I recently returned from a trip, throughout which I coached clients from four different construction companies. The owners of these companies come from different backgrounds, have different goals for their businesses, employ teams with varying roles and personalities and entertain projects of different sizes. However, during our conversations together, we found there to be one common denominator: They are all busy, but they are all not earning profits at the pace they could be.
What’s Not Working?
These business owners have increased their personal workloads, maintaining more of the day-to-day operations than they should. They have stretched most of their managers and staff beyond their abilities to proactively head up projects and effectively manage field productivity to maximize their profit potential.
Additionally, the company owners take on too much of the workload themselves, including performing estimating and takeoffs, supervising, scheduling crews, ordering materials, managing projects, and even preparing the monthly progress payment invoices in their spare time.
One of these clients was so busy that he had a stack of subcontractor bills on his desk he hadn’t had time to approve, thus causing subs to not show up when needed.
Another company was estimating their labor costs and then adding 30 percent in additional dollars to cover for their inability to go back and check how many labor hours it was actually taking to complete the work.
Many also had repeat customers who wanted them to build projects, but they couldn’t find the time to meet with the customers or provide proposals.
Don’t Lose Focus
Another common problem among the group was that these company owners were not focused on the big picture. Having their own schedules bogged down with small, trivial tasks—instead of managing their companies’ bottom lines—forced these owners to lose focus on the future. Constantly handling the minutiae of bookkeeping or correcting change orders ( as a project manager should) easily steals critical hours from the workday.
Being too busy costs owners the time, entrepreneurial drive and focus they need to create opportunities for growth and generate the chance to increase profits, cutting their valued leadership in half. Any time this is the case, the business and its teams fall short of reaching their full potential.
Focus on The End Result
Being the owner of a construction business is not about keeping busy, regulating the books and spending, hiring a scarce team of a few people, providing for your family, paying taxes, or any number of other daily concerns facing the business. As the owner of a construction business, you agree to deliver what the customer wants.
I’ve never met a business owner whose goals are to work more hours, worry about more details, make more decisions or fight for more cash.
Most owners want to build a business that delivers substantial results, including best-in-class profits, strong business equity and high-margin revenues, because these results deliver the freedom and wealth owners desire before they are too far along in their careers to achieve it. Significant profits and steady growth also allow a company to:
- Build a strong management team
- Win employee buy-in and build a team mentality
- Develop dependable superintendents and foremen
- Generate accurate estimating without missed items
- Implement weekly field job-cost tracking scorecards
- Eliminate profit fade
- Attain on-budget labor production
- Stick to project schedules
- Procure quality workmanship
- Manage change orders proactively
- Reach a safety experience modification rate below 100
- Obtain high-margin, loyal customers
- Make investments that provide passive monthly income
No business owner gets rich handling the little things that don’t deliver big results. Spending your time focused on the following will allow your company to achieve the results you want:
- Winning the work instead of actually doing the work
- Finding reliable employees instead of coping with underachievers
- Meeting with potential customers instead of negotiating with suppliers
- Implementing an accurate job-cost system instead of scheduling crews
- Coaching emerging leaders instead of managing everyone yourself
When you’re focused on tying up all the small tasks, the big-picture items fall to the wayside. Overworked business owners tend to do too much themselves, as they often don’t trust others with big decisions.
Wealthy business owners who focus on the top priorities have a team of accountable managers dedicated to winning the right work, operating the business profitably and providing excellent financial management, which delivers results and allows them to enjoy their success.
Prioritize Carefully
During our strategic coaching session, the aforementioned four companies identified over 100 company aspects they would like to improve or eliminate during the next 12 months. Next, they prioritized the most important items that would make the biggest impacts on company results. These items then became goals for the upcoming year. Finally, we determined which three items would be their top priorities. Almost always, the same priorities appear at the tops of these lists, such as:
- Increase net profits to reach best-in-class level
- Develop a strong management team
- Eliminate profit margin fade from bid to final job cost
- Develop a job-cost tracking system to ensure accurate labor production rates
- Generate accurate estimates without missed items
- Develop accurate and timely accounting and financial reporting systems
- Chart organizational structure with a chain of command, levels of authority and written job descriptions
- Fill empty positions with reliable employees
- Develop a proactive marketing and sales strategy
- Start a wealth-building investment program
If you have more than three top priorities, then you have too many. Companies that focus on a few priorities improve their bottom lines quickly and achieve results. These priorities can make or break your business. Select your top three, and start developing and implementing action plans to make them a reality.
