Give back to your community, family, friends, or faith with your business success.
Only you know what you want your business to do for you. Only you are holding it back from being what it can become. Take a look at where you are, decide where you want to be in five or ten years, and then determine what steps to take. Start now by taking the first step out of your "uncomfortable" zone. Let me know your progress. It's an exciting journey building a better business.
George Hedley owns Hedley Construction and Hardhat Presentations. Author of "Everything Contractors Know About Making A Profit," he will be discussing his "Business Success Blueprint: How to Build Your Business to Always Make a Profit!" at National Pavement Expo, Jan. 31 - Feb. 3 in Nashville (www.nationalpavementexpo.com).