Whether it's right or wrong, most construction business owners continue to run their projects and manage their companies the same way they always have. When the economy was strong, there was enough work to manage your company like everyone else and still produce a reasonable margin. As the economy worsened, everyone cut their expenses to stay alive. When the market improved, most owners went back to their old business models. But why? Those old business models won't deliver the same results they once did.
If you are still doing business like you did years ago, you are probably discovering that the same customers, project types, operational systems and processes will not deliver the results you want. Companies that use new work opportunities to improve how they do business are becoming the new industry leaders in performance and results. Review the checklist on page 11 and use real dates (mm/yy) to see when the last time you assessed these areas of business was in order to learn where there is room for improvement.
I've received lots of emails asking what company owners should do as the market improves, their profit margin shrinks and the stress level increases. To solve this problem, you first have to realize a quick bandage won't heal a deep wound. You also can't blame your circumstances on the competition, customers, economy or your people. A company's leader is often the one resisting new ideas or refusing to make real change.
Company owners are responsible for everything in their business. Weak leaders blame poor results on circumstances beyond their control. Effective leaders realize that they might be the problem and need to change how they lead.
Take Sears department store for example. Often, you will find their parking lots nearly empty, while the rest of the shopping center is jammed full. Sears could blame their decline on Wal-Mart, Target, Amazon or the Internet. But in reality, the leaders of Sears were stuck in the past and made decisions to do nothing about their old business model, customers, image, products, services, technology, strategy and pricing. Sears leaders likely hoped that their new competition would go away and customers would keep buying from a business that was out of touch with the new economy. The leaders didn't do what they needed to do, and now they continue to scramble to stay in business and become profitable again.
Getting great results in this faster, competitive economy is an indicator of the leader's vision and innovation. Real leaders make quick decisions to adjust and stay ahead of changing business climates. Effective leaders invest in new software, better people, training, clear and accountable job descriptions, upgraded systems, scorecard tracking systems, performance-based pay, production standards, ongoing education and consultants to help them get to the next level.
Effective leaders realize they must first have the courage to change themselves before anyone else will follow their lead. They must have a clear vision of where they are going and be willing to try new markets, different customers, additional project types, new technology and standardized systems. Over 90 percent of employees rate their company's leadership below excellent due to many factors, which include tolerating poor performers, allowing some people todisregard company systems and standards, failing accountability and tolerating a continuous lack of truthful communication.
Every year, I coach a lot of contractors and speak at many meetings. The common challenges are how to get organized, build a strong management team, grow with better customers against less competition and make a higher profit margin.
This only starts when the business leader has a dynamic, focused vision that his or her team can get excited about achieving. People want to follow a leader on a positive mission, who possesses a clear vision of where they want to be into the future.
People won't follow someone who is negative and complains about problems, teams, performance, results, competitors and why they can't compete or make enough money. Effective leaders really lead, stand up, seek ideas, look for new strategies to implement and then proclaim, "Here's where we're going, the changes we need to make and how we'll make it happen."
When I coach business owners, we have to decide together what needs to be changed. Often, I ask the company's employees and managers to complete the confidential "Company Improvement Survey" below to gather input and ideas.
Company Improvement Survey
- What is right or works well in our company currently?
- What is wrong, doesn't work, needs to improve or needs to be fixed?
- What is missing in our company?
- What is the biggest challenge you face doing your job?
- If you owned the company, what would you change or do differently?
- What are your ideas to improve the following:
- Project results, quality, field productivity or profits
- Service, scheduling or on-time completion
- Teamwork, accountability, responsibility or safety
- Your supervisor or company owner's performance
- Your performance
Getting the results you want for your company starts with the decision to change and the willingness to do what it takes to transform your company into a high-profit, high-results machine.
Go make change happen! You can sit around and wait, or you can stand up and get your company moving toward results. What's your decision? Only you can choose to accept responsibility for results and do what it takes to realize your company's future profits.
When Was the Last Time You?
__/__ Changed your standard bid proposal
__/__ Added a weekly supervisor meeting
__/__ Revamped your standard company chart of accounts to match how you bid work
__/__ Updated your labor burden rate
__/__ Assessed your equipment charges versus rental companies' charges
__/__ Reviewed your production rates to make sure they are improving
__/__ Added a few new customer targets
__/__ Implemented a new marketing or sales strategy to achieve better margins
__/__ Fired a customer who doesn't give you any profitable work
__/__ Examined who is really responsible for finishing projects on time and under budget
__/__Delegated more responsibilities to one of your managers