Most construction business owners have the same goal. They all want to grow, earn high profit margins, retain great customers, be organized and in control, have a responsible management team, own income-producing investments and, after all that, have the time to enjoy the benefits of their hard work. Unfortunately, most know the results they want but they won’t make the tough decisions necessary to achieve their goals.
Are you willing to analyze why your business is in the place it is and what it needs to move to the next level? Many contractors conduct the same actions year after year with the same systems, the same customers and the same leadership strategies. And then they can’t figure out what to do to get out of their respective ruts.
By working closely with business owners who have made the changes necessary to improve their margins, find better customers, implement machine-like systems, hire strong managers and achieve great results, I have watched these average companies become best-in-class contractors. You must commit to running your business differently. You must also spend money on experienced, key people and managers, delegate and start a proactive sales and new-customer target program.
Take a look at the traits of companies at each level of their growth, listed below. Review which traits your company has implemented in each of the key areas of success required to run your business.
New Construction Business Traits
- Vision - Owner wants a successful company
- Goals - Keep busy and do a good job
- Financial goals - Make as much money as possible
- Business plan - No written business plan, targets or goals
- Owner’s role - Makes most decisions
- Scorecards - No regular, formal results-tracking systems
- People management - Owner makes all staffing decisions
- Structure - No clear chain of command
- Written systems - No written systems
- Estimates - Owner unsure of actual job costs
- Job-cost tracking - No regular job-cost tracking
- Financials - Owner does not know the numbers
- Accounting - Owner manages and approves all bills
- Management team - None; owner makes all decisions
- Project management - Owner manages most projects
- Field supervision - Supervisor reports to owner
- Field crews - Owner schedules and directs crews
- Sales - Wait for referrals or customers to call
- Win contracts - Sell low prices to win most work
- Regular meetings - Owner too busy for meetings
- Technology - Little to no technology
- Wealth and investments - None
Growing Construction Business Traits
- Vision - Owner wants to earn more return on investment
- Goals - Get business to work better
- Financial goals - Work harder to make more money
- Business plan - Starting to track targets and goals
- Owner’s role - Delegating to responsible people
- Scorecards - Developing company and project scorecards
- People management - Written job descriptions
- Structure - Drafting organizational chart and discussing job functions
- Written systems - Installing operational systems
- Estimates - Starting job-cost history
- Job-cost tracking - Tracking monthly and completed jobs
- Financials - Reviewing monthly income statement
- Accounting - Hiring full-charge bookkeeper
- Management team - Hiring project manager and/or estimator
- Project management - Project manager oversees jobs
- Field supervision - Hiring job supervisors
- Field crews - Supervisor makes most field decisions
- Sales - Getting on bid lists and using bid plan services
- Win contracts - Bidding more jobs to more customers
- Regular meetings - Holding weekly staff meeting
- Technology - Implemented low-priced accounting system
- Wealth and investments - In beginning planning phase
Best-In-Class Construction Business Traits
- Vision - Written five-year vision, mission and core values
- Goals - Written company targets and goals, tracked monthly
- Financial goals - Making high profit margins and steady growth
- Business plan - Updated, comprehensive, strategic business plan
- Owner’s role - Focusing on priorities, growth and investments
- Scorecards - Tracking scorecards for all projects, crews and people
- People management - 100-percent accountable for expected results
- Structure - Documented organizational chart with functions
- Written systems - Updated standard systems and playbook
- Estimates - Accurate project job-cost history library
- Job-cost tracking - Updated and tracked weekly
- Financials - Accurate, updated financials and tracking
- Accounting - Assists company in achieving targets and goals
- Management team - Management team runs company
- Project management - 100-percent accountable for project results
- Field supervision - 100-percent accountable for field results
- Field crews – 100-percent accountable for production, project schedule and quality
- Sales - Written sales action plan and customer targets
- Win contracts - Focus on high-profit contracts and customers
- Regular meetings - Scheduled field, project and management meetings
- Technology - Fully integrated accounting, estimating and PM software
- Wealth and investments - Ongoing wealth-building investment plan
Where does your company stand on the journey to becoming a best-in-class construction business?
Top-performing construction companies, whether they are large or small, generally have all the requirements in place to make the highest margins and stay at the top. The low-performing companies make excuses for why they don’t do what they need to do to move to the next level. What do you need to do to start the process?
