When business owners start construction companies, they’re excited to be on their own, land some work and start making money. They do a good job because they stay intimately involved in every aspect of their projects, people and business. Then they get busier, hire more employees, get more customers, increase their overhead, and win more jobs to manage and worry about.
Next they get stressed-out, over-worked and out of control because they’re constantly putting out multiple fires. They keep running in place faster and faster, working harder and harder to make enough money to stay in business, scrambling to keep the doors open, their employees busy and cash-flow coming in to cover the ever-increasing pile of bills.
After five, 10 or 20 years, many business owners finally wake up and start questioning their results, efforts and methods. They need help! Nothing seems to get better. Their repeat customers ask them to add more services, work cheaper, finish faster, do more, and accept slower pay.
They’ve been in business for years but don’t have much to show for their efforts except negative attitudes, tired bodies, more wrinkles, lots of aches and pains, less hair, and more stress. In fact, they’ve lost their passion and enthusiasm, and have forgotten the real reason they went into business in the first place — to get paid for doing something they love — creating, growing and building. Does this sound familiar?
My study of small- to medium-size construction company owners shows that only one out of 20 get their business to work for them, enjoy the benefits of business ownership, become highly profitable, build their net worth and become financially independent. The rest must keep working well into their retirement years — because they have to — and never made tough, drastic decisions to fix or improve their businesses.
Take a hard look at your business
Dave is a general contractor and one of my coaching clients. I have been working with him for years trying to get him to change how he does business. He almost never keeps his coaching commitments and hasn’t gotten better.
Dave doesn’t really know his numbers. His cost estimates never seem to be right. He micromanages his field crews and won’t delegate decisions to superintendents. He doesn’t manage paperwork properly and isn’t tough enough to get his change orders signed before he does the work.
He wins most of his work by cutting prices lower than his competition. And to make matters worse, his project manager/estimator of five years isn’t accountable for results. The only thing great about his company is that he gets the work done properly and customers like him.
When we regularly meet to review progress on changes and ideas he has committed to implement he always has an excuse why he didn’t make things happen. The customer didn’t pay him fast enough, or his estimator missed too many items in the last job, or his accounting was not completed yet, or on and on and on! Last week, he called for another coaching session. Reluctantly, I agreed even though I was really tired of his ongoing all talk and no action progress reports.
After listening to his problems and reasons why he had another bad year, I asked him the ultimate question: "Since what you’ve been doing for many years isn’t working and you’re running out of money, why don’t you close and get a job as a project manager or general superintendent?"
He didn’t like that question, so I asked him another, "What are you going to do drastically different to grow your business and make more money?"
After discussing his predicament for several minutes, he committed to make some drastic radical changes. He needed to find an experienced business partner who could run his construction operations, project management and estimating. He agreed to replace his estimator, find better customers, and he should focus on running the field and calling on customers. Well, time will tell if he really does what he needs to do.
What do you need to do to grow and profit?
Take a hard look in the mirror, and take this test. What do you need to do to reach your goals, get organized, reduce stress, delegate, hire the right people, make lots of money, and get your business to grow and profit? Take this True - False test to determine what you need to work on to allow your company to reach its potential.
Read next: How Much Profit is Enough?
Answer TRUE OR FALSE to each of the following statements:
- We have a written vision, mission, purpose statement and core values.
- We have a written strategic business plan with one year targets and goals.
- We track our company and project targets and goals monthly.
- We have a list of things we want to improve and fix in our company.
- We have a good handle on our numbers, financials, job costs and estimating accuracy.
- We have a clearly defined organizational chart with accountable job descriptions for each position.
- We have the right players in the right positions.
- We have a strong management team and company leaders accountable to meet our goals.
- Every manager, department head and project team has key success factors with updated scorecards to track their financial results, job costs, production and performance.
- Our management teams meet monthly to focus on strategic objectives and ways to achieve results.
- We have regular meetings with project managers, superintendents and foremen to review their progress, job costs and results.
- We have written and trained operational systems defining how we do business everyone follows.
- We have a detailed written business development, marketing and sales plan.
- We continually seek profitable growth, higher margin projects and better customers versus low bid to win more work.
- We have a target customer list we track to develop loyal customer relationships.
- We have a marketing and customer activity calendar to implement our sales plan.
- We have an ongoing strategy to set our company apart from the competition.
- We have a great place to work that attracts the best employees possible.
- Our business creates high profit, equity, growth and wealth.
- We seek wealth building investments to grow our net worth and cash-flow.
How were your test results?
If you answered false to more than one of the statements, you need to start rethinking things like how to:
- Run your construction business.
- Get off the ‘work-work-work’ stay busy treadmill.
- Take your business to the next level.
- Get organized, systemized and structured for growth.
- Change your role and replace yourself with key people.
- Find better customers at higher margins.
- Stop selling low bid prices to win work.
- Increase your profits and achieve the results you want.
- Start building wealth and growing your equity.
If you answered false to several of the statements, your business isn’t working! You’re STUCK, going nowhere fast. Radical changes are needed. You can’t keep doing the same things over and over and hope the economy or another miracle makes your business better.
To help you decide what you need to do to improve, email GH@HardhatPresentations.com‘BIZ-Builder Blueprint’ action plan. It may surprise you, but the answer can be simple. Decide what to do and commit to do what you must do! Create a solid business plan with structure, people and systems working together to make your company’s performance both profitable.
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.