Most construction business owners I meet, talk to and work with have the same goals. They all want to grow, make high profit margins, have great customers who give them steady work, be organized and in-control, have systems in place to run their business, have an accountable responsible management team, build wealth and own income producing investments, and have the time and freedom to enjoy the benefits of their hard work. Unfortunately most won’t make the tough decisions to implement the action plans they must do to achieve their goals and be a top performing business.
What about you? Are you willing to look in the mirror (or your last several income statements) and analyze why your business is in the place it is and what needs to happen to move it to the next level? Many contractors do the same things year after year with the same people, the same systems, the same customers, and the same leadership strategies — which all create the same average or poor results. And then they can’t figure out what to do to get off the treadmill and get out of their rut.
What ‘best in class contractors’ do
By working closely with business owners who have made the changes necessary to improve their margins, find better customers, install machine like systems, hire strong managers, and move towards achieving great results, I have watched these average companies become ‘best in class.’ Doing what top contractors do requires a commitment to run your business differently than you currently are. You also have to spend money on experienced key people and managers, get out of your comfort zone, delegate, let go, stop controlling every decision, and start a pro-active sales and new customer target program.
To determine where your company currently sits on the path to becoming a ‘best in class’ construction business, take a look at the traits of companies at each level of their growth shown below. Check off which trait you have implemented in your company in each of the key success factor areas required to run your business.
Sole Practitioner Smaller Contractor Traits
- Vision - Owner wants a successful company.
- Goals - Keep busy & do a good job.
- Financial Goals - Make as much money as possible.
- Business Plan - No written business plan, targets or goals.
- Owner’s Role - Micro-manages & makes most decisions.
- Scorecards - No regular formal results tracking systems.
- People Management - Owner makes all people decisions.
- Structure - No clear chain of command. Owner decides.
- Written Systems - No written systems. Owner in charge.
- Estimates - Owner unsure of actual job costs.
- Job Cost Tracking - No regular job cost tracking.
- Financials - Owner doesn’t know the numbers.
- Accounting - Owner manages & approves all bills.
- Management Team - None. Owner makes all decisions.
- Project Management - Owner manages most jobs
- Field Supervision - Supervisor reports to owner.
- Field Crews - Owner schedules and directs crews.
- Sales - No plan. Wait for referrals or customers to call.
- Win Contracts - Sell low price to win work.
- Regular Meetings - Owner too busy for meetings.
- Technology - Little or no technology.
- Wealth & Investments - None.
Stuck Mid-Size Construction Business Traits
- Vision - Owner wants to stop working hard for little return.
- Goals - Trying to get business to work better.
- Financial Goals - Work harder to make more money.
- Business Plan - Starting to track targets & goals.
- Owner’s Role - Delegating to responsible people.
- Scorecards - Developing company & project scorecards.
- People Management - Written job descriptions.
- Structure - Drafting organizational chart.
- Written Systems - Installing operational systems.
- Estimates - Starting job cost history.
- Job Cost Tracking - Tracking monthly & completed jobs.
- Financials - Reviewing monthly income statement.
- Accounting – Hiring full charge bookkeeper.
- Management Team - Hiring project manager / estimator.
- Project Management- Project manager manages jobs.
- Field Supervision - Hiring full charge job supervisors.
- Field Crews - Supervisor makes most field decisions.
- Sales - Getting on bid lists & using bid plan services.
- Win Contracts - Bidding more jobs to more customers.
- Regular Meetings - Holding weekly staff meeting.
- Technology - Implemented low priced accounting system.
- Wealth & Investments - Thinking about starting.
Best In Class Construction Business Traits
- Vision - Written five year vision, mission & core values.
- Goals - Written company targets & goals tracked monthly.
- Financial Goals - Making high profit margins & steady growth.
- Business Plan - Updated comprehensive strategic business plan.
- Owner’s Role - Focusing on priorities, growth & investments.
- Scorecards - Tracking scorecards for all projects, crews & people.
- People Management - 100% accountable for expected results.
- Structure - Documented organizational chart with functions.
- Written Systems - Updated standard systems & playbook.
- Estimates - Accurate project job cost history library.
- Job Cost Tracking - Updated & tracked weekly.
- Financials - Accurate updated financials & tracking.
- Accounting - Assisting company achieve targets & goals.
- Management Team - Management team runs company.
- Project Management - 100% accountable for project results.
- Field Supervision - 100% accountable for field results.
- Field Crews - 100% accountable for production, schedule & quality.
- Sales - Written sales action plan & customer targets.
- Win Contracts - Focus on high profit contracts & customers.
- Regular Meetings - Scheduled field, project & management meetings.
- Technology - Fully integrated accounting, estimating & PM software.
- Wealth & Investments - Ongoing wealth building investment plan.
Where are you on the journey to becoming a ‘best in class’ contractor? Top performing construction companies, large or small, generally have all of the requirements in place to run at full speed, make the highest margins, and stay at the top. The lower performing companies have excuses why they don’t do what they need to do to move to the next level. What do you need to work on next and implement to start the process?
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 Action Plan Boot Camp, or get a discount at www.HardhatBIZSCHOOL.com online university for contractors, E-mail GH@HardhatPresentations.com.