Over the last several years as a contractor business coach, I have closely observed and gotten to know many highly successful construction company owners. Via interviewing them for these articles, coaching them one-on-one, and working with them in our Construction Business Owner BIZGROUPS, several common factors have emerged as to what makes them become the best in their markets, extremely profitable, and continuously building wealth.
Steps To Becoming A Wealthy Contractor!
- Focused On Purpose & Priorities
People who know where they are going, have clear direction and purpose in their personal and professional lives. This path keeps them focused on their primary priorities and the steps required to draft a plan to get them there. When focused, they don’t get sidetracked chasing goals to keep busy or do more work that doesn’t provide a high financial and personal return. When you do work for the wrong customers who don’t respect or value what you offer and the services you provide, you don’t give them your best, you spend too much time stuck in the mud, and don’t enjoy the journey. This difficult existence results in owning and managing a company that isn’t fun, difficult to manage, and off-purpose.
Wealthy construction business owners design their companies to provide value-added help to customers who appreciate what they do and will gladly pay top dollar for their expertise and passion. Just because your talent might be excellent craftsmanship or on-time completion, doesn’t mean you can build a great business doing cheap work for unfair or slow-paying customers who always go with the lowest price. What turns you on and get you excited? Who do you like to help the most? What were you born to do? When you are ‘on-fire’ doing what you love and helping those who you enjoy working with, your business will explode. And guess what follows? Your personal life. Are you on-purpose and putting your priorities first? If not, your business will flounder and continue to spiral downward towards a meaningless existence. On-purpose is a lever for peak performance, profits, significance, meaning, and building wealth.
- BIG Written Goals
Every top performing company has a regular system to set, track, and monitor their written goals. Unfortunately, based on a survey I performed of over 2,500 companies, less than 20% of all business owners write, track and set performance goals. According to another survey of the Construction Financial Management Association I read, companies with written goals and strategic plans achieve 33% higher profits than those without written goals and targets. The higher you aim, the higher you go. Accepting the status-quo or waiting for something to change, is a cop-out decision to do nothing different while you hope your situation might get better.
Every successful business I know of, takes one or two days every year to hold a management team retreat where they develop and write out their overall strategy, goals, and implementation plans for the upcoming year. When you stop to think and plan, the vision becomes clear. When all you do is work, your vision stays repressed deep within your brain and can’t come out or get creative. Could you imagine a professional sports team where the coaches don’t take time to look at their game films to plan a strategy to beat their next opponent? Business is the same if you want to win. For example, if your goal is to grow your company 25% next year, writing down the goal will force you to develop an action plan to make it happen. And then when you track your progress every month, you can make the necessary adjustments in your customer targets, marketing strategy, and sales tactics.
- Strong Management Team
It’s impossible to build a great company without a great management team. When entrepreneurs start their businesses, they try to do most of the important work themselves. After a while, they hire a few employees to fill in the gaps and take some of their workload. This solves the short-term problem until they grow to the next level where they get stressed-out, maxed-out, and can’t do anymore themselves. At this point, business owners must make a decision – grow or shrink back to their level of comfort and control. Only top business owners get beyond micro-managing what they can control themselves and letting go of daily decisions by hiring strong people and building an accountability and responsibility system to allow them to grow.
Great companies have great accountable and responsible managers. What does your company need next to grow? Maybe it’s a professional office manager, estimator, project manager, general superintendent, or salesperson. Whatever you need, hire the best people who can help your company move to the next level. By investing a few more dollars, your management team will begin to evolve into a group who can eventually be responsible to find and do all the work you are doing now. This will allow you to stay focused on the important work only you can do, like building sales, creating new services, or investing in expansion plans. It’s simple: no management team = no growth, no profits, and no wealth building opportunities.
- Regular Accountability Meetings
Every successful business has regular systems to communicate with their managers and employees and keep them focused on the big picture. A regular meeting schedule with an agenda comprised of your top priorities will keep you and your team focused on what really matters. The top companies focus on achieving results and measuring actual job performance in their weekly meetings. These contractors have weekly Superintendent and Foremen meetings to review productivity goals, targets, and accomplishments over the past week, and discuss plans for the upcoming week. This keeps their field crews focused on achieving things that matter most including field production, budget versus actual, achieving schedule milestones, safety goals, and quality targets.
Estimating and business development managers get together every Monday to review their customer targets, bid-hit success, upcoming proposals, and strategies to develop loyal customer relationships. Project managers get together every month to review their jobs cost updates, receivables, cash-flow issues, schedule milestones, project issues, procurement, submittal progress, and change orders on every project. These regular meetings focus on the big picture and help them move towards accomplishing project and overall company goals.
- Invest In Yourself!
Successful people hang around successful people. A common thread amongst top business owners is their desire to continually improve and learn new and better ways to do business and live their lives. They get together often with mentors and associates to talk about business opportunities, issues, and critical choices. They are involved in industry associations and attend annual conventions for the training workshops and networking, to learn from their peers, to look at the latest equipment and software, and seek new ideas how to build their companies. Most successful business owners also read lots of books and trade magazines to stay abreast of the latest trends and innovative ideas. Many of them are also involved as members of mastermind peer groups with other business owners who meet regularly together to discuss their issues, challenges, plans, and decisions. The bottom-line is investing in yourself is the best way to get a return. When you operate in a vacuum, you are the only one you talk to and get advice from. Not a good choice of mentors!
- Don’t Sell Low Price!
It is hard to be at the top of the class by trying to make a big profit competing against too many competitors who only get chosen based on their lowest price. When business is plentiful and there is a lot of work to go around, you don’t have to market or sell to get work, develop customer relationships, or have a differentiating factor that set your company apart from the competition.
Contractors who focus on quality customers who award business based on working with companies they want to work with, have to be better than their competitors, but make more money. It’s harder and takes more effort to build customer relationships, build effective business development systems, or have market niches that set your company apart. Even during tough economic times, top companies have leveraged their excellent work and service into profits by moving from selling low price to focusing on customers who pay for and award contracts based on trust, performance, and exceptional knowledge or technical skills.
- Multiple Streams Of Income
If the revenue faucet shuts off and there aren’t any more good jobs to bid, what’s left to do, if that’s all you’ve ever done? While the faucet is flowing, most companies only do what they know how to do assuming the flow will continue forever. But, top companies invest some of their time and talent, and look for additional ways to find other sources of income which will provide a steady flow of cash during both good and bad times. Wealthy contractors realize that one main reason you own a business is to create wealth.
Wealth is defined as an investment or asset that produces a positive cash-flow without having to work full time running and operating it. Wealthy contractors take a portion of their profits and reinvest them into income producing ventures like rental properties, service businesses, and manufacturing companies. These wealthy business owners now have part-time responsibilities managing these investments which continually produce ongoing income for the owners with little time or effort. What are you doing about creating a portfolio of wealth building investments? As I say often: “Buy your first rental property before your second truck!”
- Give More!
Getting to know wealthy business owners, it becomes apparent that the more you give, the more you get. Great people are involved in some kind of charity work in their community. They dedicate time and money to help other people. They are leaders for a cause or organization with goals to change people’s lives or make the world a better place. Business owners who don’t give are missing out on the blessings life and the benefits of what helping others has to offer. The excuse that you’re too busy or too poor to find time or money to give, leaves one empty and unfulfilled. Exciting people do exciting things with their wealth. Wealth is more than money and possessions. It is a way of life that enriches yourself as you enrich others. Becoming a wealthy business owner starts with helping others.
As a professional construction BIZCOACH and popular industry speaker, George Hedley helps contractors increase profits, grow and get their companies to work! He is the best-selling author of “Get Your Construction Business To Always Make A Profit!” available at his online bookstore at www.HardhatPresentations.com. E-mail GH@HardhatPresentations.com to sign-up for his free e-newsletter, join a peer mastermind BIZGROUP, attend a BIZ-BUILDER Boot Camp, implement the BIZ-BUILDER BLUEPRINT, or get a discount for online courses at www.HardhatBizSchool.com.
George Hedley CSP CPBC
Phone: (800) 851-8553