5 Mistakes Construction Contractors Make When Trying to Scale
Updated: Jun 23, 2020
Trying to do it all
Superman you’re not. KAPOW! Nor are you Wonder Woman. SNAP! So, as we say in our office, DWI (Deal With It.) We also say LIF (Life Isn’t Fair) but, that’s another story for another time. Now, we’ll concentrate on the fact that if your intention is to scale your business, you must have key employees and advisors in place in order to think strategically and focus on growth.
From the back office, to the front office, to the shop, and in the field, having people in place who can help you carry the load is the difference between wishful thinking and decisively moving forward.
And, if you wear all or most of the hats in your construction business, your goal is to replace yourself one position at a time. Finding every task you presently perform yourself and delegating them to your employees and freelance advisors is a sound business tactic that will move you forward more quickly.
In addition to your lawyer, your insurance provider, your bonding agent, your tax preparer, and your loan providers you do well to consider having excellent freelance advisors on board. Everything from virtual assistants, to human resource experts, to accounting advisors, (That’s Us!) will free you up to find ways to work on your business rather than in it.
When you’re able to delegate, (in-house or out) you have the precious commodity of time. Time to spend judiciously planning for the next steps that are about to take place.
Dug, the dog in the movie “Up” is delightfully fun, because he is the ultimate squirrel chaser. And, because he is so easily distracted he is the perfect example of what it sometimes feels like to be the owner of a construction contracting company. You know, there are squirrels at every turn.
It is downright hard not to chase idea after idea and change after change. Squirrels make it difficult to settle with one (good enough) option. Perhaps it is business objectives, marketing strategies, client types, or even (hold your breath) other business ventures.
And, the squirrels can be as subtle as offers for business trainings which seem attractive but don’t really push you forward in meeting your immediate goals. Another insidious squirrel can be found in the purchase of tools or technology that aren’t needed.
One way to deal with squirrels crossing your path is to take note of them. If an idea, thought, or offer attracts your attention, write it down. In other words, keep a squirrel list. Then quickly decide (use your leadership powers to be decisive) if they are good, mediocre, bad, or future squirrels. Sometimes the simple tactic of “sleeping on it” will help you decide. Other times you may wish to visit the people from the above section, (your in-house and outside advisors) before making a decision.
One last thought on squirrel chasing – don’t become befuddled by the off chance you should have followed that one “great” squirrel. You’re in the construction industry, there are tons of squirrels in the construction forest. Another will be along soon enough.
Neglecting to think like their clients
Clients focus on the end product, not the process. Construction clients don’t like the changes you force on them. They do not want to be disrupted. They simply want what they want when they want it. Yet the very nature of the beast we call “construction contracting” means you’re disrupting the lives of your clients, be it for only a day or for many months.
Try putting yourself in their shoes. Suppose when you went to buy a car you were told that for the next six weeks you would have to figure out another way to get to work, to the grocery store, or to the movies because your car would be out of commission. Not only that, you would have to spend some time daily watching as piece by piece your new car was assembled . . . in your driveway. Not a pretty picture. Yet, depending on your trade you may be asking your clients to endure something very similar.
And your clients who (remember?) want what they want when they want it, are probably not all that prepared to have you disrupt their lives. You can help them get over that hurdle through constant and honest communication before, during, and after the project.
Oh yeah, don’t forget this part. Clients HATE surprises. Clients will be more understanding of a temporary defect or delay if communication comes first from you.
It doesn’t matter if you’re a service provider, a general contractor, or a sub; it doesn’t matter if you’re on a commercial site or a residential site, there is always a client and you must always consider ways to think like your client.
Failing to document their processes
You may have heard someone joking on one of your social channels that if there are no pictures – it didn’t happen. That is fun and funny. Yet the truth is if there are no documented systems there is no scalable business. If you want your business to grow, you must have systems in place with written instructions concerning how the processes work in order to maintain the system. If it is all in your head, then by golly, it is all in your head that you own a viable construction business.
Wendy Tadokoro from Process Street tells Why You Need to Document Business Processes. If you don’t know, check out the article, it’s eye opening.
Now that you know why, it is time to learn a lot about how (and more about why.) Sam Carpenter wrote a book titled Work the System. You can find the book and other helpful information on his website. It is worth the time it takes to check it out. He offers insight into how to build a successful business through the use of documented processes. His story of how the business he was about to lose was turned around from the brink of disaster is captured throughout the book. If he can’t convince you how important the process of process capture is, then probably no one can.
Forgetting that trimming fat is part of scaling
Much like starting up, scaling up requires some belt tightening or fat trimming in order to make it through. It isn’t simply a matter of hiring more hands, finding more work, and making more money. If your additional labor, travel, or equipment costs eat up the additional money you make on a variety of jobs you’ll find all you’ve gained is more headache.
What scaling really means is finding a way to increase your profits. Increasing your profits means finding ways to earn more money while not spending more money.
Inefficiencies exist in your present organization. Some systems are in need of repair or should be eliminated. Other systems need to be developed.
You may even have some people who will no longer fit into your company for any number of reasons. Perhaps they don’t want to grow, can’t see your vision, simply don’t gel with the rest of your staff.
Focus on operational efficiency.
Then focus on motivating your team towards a common goal of scaling up and being relentless in achieving it.
Is your bookkeeper stuck in the old way of just doing the books? Then we would love to show you what modern bookkeepers do. As accounting advisors, we help you drive profitability. Give us a call to set up a consulting session. 866-629-7735