As construction companies grow from $1 million to $5 million to $10 million or higher in annual sales, the owner’s or president’s role grows and changes right along with the increasing number of employees, projects, bids, contracts, customers, fires, and issues to handle. As a contractor business coach, company owners typically call me for help when they have grown past their ability to effectively manage all the challenges themselves as the leader of their expanding business. The overloaded owner is at a point where they have too many responsibilities, tasks, roles, and accountabilities to keep all the balls in the air and their company working like a well-oiled machine. In fact, they often get out of control trying to do too much themselves and trying to supervise and schedule too many projects, process, systems, crews, estimates, and commitments.
To make matters worse at this stage of business growth, most employees think the owner is their boss. Most customers, subcontractors and suppliers want to have direct access and only talk to the owner about important matters, contracts, pricing, or other issues small and large. The owner is still pricing most of the estimates, scheduling crews, and making sure jobs stay on budget. Often times I see where a company has grown fifty percent and the overhead, management team, and number of field supervisors has remained at the same level. This is causing even more stress on the owner as everything can’t get done as it should.
When companies grow faster than their staff, structure, systems, and ability, the next thing that happens is finances can spiral out of control. The owner doesn’t know the job costs or have a clue if they’re making any money. They run in circles faster and faster, and work twice as hard for less and less money, going nowhere. The challenges of business ownership continue to mount.
Overloaded owners stop progress!
There are so many details and so much to handle being a growing contractor. The more you do, the further behind you are. You get bogged down, stuck, inefficient, and ineffective. Things take longer to finish. Ever-increasing paperwork and demands get in the way of doing things right. And you only have enough time to fix field problems and put out fires that are always flaring up. You have to make all the decisions for everyone and try to do all the important tasks yourself. And you still won’t delegate important responsibilities to your team. And to make matters worse, you don’t have time to hire help and don’t want to pay top dollar to find professional managers who can run your field, mange your projects, price your bids, or implement an integrated job cost and accounting system.
When you’re busy, you don’t have time to find higher margin work, make good decisions, improve customer relationships, or offer more than your competitors. So, you continue to run faster on the treadmill doing what you always done – selling low prices to compete, while knowing you’ll suffer the consequences later. Everyone likes you when you’re operating at overload capacity. You buy materials from the same suppliers without getting additional quotes, hire the same subcontractors over and over instead of getting more bids, and you keep field employees working overtime instead of hiring more workers. You’re totally stressed, frustrated, and don’t know what to do to fix it. Your life is out of balance, your business is out of control, your company consumes your every waking moment, and you aren’t making enough money to make it worthwhile. And even your spouse or family keeps telling you to do something different.
What should the owner’s role be to get to the next level?
When your company was smaller, it had been easy to act as the ring leader, schedule crews, supervise workers, order materials, meet with inspectors, and work with customers to keep them happy. But now it isn’t happening and customers demand more meetings, faster service, better prices, more paperwork, and more of your time. What should you do to take charge of you company and get it to become efficient, effective, and profitable as it grows?
People tend to do what they’re most comfortable doing! People know what they should do to achieve the results they want, but tend to do what they like to do rather than what they should do. The bottom-line results your business achieves are the number one indicator of your effectiveness and how you spend your time and your ability to build a profitable company. Your priorities determine the importance you actually give to on-time schedules, safety, quality workmanship, finances, operational systems, motivating employees, sales, taking customers to lunch and your leadership. If you’re not getting the results you want, there’s something wrong! And chances are, it’s not your people, subcontractors, suppliers, competition, customers, or the economy. It’s you!
Decide what the owner should do.
- What owner’s job description, position, or role will bring the highest return?
- What is the owner best at or want to do going forward?
- What does the owner want to stop doing and doesn’t enjoy?
- What does the owner never want to do again?
- What roles, accountabilities, responsibilities, and tasks should the owner focus on as their priority?
Most construction business owners / president is the best person to:
- Manage the overall company leadership and management team to insure they are accountable for meeting company and project goals.
- Most owners should be the ‘get and win work’ person accountable for business development, customer relationships, marketing, and sales.
- Meet with customers and convince them to hire their company versus supervising, running, and doing the work.
- Based on the company size, the owner can also manage the ‘price work’ role by supervising the estimator by reviewing final bid estimates, but not being the estimator doing bids.
- Provide overall financial leadership, know the numbers, and oversee the accounting manager and finance department performance.
- Provide leadership, innovation, direction, motivation, vision, wisdom, coaching, and troubleshooting.
- Hold managers accountable and responsible to achieve expected results without micro-managing and making decisions for them.
- Be involved with (but not doing) the recruitment and talent development process.
Most construction business owners / president should NOT:
- Manage or run construction operations, projects, or field crew and equipment scheduling from start to finish.
- Project manage any jobs including procurement, scheduling, ordering, coordinating, negotiating subcontracts, approving project invoices, dealing with project issues or change orders, handling routine customer issues, or getting involved with subcontractors or suppliers.
- Supervise the field and crews including scheduling, ordering materials, managing equipment, logistics, reviewing, firing, pay raises, or dealing with personnel issues.
The answer is up to you!
After exploring all these factors outlined above, remember bottom-line RESULTS are the number one indicator of your abilities as the leader of your company, and that includes your ability to delegate and let go. As your company grows, you will reach your personal limits and realize you can’t handle much more work than you already have going. Your calendar is full, your day is packed, you’re working twelve or more hours seven days a week, and it gets more stressful every day. You’re unable to keep up with all the tasks, orders, contracts, inspections, meetings, demands, employee questions, paperwork, and problems you have to take care of. Your ‘To-Do List’ is too big, and you have reached the level of what you control can and do yourself.
Most companies stop growing when the business owner reaches their maximum level of what they can DO themselves, micromanage, supervise, and control. Another bad thing happens at the ‘STUCK’ level – all you have time for is to DO work and you don’t have time to go out and GET enough work to keep your company growing. This downward cycle eventually destroys a potentially great company. Obviously, you can’t DO more work yourself. You have to free yourself from day-to-day supervisory activities that bog you down and hold your company back.
Put your priority plan into action!
Now’s the time to make some decisions to solve your priority problems. To help with your decision, email GH@HardhatPresentations.com to get your copy of ‘Org Chart & Job Descriptions!’ Decide what roles and responsibilities you should focus on exclusively. Decide what activities and assignments you need to let go of, delegate, and stop doing. Decide what new positions you need to create to allow your company to grow, profit, and reach your goals. And decide what people you can hire or promote now to move your company to the next level.
About the Author
George Hedley CPBC is a certified professional construction BIZCOACH and popular speaker. He helps contractors build profitable companies, grow, get organized, improve field productivity, and get their businesses to work. He is the author of “Get Your Construction Business To Always Make A Profit!” available on Amazon.com. To start a BIZCOACH program, sign-up for his newsletter, attend a webinar or workshop, or get a discount at HardhatBIZSCHOOL.com online university, visit HardhatBIZCOACH.com or e-mail GH@HardhatBIZCOACH.com.