5 Success Limiting Actions Contractors Should Avoid To Maximize Long Term Profitability
Having grown my own contracting business and worked with hundreds of business owners seeking to do the same I have come to recognize five specific things I think dramatically limit a business owner’s success and potential long term profitability. If you plan to grow your construction business deciding how you will address these five actions can set you on path that is more likely to support your long term professional and personal levels of success.
Not having an exit strategy
If you have no idea where you want to end up any path will take you there. On the other hand if you think about where you want your business to be in 10 to 15 years, and what role you as the owner want to have then, it’s more likely the decisions you make along the way will support and maximize your ability to get there. Consider going down the wrong path will eat up a lot of value time and money that could have been used to help grow your business and will reduce your potential retirement funds.
Hiring for today without thinking about tomorrow
Many contractors hire for today. By that I mean they hire the help they think they need for the projects they have on the books and the current size of the business. If you plan to grow your business these employees may not have the skills or desire to grow with the business. If you think about how much you want to grow, the organizational charts you will need at different stages of growth, and the job descriptions for each position on the organizational charts, you can make better hiring decisions. And, long term, you will have less employee turnover and therefore lower training related expenses over time as well.
Not setting goals and metrics
Letting your business grow without having measurable goals along the way can lead you and you’re your business down a path to mediocre results. Without a goal for example for work produced and sold per month you won’t have an objective target to hold you and your employees to as business happens. Without goals and metrics the business may just accept whatever level of performance happens by chance. On the other hand, by having established goals that need to be answered to, if you come up short of your goal in one month the new goal for next month can be increased to make up for the shortfall and get you back on track. Knowing you are behind on your goals you and your team can make alternate plans and the changes required to catch up.
Not establishing your target customers and project types.
Being the” Jack of All Trades” to everyone who calls your business may work for a self employed handyman or carpenter, but that’s not a good strategy if you want to be a construction business owner with a growing business. Deciding your niches can help you streamline and personalize your business systems so they serve both your business as well as your customers in a consistent and reliable way. For example becoming a Design/Builder may limit who will do business with you, but on the other hand making a commitment to that business delivery method you can develop a marketing and sales process that generates the qualified leads and sales you need and will help your business become known as a Design/Build expert in your desired target market area. My own experience made it obvious to me that consumers are willing to pay more for experts than they typically will pay for a “Jack of all Trades”.
Not getting the professional help you and your business need
Successfully growing a residential construction business is not easy and takes time. If you go it alone you will likely attend many sessions at the “Lumberyard School of Hard Knocks”. That educational institution can be expensive, frustrating and may require you scrap a lot of what you have done in your business because it will no longer work well enough as you grow the business. With the right professional help and guidance you can reduce the overall long term cost of your path to success and you can get there much faster. Considering the principle of compounded interest, the more profit dollars you earn and keep each year along your path, the bigger your nest egg can be when you are finally ready to exit your business.
A final thought
If you find and work with the right construction business coach and or mentor your investment of time and dollars working together can have tremendous ROI. Just make sure he or she teaches you to fish so you and your business won’t become dependent on their assistance to stay in business.
Let me know if you want my help.