ForConstructionPros.com

One question continues to be asked of me from contractors across the country: "When is it time to grow my business?" I must admit that my normal, in-your-face response is, "When is it ever time not to grow your business?" Now before you consider me a smarta## of sorts, let me explain my answer.

First, for any company to purposely NOT be focused on building their business is just short of committing economic suicide. Even those contractors who don't have a formal business plan or financial goals still strive to be successful. Seeing your sales and profitability figures increase is simply an obvious form of measuring your growth.

The contractors asking the questions took very serious their future and wanted to be competitively positioned in the marketplace. But what were these contractors really asking?

Well, I think what they were really driving at was, how do you know when it is time to plan for growth, purchase more equipment, add one more salesperson, or take on more debt to subsidize the business until sales picks up?

Here are some rules of thumb.

First, look at your net profit margins. Are they increasing or are you making less money than in the past? Losing your profits might be due to your firm's lack of focus on quality performance. You might not be holding your people accountable to reducing operating costs and becoming more financially responsible. If your profits are steadily increasing you might be positioned to take on greater risk because your performance systems and processes are under control.