We played a lot of touch football when I was around ten years old. The boys from the neighborhood would gather at our local park and choose teams. After a coin toss, one team would kick off to their opponent. The receiving team would have their fastest player catch the ball and run down the field as far as he could without being tackled. Then the offensive team huddled to decide their play for the next down. The quarterback usually called the plays, even though he wasn’t always the smartest player on the team. He was usually the one who was the tallest, fastest, or had the best arm. Obviously, there wasn’t a playbook nor did the teams have time to practice their game plan. Before each down, the inexperienced quarterback gathered the team in a huddle and called plays based on what he thought would work to surprise the opponent. The players were loosely told what position to play, who would run which way, who’s job it was to block, and where they were to go. Not a very good strategy for a winning outcome.
Are you better than a 10 year old?
Think about your company. Is your business strategy better than a neighborhood pickup football game? Do you huddle up before every decision? Do you tell your players what to do before every project? Do they know what to do based on written systems and strategies from your company playbook? A professional football team is a good model to copy for small business owners. Professional teams have a written strategies and playbooks with detailed plays designed to work in every situation they encounter. Do you?
Draft your winning BIZ-Playbook!
A professional team must have all their bases covered to put a winning team on the field plus make as much money as possible. Where should you start to draft a winning game plan?
1. Determine your overall company vision, purpose, mission and core values!
Sit down with your key managers and take time to discuss why you are business and what’s the purpose for owning your company? This exercise will get you focused on the real reason you go to work everyday. I often ask business owners why they are in business. They answer: ‘to make money doing whatever they do like plumbing or construction.’ You are not in business to do plumbing or construction. You are in business to maximize your resources of time, energy and money so you can get the biggest return possible.
A construction company can deliver what the owners want. But, it can be limited in net profit margin potential as it is very competitive and cyclical with thin margins. Construction companies can also create excellent opportunities to build wealth versus building for others. When you build for your own account, it allows for passive income and equity growth. What’s your reason to be in business? To make some money or build wealth?
2. Assign coaching management responsibilities!
When a professional sports team is not winning many games, what happens? They fire the head coach. What else happens? Most of the coaching staff gets let go as well. In order to build a winning team, you must surround yourself with the best managers possible. Excellent managers require high pay to keep them. Last week I was speaking a national construction association. A business owner approached me and stated his goal was to double his company to $40 million in sales over the next four years. He loved selling and wanted to try to find someone who could run the operations side of his company. I asked how much he was willing to pay to give himself more free time to build sales, double his company, and make more profit. He said he was willing to pay $55,000 to $65,000 per year to find a Vice President of Operations. I smiled and said ‘Good luck!” In my opinion, to find the right person would cost him between $90,000 to $140,000 per year.
The problem with small thinkers is that they try to hire cheap and think they can work harder themselves to get ahead. When you hire cheap you hire weak and then you have to fill the gaps, train them, and micro-manage them instead of performing high priority tasks like leading or selling. And guess what else? You don’t make any money and your business doesn’t grow. Make a list of the top 5 positions you need filled with the best possible people you can find at whatever it will cost – sales, estimating, operations, field management, and finance. Next decide which position is needed now and will benefit your company the most. Go out and hire at least one top professional to help your company grow. Then look to the future and do it again and again until your company is growing and maximizing the bottom-line.
3. List your player accountabilities and responsibilities!
Professional sports teams have many people assigned to scouting, training, and managing their players. They realize, in order to win games, it’s all about the players they put on the field. Most construction business owners don’t spend a lot of time scouting, managing or training employees to help them become the best they can be.
To solve this problem, sit down and make a list of all positions and functions you need to operate your company. Next to each position, list out what results each position is accountable for and what they’re accountable to do on a regular basis. Then look at who you have assigned to each position. You’ll find that several positions are filled with yourself or the wrong people. On a professional sports team this almost never happens. The manager of player personnel is always looking to fill each position with the best player possible, even if it means trading away a player for another. And guess what else? The bad players who don’t achieve the expected results are benched or cut from the team quickly. How are you as the manager of player personnel?
4. Design your offensive plays and strategy!
To win more games is simple: score more points than your opponents. In business, what plays will guarantee you win, finish projects on-time and under budget, plus provide excellent service and provide superior quality? I just left the dentist office. While waiting in the chair, I was impressed with the organization and preparation. All of the tools and supplies for my procedure were laid out in the exact order of when the dentist would need them. And my new crowns were sitting in a small box ready to be installed. Prior to my arrival, a technician had prepared the room for my dental work. I am sure they must have used a checklist to get ready. What kind of preparation and checklists do you use to insure your offensive plays work?
Think about where you can lose the most money the fastest. For example, a carpenter forgets to install blocking for future fixture installation. A slab is poured with the wrong concrete design mix, sub-base material, or expansion joint spacing. A foreman proceeds to install extra work without a signed change order. Or a project manager runs a meeting without a standard agenda and forgets to review some urgent approvals in a timely manner. Where have you lost money? Make a list of the plays you need to write out and make them standards in your company.
5. Design your defensive plays and strategy!
And without a good defense, you also can’t win many games. Defensive business strategies are those which insure you don’t get sued or need to hire an attorney to earn your money. We use a checklist on our construction contracts to list out how many days notice is required for things like approvals, changes, notices, changes, etc. We also have a general contract checklist to make sure we don’t miss a clause we won’t want to agree to. We also have a collection policy we follow which includes how we invoice, what we do when not paid, and how to file a lien. What system do you follow when you want to protect your rights or things aren’t going your way?
6. Implement a training program!
Professional sports teams spend a great amount of their time practicing and training. Football players attend a long spring training camp and then practice five or six days a week during the season. In construction, most companies don’t train or practice very often, if at all. They just hire people and throw them into the game and hope for great results. Proper training takes a concentrated effort and a priority to implement a comprehensive training plan with exercises and drills to improve people’s skills.
To start a simple and effective companywide training program, make a list of the top five things each position must do well to win your games. For example, a project manager must be able to organize, manage, and lead meetings. A concrete foreman must be able to insure all the embedded steel is place in the right place before each pour. A bookkeeper must be sure a subcontractor’s invoice is correct, and any change orders have been fully executed prior to payment and funded by the customer. Estimators must be sure they have read the project specifications to insure they have included the correct insurance requirements in their bids. While all of these seem simple, each of them will cost you lots of cash if they are not done properly.
Make training a priority by implementing a weekly 20 minute training session for each department or crew. Pick one or two areas to review with the teams. Then have them practice doing the task on their own with input and coaching. Remember, no train, no gain!
7. Develop an equipment inventory management system!
Imagine being an equipment manager for a professional football team and not keeping an up to date list of what you have, what’s needed to be fixed, and what equipment you’ll need in the future. Without a good equipment inventory management system, your team would eventually show up without enough helmets or uniforms for the next game! Equipment is a valuable part of your team’s success. In your business, employees rely on trucks, skill saws, backhoes, generators, extension cords, and screw guns to get their jobs done. With outdated, broken, or missing tools and equipment, it’s impossible to get the job done efficiently.
Start by making a complete list of all your tools and equipment. Next to each piece, write out the condition, maintenance schedule, and rental value. Then assign someone in your company to be in charge of managing the process for you. The ultimate goal is to keep your crews working efficiently so you can make as much money as possible.
8. Initiate business development plays!
The key to success in any business is customers, and lots of them. Even in professional sports, an empty stadium won’t keep a team on the field very long. What is your sales system to sell the most tickets and fill all your seats to the top? Do you regularly contact your repeat and loyal customers and thank them for their business? Do you have an ongoing program to reach out to potential customers and lure them into buying from you? Professional sports teams have an entire department 100% focused on selling tickets and taking care of their fans. Without a fan appreciation and attraction program, your company will not reach its’ bottom-line potential.
9. Track your financial plays and strategy!
The rubber meets the road on the scoreboard. Did your team win or lose? Without a prominent scoreboard, sports are irrelevant. In your business, score is of utmost importance. What numbers will you keep score of? I suggest every week you spend time reading your business sports page and get to know your numbers: sales, gross profit, net profit, job costs, employee costs, equipment costs, receivables, payables, bid-hit ratio, and markup trends. Without a clear knowledge of your financial score, you can’t judge how well your team is playing the game.
Play business like a sport.
Business is more fun when you manage like a professional sports team owner or head coach. Every day ask yourself what decisions you need to make and how would a coach go about making the right decision. In order to win, you’ve got to be working on all nine cylinders described above. Without any of these chapters in your playbook, you’ll eventually lose more games than you’ll win.
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