Words: George Hedley
You have a choice as to how you run and manage your company. You can continue working too hard, controlling every decision, being a low bidder to win more work, struggling to find more help, not knowing your job cost numbers until it is too late, telling crew leaders what to do and where to go daily, making every important decision, and earning low profits. Or you can make a decision to change how you do business, implement a written business plan, install proven systems, distinguish yourself from competitors, stop selling at low prices, build a strong managerial team, and make what I call “Best in Class” profits.
Most construction business owners are overworked and underpaid for the effort they make and the risk they take. They manage by the seat of their pants, try to run their company without systems or controls in place, put out fires all day, fail to delegate, feel the need to hire professionals to help their businesses grow, and are too busy to do what they need to do to make more money. Owners of Best in Class companies, on the other hand, make more money, work less, and their businesses – because they have the right plans, systems and structures in place – are management team-run with loyal, long-term customers who give them lots of profitable work.
So is there a method to building a Best in Class company that works effectively, grows steadily, and makes consistently high profits? The answer is yes. Best in Class companies – the top five to 10 percent – generally follow a similar business plan or blueprint that is proven to work time after time. The rest continue to struggle without a written plan, organizational structure, or the right people or systems in place. The latter therefore have to rely on the owner’s ability to micro-manage business activities, causing their companies to be stuck at the same performance level year after year without improvement. The owner becomes the business, as he or she is the cog in the wheel or the valve that holds back company growth and the ability to become more profitable.
Over time, working as a contractor and professional business coach, I have observed what works, and based on those observations I have developed the BIZ-BUILDER BLUEPRINT Action Plan.
Companies that have dedicated the time and commitment to draft and implement their BIZ-Plans have been able to improve their net profit by as much as five to 10 percent, while taking control of their businesses and developing an accountable and responsible management team capable of and dedicated to improving the company’s long-term growth and performance.
Steps to Implement Your BIZ-BUILDER BLUEPRINT Action Plan
- Realize you are stuck. The owner’s name is the most important box on any company’s organizational chart. As owner, you do lots of work, make most big decisions, tell everyone what to do, and handle all important matters. You are the business, and likely can’t handle any more work yourself. When you come to realize that you may be holding your company back from profitable growth, your company can then start to get “unstuck” and move to the next level.
- Take more risk. To get your business to realize your vision for growth and make Best in Class profits, you’ll have to take more risks, including relinquishing some control and delegating more, hiring, focusing on new customers and projects, and investing in people, systems, technology, and your company’s future.
- Decide to Grow. You can’t get your business to work and make more money unless you decide to make growth a top priority. To grow, you’ll have to stop doing so much of the work yourself and focus on identifying, developing, and selling better project and customer opportunities. To make this happen, you’ll have to build an accountable management team – by hiring the right people and then delegating to them, and by establishing and developing a set of effective structures and systems.
- Draft your BIZ-BUILDER BLUEPRINT. To put it all together, you’ll have to dedicate time (and money) to drafting your strategic business action plan detailing your five-year vision and your company’s purpose, core values, targets, goals, organizational chart, structure, systems, financial plan, business development sales, and marketing plan. You’ll need to include the steps you plan to take to get your business to work the way you want it to. To jump-start, this process, hire a business coach to promote your progress and commit to two- or three-day management team retreats to get your BIZ-Plan on paper.
- Design Your Organizational Structure. To build an organized, accountable, and responsible management team to grow your company, you’ll have to prepare an immediate, short-term, and long-term organizational chart. Your organizational structure should include all the functions needed to run your company, including the management team, responsibilities, tasks, positions, and people to do the work required over the next few years. And for each position, you will provide detailed job descriptions and the particular results for which each person is responsible. Working within a coherent and well organized management structure will transform your job from hands-on controller and doer to coach and leader.
- Hold Regular Team Meetings. Regular strategic and tactical logistics, project, or team meetings are necessary for building a strong, well-managed company. Your management team must meet monthly to review and update the progress of the BIZ-Plan, including the status of each strategic initiative, target, and goal. Financials, systems, estimating, sales, personnel, scorecards, and projects must all be reviewed on a regular basis. Ongoing tactical meetings must also be scheduled and held separately for estimating, sales and marketing, project management, and field crew leaders.
- Install Written BIZ-SYSTEMS. Sound management and consistent operations begin with a clear set of written company guidelines and systems specifying how you want to do business. Construction operations, administration, and production excellence start with complete systems to insure on-budget projects, excellent service, quality workmanship, on-time completion, and a safe workplace. Replace yourself with written systems to get everyone in your company doing things the same way, producing consistent results without your constant supervision and attention. Identify the systems and standards your company needs, write them down, and then implement and monitor their use and effectiveness.
- Track Scorecards. Implement scorecard performance tracking systems for your key numbers, success factors, company and project results, finances, pricing, profit, job cost, and estimating to monitor and track results with timely reporting. Calculate and track progress towards your required sales volume, breakeven point, overhead, fixed cost of doing business, and profit markup to reach your overall goals. Create financial controls and action plans to price, track, and achieve your overhead and profit goals. Install a fully integrated accounting system with income statements, balance sheets, job cost reporting, cash-flow projections, accounts receivable, and payables aging. Use job cost scorecards, crew production measurement systems, work-in-progress and completed contract tracking, and accurate estimating standards.
- Focus on Profitable Growth. Once your company is working the way you want it to, and is organized with systems, structures, a sound management team, and effective people in place, you can move over to the “get work” side of your business. It will now be time to develop a plan to grow your business with better customers and higher margin work against less competition.
- Draft a BIZ-Development, Marketing and Sales Plan. Implement your written plan to find great customers, projects, and opportunities to grow your top and bottom lines. Determine which projects and markets have the most opportunity for success, develop project and customer target lists and tracking systems, and create a marketing and sales calendar. Create an ongoing marketing and sales program to build and maintain loyal repeat customers.
- Differentiate. Set your company apart from the competition, exploit your expertise and market niche, and go after specialty work with high barriers to entry and less competition. Move towards selling higher value versus lower priced but more competitive services. And create strong, trusted relationships with a select group of loyal customers who will give you most of their work.
- Build Equity and Create Wealth. Leverage your success by seeking new markets, other business opportunities, partnerships, and ventures that will build equity, create wealth, and provide passive cash flow and positive income. Use your profitable business as a stepping stone into other strategic alliances, joint ventures, real estate developments, exclusive distribution agreements, investments in real estate or other enterprises such as equipment rental companies, or any additional products or services that complement what your company already does.
- Enjoy the Freedom of Owning a Business that Works! When your business operates the way you want it to, you create the time and financial peace which allow you to enjoy the benefits and freedom to pursue whatever you want with your time, energy, and money. You can invest back into your business and hire better managers, develop more business opportunities, focus on sales, spend more time with your family and friends, or give back and contribute to your church, industry, or community.
Now is the time to get started building a business that grows, makes a profit, and works for you. Put on your hard hat, strap on your tool belt, and get ready to make your vision become a reality. Only you know what you want your business to do for you. Only you are holding it back from reaching its potential. Take a look at where you are today, decide where you want to be in five or ten years, and then determine what steps you need to take in order to get there. Start now by taking the first step – getting out of your comfort zone. Let me know your progress or if you need help taking that first step. Email GH@HardhatPresentations.com to get a template to draft your company’s BIZ-BUILDER Blueprint.
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