Determine what is preventing your construction company from growing, and make changes today.
Editor's Note: This is the first in our 2011 series, "Profit Builder."
Someone who attended one of my seminars recently sent me an email asking for advice, and he closed his email with this semi-sarcastic comment: "I hope you are enjoying this economy!" It seems like everyone is looking for excuses to wallow in their sorrow.Yes, the overall business climate is slower in most markets, and competition has gotten tougher. But talking about how bad it is does not make things better. In fact, it justifies poor performance and makes it acceptable to have shrinking sales figures and lower profits.
What obstacles are holding your construction company back from growing or profiting in your market?
- Too many cheap competitors
- Less jobs to bid
- Low profit margins
- Jobs bidding below your costs
- Customers shopping your bids
Ask These Questions
Start by identifying the external and internal obstacles or excuses you face:
- What is preventing your company from progressing?
- How can you achieve your goals?
- Why is it difficult to change your strategy?
- Why haven't you made necessary changes?
- What additional knowledge do you need to succeed?
- What do you gain if you do not change?
- What is your worst-case scenarioif you do not make any changes?
Take a hard look at the answers. Then, look even deeper at your willingness to change how you do business.
What Should Plumbing Company Owner Charlie Do?
Imagine this fictional account: Charlie owns XYZ Plumbing, a plumbing company that specializes in new custom homes and remodels. His main customers are high-end builders and contractors who use a select group of specialty subcontractors they trust. Over the years, Charlie had built his company to three foreman and nine plumbers who are all excellent technicians at completing quality workmanship. His field crews do great work but do not interact much with the customers. Charlie handles all the meetings, bidding, proposals, scheduling crews, purchasing and contract management. As Charlie's workload slowed down over the last few years, he struggled with finding enough homes to bid on to keep his crews busy.
Charlie did not know how to get more projects. He thought he could wait until the economy turned around. But as he waited, he slowly had to lay off several of his key employees. Eventually, he started dipping into his savings account and selling some of his trucks and equipment to make ends meet. He regularly attended the Plumbing-Heating-Cooling-Contractors-National Association meetings and talked to his fellow plumbing contractors about his business problems. As he continued to look for answers, the phone still would not ring.
Unfortunately, Charlie is not alone. There are many contractors who are excellent technicians and solid business people who have built great businesses over the past 10 or more years but are now stuck with the same problem. Their old business model does not work now. Listed below are several suggestions and ideas for Charlie's plumbing business to grow and prosper.
1. Create Ongoing Revenue Streams
Charlie had built his business by doing excellent work and providing custom home-builders bids on a project-by-project basis. His customers liked dealing with Charlie directly and relied on him to do what was right on the jobsite. Because of his trustworthiness, Charlie received repeat business and referrals for high-end home plumbing contracts. And because his price was not usually the deciding factor, his crews had become less efficient and too detailed than they should have been. When competition increased, his prices and field productivity were not competitive enough to generate new contracts anymore.
With XYZ Plumbing's current business model in mind, think about what type of customers will pay for high-end workmanship rather than low price. Charlie's company is already known for providing the utmost in service and quality. He has over 275 past projects and customers who can vouch for his
