Owning a Job vs. Owning a Construction Contracting Business: How to Know Which You Own
“If your business depends solely on its owner, you don’t own a business but instead hold a job.” – Alan Wozniak
Many think they own a construction business because they are licensed, bonded, have a business name, pay employees, and work diligently.
Truly owning a construction contracting business comes down to thinking and behaving like an entrepreneur. There are many aspects to be considered, but perhaps the most important has to do with mindset. This mindset allows them to leap from knowing their trade to being a true businessperson and purposefully dealing with all that entails.
The basis for the problem is usually a lack of knowledge. Gaining that knowledge takes time, assistance from others, and a willingness to transition and transform.
Ultimately, you can’t run your business like a job owner and expect results like a CEO.
A job owner limits the ability to scale and grow because all that takes place in the office or on the job site depends on his or her time, energy, and skill set.
A Construction Business Owner is Seriously Strategic
It is a matter of having a viable corporate-level strategy. This means construction business owners have a long-term plan that their company uses to guide business decisions and activities. Some of the elements they consider are:
Articulating a clear set of values and targets
Determining appropriate KPIs
Defining their goals
Establishing a financial plan
Developing a marketing vision
Creating clearly defined roles and responsibilities.
A job owner makes the decisions (both large and small,) solves the problems (even when others could do so,) and often becomes the bottleneck preventing timely execution.
A Construction Business Owner Develops Documented Systems
This is one aspect of running a viable, long-term, successful business that construction business owners do not miss. The systems that once lived only in their heads, when transferred to easily accessible documentation for them and their employees, become the springboard designed to change their operation into a well-functioning construction contracting business.
While it isn’t the easiest thing contractors ever do, it isn’t as daunting as some may at first think. There are several ways to accomplish this task. This article, Upgrading Your Processes – Part 2, mentions several surprising, effective, and simple ways to develop and maintain systems and procedures.
A job owner will likely avoid risks rather than determine which risks are worth taking.
A Construction Business Owner Takes Calculated Risks
Starting a construction contracting business is risky – on many levels. However, identifying which risks are worth taking is essential to moving into whole-hearted entrepreneurship.
There are risks at every juncture, from hiring employees to bidding on jobs to signing contracts. Construction business owners see the big picture, break it down, and find solutions and opportunities.
The big picture – you can’t do all the work required
Break it down – so you must hire others to help you
Find solutions and opportunities – some people will steal from you, and others will serve you well; you must make risk decisions before and after the hiring process.
When construction business owners can identify which risks can be managed and which are beyond their control, they can focus on contingency plans and prepare for the unknown.
Some risk mitigators include:
Hiring a legal advisor
Engaging an accounting firm
Purchasing necessary insurance policies.
A job owner plows through the daily tasks, puts out frequent fires, and has little time for family or fun, not to mention personal or professional growth.
A Construction Business Owner Develops Business Acumen
There are a variety of ways to develop business acumen. Three of the most effective ways to jumpstart the process are:
Set aside time for learning – like reading or taking classes.
Network with like-minded business professionals – for instance, join and get involved in a trade-related association.
Hire a construction-centric business coach.
A few of the ways that experienced construction business owners prove their business acumen are:
Build a desirable company culture.
Maintain the ability to be flexible when appropriate.
Look for creative ways to improve their business and stand out from the competition.
Be a leader, not a manager of people.
Develop a strong network of experienced associates, service providers, and mentors.
Maintain a business mindset, including making corporate-level decisions.
Scale up at a manageable pace.
Know when to pivot.
Have an exit plan.
A job owner hesitates to let others know there are things he or she doesn’t know or understand.
A Construction Business Owner Seeks Experts and Advisors
By surrounding themselves with people who know more than they do, construction business owners garner for themselves expertise they cannot achieve alone. It could be as simple as hiring someone who knows more about estimating than they do or as straightforward as engaging an outsourced service provider to deal with one aspect of their growing business.
Hiring people to perform specific tasks that meet the present needs of their business – and letting them do those tasks is an easy example of finding a way to put an expert on their team.
Another way they engage expert advisors is through outsourcing. Some of the outsourced services they may consider are:
Web Design and Development
Social Media Marketing
Supply Chain Management
Call Center or Customer Service
They look for weaknesses in their business operation or in their knowledge. They ask those in their network for recommendations. They pay attention to the needs of their employees. In short, they actively look for ways to improve their business through the expertise of others.
A job owner doesn’t grasp the vital financial aspects of being in business and may co-mingle funds (in various ways,) leading to trouble.
A Construction Business Owner Knows That Money Matters
Going well beyond the “how much money do I have in the bank” way of managing the financial aspects of a construction business are some number-knowledge basics that must be accounted for. (Yes, the pun was intended.)
Being numbers-savvy is imperative. That doesn’t mean construction business owners must become accounting professionals – there are people for that. It does mean being acquainted with their business numbers. For example, knowing which reports are helpful and why. Those numbers can be used to perform many tasks, such as knowing the year-over-year percentages (is this business healthy?) and understanding which jobs are profitable and which are not. (What types of jobs should this business pursue?)
Knowing their numbers allows construction business owners to focus on profit. For example, finding ways to improve their processes and productivity or learning what non-essentials are eating into profits.
By understanding the financial aspects of their business, contractors can better know their value and bid or charge appropriately.
For construction business owners, dealing with tax obligations is no longer a cause for stress but a testament to how well a business runs.
One last example in the money matters section is this: Construction business owners know the importance of maintaining separate accounts for business and personal use. They also understand that something as seemingly insignificant as a daily lunch on the company dime is inappropriate and unacceptable. This practice can lead to operational, legal, and tax problems.
A job owner finds that he or she is frequently overwhelmed by restrictions on time and often without funds for something as vital as meeting payroll.
A Construction Business Owner Understands the Culmination of Efforts
One sign that a construction contractor is successfully operating is that there are enough profits for them to invest in their own business and other endeavors. The equation is simple: they use their business acumen and their money to make more money.
More importantly, prosperous construction business owners give to the community from their largess. Two ways this can be seen are by giving financial support to causes they care about and donating their abundant time, energy, and effort to teach others how to become successful. They have both time and money to help others.
Where Do You Stand?
We’ve found that there are typically three categories in which people stand on the above aspects:
The first are business-savvy construction contractors who have gained experience and expertise in each section presented.
Secondly, some have begun the process, and a few sections are conquered, leaving only a few others to improve.
And third, are those who have realized that they are more like job owners than construction business owners and need help in all areas.
We’re pleased to say that we can serve people in each of the three categories. We can help people Run With the Big Dogs in each case!
Ambitious Construction Contractors look to The Profit Constructors to provide advocacy in dealing with:
Clients and customers
Employees and subcontractors
Vendors and service providers
Working with The Profit Constructors gives Construction Contractors the means to organize their operations in ways that help them:
Ready for action? Or want to know more? Get in touch today to schedule a complimentary discovery call. 866-629-7735