The Right Team is the Infrastructure Required to Grow Your Company
Growing a construction business at a rapid pace can be extremely profitable. It can also be deadly.
If you have a team in place capable of managing more work than you currently have, when growth occurs, you are in a great position to profit from the increased workload. However, if you do not have the proper team in place, and growth occurs, it can be a disaster in the making.
When you pour gas through a funnel and into a lawnmower, you can only pour as fast as the throat at the bottom of the funnel is designed to take the gas. When you try to force more gas in than the funnel will take, it will overflow and could catch the lawnmower on fire. Especially, if your pouring the gas while the motor is running.
In a business context, the bottom of the funnel is your infrastructure. Your infrastructure is the team you have in place operating the business with capacity remaining to accept a greater amount of work. Like pouring gas into a lawnmower, you must build your infrastructure (throat of the funnel) big enough to accept future work, as you will be pouring a huge amount of gas into the funnel. And, you must build the infrastructure while the business is running.
Wolf Creek Contracting (WCC), our general contracting (GC) company, will double sales from $14 million in 2017 to $28 million in 2018. If you read my contractor tip last month on “How Your 12-Month Rolling Backlog affects Your Yearly Sales Goal,” it explains how growing this fast is inevitable for as of the middle of April, our backlog has increased to $30 million.
So, is it possible WCC can pull off double digit growth over a 12-month period without burning the place down due to taking on too much work or pouring too much gas in the funnel?
While there are no guarantees in the construction business, I believe the team led by my partner Howard Offenberger is poised to pull it off beautifully. Howard has built an infrastructure with the capacity to handle the growth he is about to experience. And, he never waited to get the work before building this tremendous team. Of course, he will need to hire more great talent along the way, but the infrastructure is in place to support the growth.
I am fortunate that the managers at our three other companies have built strong infrastructures (funnels with big throats) poised for growth as well. Lang Masonry Contractors (LMC), headed up by James “Hoss” Hoskinson, has grown from $12 million to over $20 million the last two years while maintaining fantastic profit margins. Again, without the infrastructure in place to accept the growth, LMC could have burned down.
So, here’s what good construction infrastructure, or a strong construction team, looks like:
- Owners/Managers: That possess tremendous people skills and exhibit passion for their team. Technical skills are important as well, but the construction business is a people business, so people skills are more important to ensure the long-term success of a construction company.
- Accounting:Staff experienced with construction cost accounting. If you don’t have one on payroll, make sure you are using an outside firm that can provide detailed monthly profit and loss statements for you. The month reported should be received by the 20thof the following month. Make sure the accountant explains in detail how your company is performing on a monthly basis. This is vital even for low volume contractors.
- Estimator: With solid experience in delivering top quality estimates. If the estimate isn’t right up front, an adverse situation could be created making it impossible to bring a job in profitably.
- Project Manager (PM): Experienced completing projects on time and within budget.
- Foremen/Superintendents: Responsible for day to day jobsite activities and reports to the PM.
- Field workers: Fairly compensated hands with market-rate benefit packages is critical to operational success.
- Human Resource Director: Ensures employee compensation and benefits are properly administered each week.
For smaller companies, owners or managers may handle all of these functions. However, it doesn’t make any of them less important to the success of the operation.
Focus on building your infrastructure now by getting the right people in these critical areas of your operation. Once you have right people in the right positions, you are poised for profitable growth.
Damian Lang is CEO at Lang Masonry Contractors, Wolf Creek Construction, Malta Dynamics, and EZG Manufacturing. To view the products and equipment his companies created to make jobsites more efficient, visit his websites at ezgmfg.com or maltadynamics.com. To receive his free e-newsletters or to speak with Damian on his management systems or products, email:firstname.lastname@example.org or call 740-749-3512.