Correct These Three Remodeling Business Dysfunctions Before You Grow Past $1M
Newton’s Law of Momentum states that “A body in motion tends to stay in motion and tends to continue in the same direction.” Remodelers who downsized their businesses during the recession might want to consider Newton’s law.
Your remodeling business may be back in motion again now that the economy is improving, but if you continue in the direction it is currently headed will you reach your personal and professional goals? And, if you were already at or had crossed the $1Million per year threshold before you downsized, thinking back, was it really the right path to be on to help you keep growing profitably? If you are not realizing the success you hoped for when you started your remodeling business you might want to consider and address these three indicators of a dysfunctional remodeling business before planning any additional growth.
Dysfunction #1: Constant Crisis
If you wake up every day wondering what fires you or your employees will have to put out you’re probably already deep into constant crisis. Lack of planning and a lack of standard operating procedures causes constant crisis. Once in constant crisis it can be difficult to get out because addressing each crisis eats up the time your business needs to plan, develop and implement procedures that would have prevented the crisis to begin with. For example, if you keep underestimating or under pricing your work because you lack a quick and accurate estimating system you will forever be trying to find ways to reduce your production costs to make up for it. Also, consider it might only be a matter of time before employees, subs and vendors get fed up with constantly having to do and give more because your lack of planning has become a way of doing business, rather than just a phase you’re working through. Maintaining constant crisis often leads to staff and sub contractor turnover. Losing and replacing resources will help keep you in the constant crisis whirlpool as well.
Dysfunction #2: Tolerating Relative Success
If you have convinced yourself that your business isn’t really all that bad when you compare it to other dysfunctional businesses that are worse off than yours, yours will never achieve true success. Being less bad is not good. Rather than judge your business on relative success, you should judge it based on absolute success. Again this requires planning, but also requires establishing metrics against which you, and anyone else who reads your plan, can measure whether your plan is working and is actually leading you towards predefined success. Keep in mind that being better off than you used to be might not be a great place to be either. Think of it this way;“If your business is ten feet under water and drowning, but your improvements get you to two feet below the surface; your business is still going to drown!”
Dysfunction #3: Broken Behavior-Consequence Strategy
If your business requires you to do almost everything because if you want it done right you have to do it yourself, your business is dysfunctional but so are you. If employees or subcontractors can’t or won’t do and or follow through on certain tasks, why are they still there? What sense does it make to establish rules for doing business if you don’t also establish clear and actionable consequences for not following them? For example, why give a salesperson a commission for closing a sale if he or she hasn’t completed all the paperwork required to hand the project off to the production team? Or, if employees don’t get their time cards in on time and or fill them out correctly, why do you pay them on time?
Owning and running a remodeling business requires leadership
Without proper and adequate leadership from the owner a business can quickly and easily become dysfunctional. If any or all of these indicators are happening at your business it’s time to step back and away from your situation long enough to develop an “outside view”. You should definitely do this before you allow your business to pass $1Million in installed sales.
Perhaps consider these words of wisdom I found on a bumper sticker:
“The minds that created our problems are not likely the ones who can help us solve them.”
If you can’t or won’t eliminate the reasons for dysfunction, find someone else who can.
(Note: This is the fifth article in a series of articles written specifically for remodelers who want to successfully break past doing $1M/year in installed sales. Click here to see a list of all the articles in the series that have been published.
Owners should seek to put a more refined structure in place for the purpose of better, faster, and more accurate information. This is a critical step towards the owner’s ability to evolve away from the micromanagement of employees.
Give salespeople the support they need to support sales less on their own, sell more and keep them selling profitably.
Lots of small businesses, including many contractors, outsource accounting services like payroll and tax preparation. This is a smart move; tools like QuickBooks and 
If you have lost focus or lack the discipline to put business systems in place and stick to them it’s time to commit to and practice new attitudes and behaviors. Before you grow your business consider the adequacy of your financial system to predict and measure results. Do you have a formal marketing plan to guide you or are you winging your marketing? Do you have well thought out job descriptions you can use to recruit, qualify and hold new hires accountable to? Have you established benchmarks for the performance of your business systems? If you don’t have or do these things what example are you setting and what type of employees will join and or stay with your business?
A growing business that wants to attract and keep good employees needs to act professional. This means having a proactive and strategic marketing plan in writing. It means preparing a financial operating budget and staying within it. It means investing in training and mentoring your employees to be the future leaders your business will need. It means creating a profit sharing strategy and or compensation strategies based on performance. It also means operating legally and safely.
Before you as the leader can step away from your business the business needs to have a new leader already in place. Many business owners are forced back into leading and managing their businesses because the person they hired to do so did not have adequate leadership skills and or wasn’t yet seen as the leader by the other employees. Don’t make this mistake at your business. Before you step away make sure there is a successful transition of leadership from you to the new leader; in the eyes of the employees as well as your customers. Also, make sure you have a way to measure the performance of the business and the leader before you pull away. Again I suggest you have this in place and confirm it is working before you transition out of your office and your roles at the business.
Be the leader you need to be. Work on your leadership skills and make sure you understand the difference between leadership and management, and when to use one versus the other. Good employees want to be lead, not supervised.
Know your limits. Do what you can yourself but get the professional help you need to do things right; to avoid costly mistakes, increase the likelihood of success and maximize the results for your all your efforts.
I want to be able to assign tasks and duties to employees, prospects and customers, and I want to be able to track and verify whether things are getting done and done in a timely manner.
A system that can provide true apples to apples comparison of estimated to actual job costs and estimated to actual overhead costs.
