Q: What business practices do successful contractors have in common?
A: Over the last year, I have gotten to know several highly profitable and successful construction company owners. They all seem to share several common traits. Follow their lead to grow your business.
Establish Goals
These business owners have a clear direction and purpose for their business. This path keeps them focused on their primary priorities and prevents them from getting sidetracked on work that does not provide a high financial return.
Unfortunately, many construction business owners do not have established goals. I surveyed over 2,500 construction companies, and less than 20 percent of those business owners said they write, track and set performance goals.
Every successful business I know takes one or two days every year to hold a management retreat to develop and write goals and implementation plans for the upcoming year. Your vision will become clear when you take time to do this.
For instance, if you have a goal to grow your company 25 percent next year, writing down the goal will force you to develop an action plan to make it happen. As you track your progress every month, you can make necessary adjustments in your customer targets, marketing strategy and sales tactics.
Develop Strong Managers
You cannot build a profitable company without a solid management team. Top business owners hire strong people to make daily decisions, and they build an accountability and responsibility system to allow their employees to develop with the company.
Determine what type of employee you need to hire next to grow your business—for instance, do you need a professional office manager, estimator, project manager or salesperson? Investing in a strong management team will give you time to focus on other important business issues, such as building sales, creating new services or investing in expansion plans.
Conduct Accountability Meetings
Every successful business has regular meetings to communicate with their managers and employees and keep them focused on the big picture. Top companies focus on achieving results and measure actual job performance in their weekly meetings. These contractors have weekly superintendent and foremen meetings to review productivity goals and accomplishments over the past week and discuss plans for the upcoming week. This keeps their field crews focused on field production, budget versus actual, schedule milestones, safety goals and quality targets.
Your estimating and business development managers should meet every Monday to review their customer targets, bid-hit success ratio, upcoming proposals and strategies to develop loyal customer relationships.
Project managers should meet every month to review their job-cost updates, receivables, cash-flow problems, schedule milestones, project issues, procurement process, submittal progress and change orders on every project. These regular meetings will help your team accomplish project and company goals.
Invest in Yourself
Top business owners have a desire to continually improve and learn about better ways to do business. They talk with their mentors and associates about new business opportunities, issues and critical decisions.They stay involved in industry associations and attend annual conventions for training workshops and networking opportunities. This gives them an opportunity to learn from their peers, see the latest equipment and software and find new ways to build business. Smart business owners also read books and trade magazines to keep up with the latest trends and learn innovative ideas.
Sell Your Service
Successful business owners have customers who pay for their work based on trust, performance and exceptional knowledge, rather than low price. To attract and retain customers, you must build customer relationships, create effective business development systems and have a market niche that sets your company apart.
Create Additional Income
Top business owners have survived the economy by finding additional income sources that can provide a steady cash flow during good and bad times. These business owners took a portion of their profits and reinvested it into income-producing ventures like rental properties, service businesses and manufacturing companies. They have part-time responsibilities managing these investments, and in the meantime, the investments continually produce ongoing income.
Construction Business Owner, December 2011
