Building a profitable construction business starts with knowing what you want, designing a business plan to reach those goals and keeping track of progress. Working hard and keeping busy is not your long-term goal. Finding more jobs to bid, winning more contracts, building more efficiently, being more productive and having a little money left over at the end of the year are good goals, but they only keep you focused on the day-to-day responsibilities of running a business.
Instead, you should aim to build an organized business that runs like a machine, maintains steady growth and produces superior profits. To keep on target, you must focus on doing what’s required to keep moving toward hitting your big-picture goals.
Stay Focused
What do you keep track of every month to make sure your company is staying on target? Waiting until the end of the year to review your numbers won’t give you the valuable information you need to build a best-in-class company. If you rely on your bookkeeper to manage the books without reviewing the financials on a regular basis, you won’t hit your profit and net worth goals. Not meeting monthly with your foremen, superintendents and project managers to review their job goals and production results won’t help you meet your overall budget targets. The bottom line: When you don’t take time each month to track your estimating success rate, sales revenue, job profit, field productivity or overhead budget, you’ll never reach your long-term goals. Can you imagine coaching a professional sports team without knowing the score or all the details and statistics of every player on your team? You wouldn’t be able to determine what play to call or which player is performing to his or her ability. As the head coach of your business, you must have an updated scorecard to know and track your numbers, statistics, results and progress at all times.
Determine Key Success Factors
In order for your business to be a success, what important success factors should you keep track of each month? Begin by listing every key business performance indicator you need to know in order to achieve your annual and long-term goals. A company scorecard includes a list of key success factors. Contractors begin the year with an annual goal for each performance target and track these targets monthly to determine results and progress.
What else do you need to know every month to build a company that works for you and delivers the long-term results you want? Some construction companies are focused on increasing their profit margins by attacking new customers and markets. To reach this goal, track your sales results, customer meetings, proposals and contracts. Other companies might want to set a goal to improve field crew productivity to reduce their installed cost. By tracking field crew targets and results, you can monitor the improvement on a monthly basis. Other construction company owners want to begin investing in real estate opportunities. Add this key activity to your scorecard, and make sure you do something every month to reach your goal.
By determining what you want to achieve during the next several years, you can create a monthly scorecard to keep track of your progress. To help you get started with your BIZ-Scorecard, email GH@HardhatPresentations.com to get your copy of “Write Winning Targets & Goals to Get Your BIZ To Work!”
BIZ SCORECARD
Financial Scorecard
- Sales Revenue
- Direct Job Cost Expenses
- Gross Overhead and Profit Margin
- Gross Margin Percent
- Mark-Up Percent
- Company Overhead
- Net Profit
- Contract Backlog
- Gross Profit Backlog
Sales Scorecard
- Bid Volume
- Number of Jobs Bid
- Bid-Hit Win Ratio
- Average Job Size Bid
- Bid Award Volume
- Bid Award Cumulative
- Bid Award Gross Profit Award
- Bid Award Gross Profit Cumulative
Marketing Scorecard
- Sales Pipeline
Marketing Activities
- New Customer Sales Meetings
- Repeat Customer Meetings
- Referrals
Project Scorecard Dashboard
- Projects On/Over Budget
- Projects On/Over Schedule
- Field Productivity
- Project Safety
Investment Scorecard
- Investment Acquisition
- Investment Cash Flow
