Words: Corey Adams
What do you think the largest cost in the construction industry is? What if the largest cost in our industry was something you could not see? As many of us were, I was always taught that labor was the largest cost of a project. Materials are mostly a fixed, predictable cost, but labor was the line item that could make or break us. But is it the largest cost?
During my climb from 16-year-old laborer/gopher to now owning my own construction company, I have driven myself crazy trying to control all the costs associated with the industry. My quest led me to a realization that changed my perspective completely. You see, the largest cost that a construction company faces is not seen. It is not a line item on a P & L, and not quantifiable.
I found that the largest cost is the opportunity cost.
Opportunity cost is the time, income, or success that we miss out on because we are focused on something else. The old saying, “stepping over dollars to pick up dimes,” hits the nail on the head, and we all do it. We get so focused on a task, business model, or tradition that we lose out on opportunities.
Broken down to its’ simplest form, the opportunity cost is mostly a prioritization problem. We get tied up in projects and tasks that have such little effect on our bottom line that something of high value slips through the cracks. In fact, most of the tasks we do in a day have no bearing on that day’s profits. They are leftover traditions of how we were taught business is “supposed to work.”
Whenever a task comes across my desk, I ask myself, “what happens if I do nothing?” This helps me prioritize the task for the day. You will quickly find that there are more than a couple of tasks during your day that has no negative effects if they are ignored. This also assists with another essential function of business: delegation.
There are many tasks in business that have little effect on the bottom line but need to be done anyway. Proper delegation takes these tasks off your plate and frees up your time to focus on the opportunities that are available. Many business owners get caught in the mental trap of “if you want it done right, you’ve got to do it yourself.” This is counterproductive to business growth, and profit.
The daily grind of business ownership is not something for the faint of heart. Most days are covered up with mounds of tedious tasks that are necessary for a business to survive but do not deliver any excitement. I remember when we first started our business, we were excited to face the day. I was excited because every new day was filled with opportunity. New clients, new projects, and daily progress. Progress is exciting, contagious, and euphoric.
Business owners should be focused on growth strategies, not low-profit tasks. This keeps our companies fresh, exciting, and poised to take advantage of any opportunity that comes our way. Prioritize and delegate accordingly. If a task has little effect on the bottom line, does it matter if it is done perfectly, or at all?
Missing out on high-profit opportunities will cost us more than we will ever know.