George Hedley works with contractors to build profitable, growing companies. He is a professional construction business coach, popular speaker and best-selling author of Get Your Construction Business to Grow & Profit!, which is available online at hardhatpresentations.com. To sign up for his free monthly e-newsletter, get involved in a BIZCOACH program or get a discount for online classes at hardhatbizschool.com, email firstname.lastname@example.org.
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. They get more customers, win more jobs, hire more employees and increase their overhead. Next, they get stressed out, overworked and out of control because they're constantly putting out multiple fires. They keep running in place faster and working harder, scrambling to keep the doors open, their employees busy and the cash flow coming in to cover the ever-increasing pile of bills.
After five, 10, or even 20 years, many business owners will finally begin to question their methods, efforts and results. Nothing seems to get better. Their repeat customers ask them to add more services, work cheaper, finish faster, do more and accept slower payments. They've been in business for years, but don't have much to show for their efforts, except negative attitudes, tired bodies, more wrinkles, aches and pains, hair loss and increased stress. 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 what they love. Does this sound familiar?
My study of small and midsized construction company owners shows that only one in 20 get their business to work for them—enjoying the benefits of business ownership, becoming highly profitable, building net worth and establishing financial independence. The rest of them must keep working well into retirement years, because they never made tough, drastic decisions to fix or improve their businesses.
Dave, a general contractor and one of my coaching clients, wins most of his work by cutting prices lower than his competition. He also has major problems with the way his business functions. When we meet to review progress on changes he has committed to implement, though, he always has an excuse. After listening to why he had another bad year, I have to wonder why he is in business at all. I ask him, "If none of this is working for you, why don't you close your doors and get a new job as a project manager?" He didn't like that idea, so we began strategizing to address his issues. The following business test strategy offers a look at how to achieve real success.
True Test Time
What are you going to do differently to grow your business and make more money? What do you need to do to reach your goals, get organized, reduce stress, hire the right people, delegate and realize profits? If your business isn't working, it's time to commit to making some radical changes. Take a hard look in the mirror, then take this quick true-false test (at the the bottom of the page) to determine which areas need work to allow your company to reach its full potential.
If you answered false to more than one of the test's statements, you need to start rethinking things—your business isn't working. It's time to brainstorm methods to achieve the following goals.
- 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're feeling stuck, your business is in need of radical change. You can't keep doing the same things over and over and hope the economy, or another miracle, makes your business better. It may surprise you, but the answer can be simple. Decide what to do and commit to doing it. Create a solid business plan with structure, people and systems working together to make your company's performance profitable.
True or False?
- 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 who are held accountable for meeting our goals.
- Every manager, department head and project team has key success factors, with updated scorecards to track financial results, job costs, production and performance.
- Our management team meets 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 operational systems defining how we do business, and everyone follows them.
- We have detailed, written business development, marketing and sales plans.
- We continually seek profitable growth, higher-margin projects and better customers rather than 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.