Setting out to build a profitable construction business starts with knowing what you want, designing a business plan to make it happen and then keeping track of progress towards hitting your goals. Working hard and keeping busy is not your big picture or long-term goal. Finding more jobs to bid, winning more contracts, building faster, being more productive, and having a little money left over at the end of the year is not what you really want to accomplish.
While these are great tasks to work on, they are activities that keep your head down focused on day-to-day supervisor functions required to find work and get projects built.
Building a successful organized business that runs itself like a machine, maintains steady growth and produces superior profits is actually what you want your company to ultimately achieve. The benefits and results of owning a company that is on-target, on-track and works for the owners include increasing company value, creating profitable investments and developing wealth that allows for the owners to focus on what gives them the biggest return on their time.
To keep on-target and on-track, you must set your overall priorities focused on doing what’s required to keep moving towards hitting your big picture goals.
What do you keep track of every month to make sure your company is staying on-target and on-track? Waiting until the end of the year to review your numbers won’t give you valuable information needed to build a ‘best in class’ profitable company. Relying on your bookkeeper to do the books and not reviewing them on a regular basis isn’t a way to hit your profit and net worth goals.
Not meeting with your foremen, superintendents and project managers monthly to review their job goals and production results won’t help you meet your overall budget targets. When you don’t update and take time to track your estimating success rate, sales revenue, job profit, field productivity, or overhead budget every month, you’ll never reach your overall long-term goals.
Could you imaging playing on a professional sports team without knowing the score or all the details and statistics of every player on your team? You wouldn’t be able to determine what play to call or which player is performing and achieving to their ability. As the head coach of your business you must have an updated scorecard to know and track your numbers, statistics, results, progress, and the score at all times to stay headed in the right direction.
Determine your key success factors
In order for your business to be a success, what key success factors should you keep track of every month? Begin by listing out every key business performance indicator you need or want to know in order to achieve your annual and long-term goals. In our mastermind peer groups comprised of like-minded construction business owners, we worked together to develop a list of these key success factors to be included in their company BIZ-Scorecards.
Each performance target starts the year with an annual goal and is tracked monthly to determine actual results, and if they are on-target and on-track.
- Sales Revenue
- Direct Job Cost Expenses
- Gross OH & P Margin
- Gross Margin %
- Mark-Up %
- Company Overhead
- Net Profit
- Contract Backlog
- Gross Profit Backlog
- Bid Volume
- # Jobs Bid
- Bid-Hit Win Ratio
- Average Job Size Bid
- Bid Award Volume
- Bid Award Cumulative
- Bid Award Gross Profit Award
- Bid Award Gross Profit Cumulative
- Sales Pipeline
- Marketing Activities
- New Customer Sales Meetings
- Repeat Customer Meetings
- Projects On / Over Budget
- Projects On / Over Schedule
- Field Productivity
- Project Safety
- Investment Acquisition
- Investment Cash-flow
Read next: Four Critical Success Factors
What else do you want or need to know every month to build a great company that works for you and delivers the long-term results you want? Some construction companies are focused on increasing their profit margin by attacking new customers and markets. To keep track of this goal, track your sales results, customers meetings, proposals and contracts with these new targets.
Other companies might want to set a goal to improve field crew productivity to reduce their installed cost. By tracking field crew targets and results, you can watch the improvement on a monthly basis. And many construction company owners want to start investing in real estate opportunities. Add this key activity to your scorecard and make sure you do something every month to reach your goal.
By determining what you want to achieve over the next several years, you can create a monthly scorecard to keep track of your progress.
George Hedley CPBC is a certified professional construction BIZCOACH and popular speaker. He helps contractors build better businesses, grow, increase profits, develop management teams, improve field production, and get their companies to work. He is the best-selling author of “Get Your Construction Business To Always Make A Profit!” available on Amazon.com. To get his free e-newsletter, start a personalized BIZCOACH program, attend a BIZ-BUILDER Wealthy Contractor Boot Camp, or get a discount at www.HardhatBIZSCHOOL.com online university for contractors, visit www.HardhatPresentations.com or E-mail GH@HardhatPresentations.com.