What brings us to the topic of business fundamentals is a recent conversation Guy and I had on his deck a few weeks ago. For once, we deviated from our usual agenda of shooting video blogs, client discussions, and business planning to discuss messaging.
When we first launched our system we grouped our systems and solutions into six categories:
1. Business Planning
2. Staffing
3. Financial Management
4. Sales & Marketing
5. Production Management
6. Tracking & Monitoring
After using that structure with customers for four years, keeping an eye on how well they grasped the structure and after struggling to force fit a certain set of topics into one of the six designated categories, we realized that our contractor specific solutions were built on a foundation of business fundamentals and we needed to pull those topics out and focus on them separately. We had so fully embedded our understanding of business fundamentals into our thinking that we had never before realized they needed to be presented up front as foundational.
Guy acquired his mastery of business fundamentals the old fashioned way: through the school of hard knocks by working in his family's business. I earned mine at the University of Kansas from a bunch of professors. Frankly, the college path is less painful; however, classroom learning is not for everyone, and it certainly isn't for most contractors.
Rarely do we run across a first generation construction company owner who has moved into the industry after obtaining a college degree. The most common degree found in construction companies is the Construction Management degree and that certainly doesn't prepare a person with business skills.
If you ever look at a construction management curriculum you'll notice that it contains very few business courses. It is almost a skill specific degree, quite similar in nature to an engineering degree. For reference, my mechanical engineering curriculum - 44 classes in all - allowed for only four classes in business. Neither degree provides the degree holder with sufficient knowledge of business fundamentals to successfully run a business.
A typical business degree requires 24 business classes. A Masters of Business Administration requires around 16. Those 16 classes equate to 900 hours of class time and 1,800 hours of study time. Speaking from personal experience, navigating an MBA curriculum while holding down a job is an exhaustive journey.
One of the biggest problems of an MBA is the time delay between the learning and the application. Is an MBA worth the time and cost? Maybe. Maybe not.
The biggest problem with learning business fundamentals from the school of hard knocks is that mistakes are expensive. Most mistakes are so expensive they prevent an owner from having the opportunity to learn from the next one. The learning curve from the school of hard knocks accounts for why so many rich entrepreneurs went bankrupt before finally cashing in. They had to make mistakes in order to learn how not to.
I contend there are far more cost and time effective alternatives for learning the fundamentals of business. That's where our coaching service and online association come in. Both bring a mixture of business fundamentals and contractor specific solutions to the table.
Let's tick off the list of the subjects that fall under the business fundamentals category. It reads like an MBA curriculum. The question to ask yourself is "What is my level of understanding on each?"
1. Finance
2. Financial Accounting
3. Cost Accounting
4. Economics
5. Strategic Planning
6. Marketing / Advertising
7. Sales
8. Job analysis and design
9. Business Law
10. Lean Manufacturing / Process Improvement (PDCA)
11. Structured Problem Solving
12. Change Management
13. Performance Management
14. Leadership
15. Ethics
16. Team Building
Pretty long list right? It's only the foundation.
Once you've developed a working knowledge of each you will need to tailor their application to your construction business. Hopefully you realize that's what we're here for. We've already tailored and tested them.
Our grasp of business fundamentals and our extensive experience in applying them in the construction world is why our solutions work and why those who follow our guidance see the businesses perform at levels they only dreamed of.
We hope you accept today's message in the vein it was meant. This wasn't written to be a cleverly disguised sales pitch. It was written to motivate you to work hard on developing your understanding of the fundamentals of business. Owners only have two choices: master the fundamentals of running a business or watch the business fade into the sunset. No business will last past the founder unless the founder develops systems that are completely in tune with the natural laws of business.
If you dream of an exit strategy that lets you retire into a life of comfortable care-free days - start hitting the books!
