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5 Ways to Take Your Remodeling Business From Less To More

Posted by Shawn McCadden on Thu, Jun 12,2014 @ 06:00 AM

5 Ways to Take Your Remodeling Business From Less To More

Remodeling business owner burnout

 

It’s real easy as a construction or remodeling business owner to get burned out as you try to keep up with everything.   This is particularly true now that the remodeling market is picking up.  After downsizing to stay in business, and putting in lots of extra effort and hours to make a profit during the recession, many business owners are once again trying to grow their businesses.  However many of them are still using the "do more with less" mentality they used during the recession.  Maintaining this mentality as they seek to grow will definitely add to the burnout they are already experiencing.

For a good number of these business owners doing more with less may have made sense as sales shrunk and overhead expenses had to be cut back.   To clarify things the idea was to do more of what you were already ready doing with less.  Now that the economy seems to be improving if you want to do more business than you have been doing you'll need to do and add more inside your business to support that growth, not less.

 

Five things remodeling business owners can do to take their businesses from less to more:

Get serious about your management style

Advice for remodeling business ownersIf 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?

 

Don’t spread yourself too thin

If you plan to grow your business it and your employees will need your attention and guidance.   If your focus is being watered down by other outside activities like a second business, community activities, politics or even involvement at your church; the leadership and oversight needed at your business may be compromised.   There’s nothing wrong with being involved in outside activities, but make sure you put qualified middle management and business metrics in place first.

 

Be sure to think and act like a professional

OSHA for remodelersA 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.

 

Develop organizational charts, career paths and improve your recruiting process

If you think it’s expensive to train your employees only to have them leave and go elsewhere, think of how expensive it will be if you don’t train your employees and they stay.   If you plan to invest in training your employees make sure you can share your business plan with them.   Your business plan should show how you plan to expand your organizational chart and the opportunities they have if they are willing to grow with the business.  Your goal should be to offer opportunities that are mutually beneficial to the employee as well as the company.

 

If you want to step back make sure your business and the new leader are ready first

Remodeling company leadershipBefore 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.

 

 

         

Topics: Business Management, Worker Training, Recruting, Business Growth, Business Planning, Leadership, Sage Advice

3 Considerations Before Working With A Construction Business Coach Or Mentor

Posted by Shawn McCadden on Tue, Jun 10,2014 @ 06:00 AM

3 Considerations Before Working With A Construction Business Coach Or Mentor

Contractor Coach

 

Working with a coach or mentor to improve your construction business can help you avoid potential challenges, particularly those you might not know to watch for yourself. It also can help speed up your path to success while at the same time reduce the cost to get there, particularly if your "go it alone" path ends up being the wrong one.

 

Click here to read about the difference between a coach and a mentor.

Here are three considerations for contractors looking to work with a coach or mentor

 

Be cautious of who you choose to work with

A business coach or mentor should have proven success in their areas of claimed expertise.  However, there are many consultants and coaches out there who failed at their own businesses or may have never actually reached success with their businesses before becoming a coach.   Check the business history and actual level of success achieved by your prospective coach or mentor before you commit and invest in hiring him or her.  Also, if you are not sure of the coach’s reputation, check with his/her current and previous clients about their experiences.  As with other business investments, your best bet may be to ask for a referral from other contractors you respect who have already worked with a coach or mentor.  The reality is if you work with the wrong coach and or mentor you own the responsibility for that decision.  If it’s not working out with your coach first be honest with yourself about why, then either change your approach to working with him or her or find a new coach to work with.

 

Make sure to have a way you can both measure success

Remodeling business coach resultsTo make sure you will get a return on investment make sure you and your coach agree on how you will measure results.   Help with soft skills like leadership and people skills will be challenging to measure because changes and results may be seen as subjective and might be measured differently by different people.  However many changes can be measured in an objective way.   For example when I was first growing my business I worked with a coach on a financial system and the related QuickBooks setup required to support it.   Although he seemed to have the right experience he couldn’t offer me a reference specifically from a construction company.  After some discussion we agreed his compensation would be conditional on results and we made a list of desired outcomes to measure.  After several months we mutually agreed his system didn't serve the intended purpose and I got the majority of my money back.   Unfortunately I lost a lot of valuable time.   I assume he did too.  However we both learned a lot from the experience, I minimized my risk by agreeing on how he would be compensated, and I still had the money I needed to hire another expert to get it done.

 

Decide whether you want to remodel your business or do a tear down and start over

The business owners I work with as a coach and or mentor typically already own businesses that have been around a while and most already have pretty good business systems in place. These business owners come to me to help them remodel and improve their businesses so they can increase profits and or grow to the next level.  

remodeling franchiseIn addition to working one on one with remodeling businesses and their owners I have also worked in the corporate side of franchising. Joining a franchise can be a great option for the right business owner. For example, if you’re an entrepreneur who wants to carve out your own path and direction and evolve your business systems on the fly a franchise might not be a good option. On the other hand if your just getting started, or need to tear down what you have and start over again, and you want to adopt an established and tested business model, and you are willing to actually follow it, not question it, a franchise can be a great way to go. 

Most franchises offer some level of business coaching, just be sure it will be enough for you to achieve your desired level of success. Before joining a franchise I recommend you look into how much one on one support and coaching you and your new franchise can expect and will receive from the franchisor. If they offer a system, but not enough training and support to help you adopt it, you might want to keep looking.


Topics: Contractor Training, Business Growth, Mentoring/Coaching, Sage Advice

2 Critical Investments For Contractors Wanting To Grow Their Businesses

Posted by Shawn McCadden on Sun, Apr 13,2014 @ 06:00 AM

2 Critical Business Investments for Contractors Looking To Grow Their Businesses

Improving a remodeling business

 

Good news!  Confidence in the future for remodeling contractors is starting to pick up.  A recent surge in new sales and leads being reported by many in the industry is a welcome change that will help businesses strapped with aging accounts payable and uncomfortable loan balances.  As welcome and helpful improved cash flow can be, be sure you prioritize how you use it.  Remodelers should not only catch up on dept with this money, but it is also important to direct some of it to invest back into your business as a way to prepare for an improved marketplace. 

 

Below are two critical areas remodelers should consider investing in as their finances improve and before the remodeling marketplace rebounds. Sure, both will cost money and require a commitment of your time.  However consider the lost opportunities and lost income you could be enjoying for the rest of your career if you invested in your business now.

 

#1, Think past the present and develop a long term perspective:

Developing a long term perspective for a business If contractors knew how to prepare for this recession, they would have been ready for it and the actual impact wouldn’t have been as dramatic on their businesses.  Knowing what you now know, use the lessons learned to better predict and deal with the next recession.  Also, start thinking about where you want you and your business to be in the future.  Be proactive and create a plan, don't wait to see what happens and where you end up.  Rather than do it on your own consider finding a mentor with a track record of success, someone who can help you and will invest the time required to understand you and your business and will invest in you. 

This should be an on-going commitment.  Don’t get started with a mentor unless you are willing to really embrace making changes and commit to the time it will take.  Establish a consistent schedule to interact with your mentor and stick to it.  You may be lucky enough to find someone who will do it at no cost.   If not, expect to invest at least an hour or more of your time a week to interact and at least $5000.00 over the course of one year to pay this person.  It is better to predict and control your future than to be subject to whatever happens.  The right mentor will have already successfully gone down the same path you are looking to get started on.

Check out this article about working woth a coach or a mentor

 

#2, Improve your sales skills:

Consider this.  Contractors earn profits when they sell, they earn wages when they wear a tool belt.  If you want to make a lot more money you should learn how to improve your sales skills.

Selling isn’t what it used to be.  Memorized responses to prospects’ objections won’t cut it anymore and emailing your proposal is not selling; it makes you an order taker.  Find a sales training coach or program that will help you understand and take advantage of the psychology of sales and selling.  I took three years of sales training on a weekly basis during the early years of my business.  Sticking with the training and having a coach to guide me helped me “own” a sales system.  That system became second nature to me and dramatically improve not only my ability to sell at higher margins, but also allowed me to become more selective about who I would ultimately choose as my customers. 

Benefits of a sales system for contractors

If you join a training program expect to invest about two hours a week in the class and about $5-7,000 a year for the training.  If you have multiple salespeople consider doing in-house training and working with a remodeling specific sales coach and assume you will invest at least $7000.  If you choose the right trainer and embrace what you learn, it will be an investment, not an expense.


Other options to consider

For more options and information about investing in your remodeling or construction business check out this recorded webinar titled “Five Key and Timely Business Investments for Remodelers”

 

 

Topics: Success Strategies, Business Growth, Sales Considerations, Mentoring/Coaching, Sage Advice

Help With Evolving From Contractor To Construction Business Owner

Posted by Shawn McCadden on Tue, Mar 25,2014 @ 06:00 AM

Information and Guidance To Evolve From Being A Contractor To Being A Construction Business Owner

Contractor or construction business owner

 

With remodeling spending expected to grow by double digits this year many remodelers can and will be taking advantage of the opportunity to grow their businesses and their market share.  If this includes you, be careful.  One of the most common reasons for small business failure is growing the business faster than the systems required to support that growth.

 

History shows us that as the volume of work increases at their businesses most contractors will be challenged to produce the work. Challenges will include important things keeping up with the workload, finding and keeping good craftsman, finding and keeping project managers and or lead carpenters, the handoff from sales to production, and managing allowances. 

LIRA Report showing 2014 spending growth

 

Decision time: Will you remain a Contractor or become a Construction Business Owner?

Construction business systems improvementMy experience has shown me that those business owners who think of themselves as contractors will typically be the ones who experience most if not all of these challenges as they grow their produced volume of work.   Rather than do things differently they just try to keep up with the growth by doing more hours themselves and hiring more people who will need to be supervised.   On the other hand those contractors who seek to become what I refer to as “construction business owners” will be adding to and improving their business systems so they and their team members can share responsibility, work smarter and work together more efficiently.

The good news is that being able to charge enough money to first invest in putting helpful systems in place, and then also continually paying for them once they are in place, is becoming practical again for many more contractors.   According to a recent survey by LEK Consulting, discussed in an article by Craig Webb, Editor in Chief of Remodeling magazine, contractors are now feeling reduced price pressure from consumers and are enjoying greater opportunities to be selective about the jobs they do take.  This is great news if you have been waiting for a good time to risk growing your business.

 

Improving production at a remodeling businessWhy I created the list of article links listed below

In mid April I will be headed out to the west coast to help one growing contractor and his team members create and implement the systems the business needs to improve their production efforts and take advantage of growth opportunities he is experiencing in his local area.   We will have a lot to cover in a few days together.  To help him and his team get ready for my visit I sent him a collection of links to articles I think will help them get the mental and creative juices flowing and will help maximize our discussions. 

As I was putting the article links together it occurred to me they would be good ones to share here at the Design/Builders Blog.  I also added a few more here than I had sent him.   If like my client you want to move from being a contractor to being a construction business owner I suggest you read them all and do so in the order they are listed.   I hope you find them helpful and enlightening.

Feel free to offer your own thoughts and or suggestions in the comments area.  

 

Links to articles for contractors who want to grow their businesses.

The Design/Build Remodeler’s 10 Step Plan for Success

3 Objections Your Boss May Have About Hiring an Industry Expert

Afraid To Hire Employees For Fear Of Running Out Of Work For Them?

Don’t Underestimate Your Estimating System’s Potential!

Tips for Reducing and Controlling the Effects of Construction Allowances

All I want for Christmas… Is a Real Production Manager!

An Overview of the Lead Carpenter System

Interesting Considerations for Putting the Right Employee on the Right Job

3 Good and 1 Bad Reason to Offer Profit Sharing Rather Than Bonuses

Checklist for Implementing the Lead Carpenter System

 

 

Topics: Contractor Training, Business Growth, Production Considerations, Leadership, Sage Advice

10 Steps To Building A Successful Construction Company In This New Economy

Posted by Shawn McCadden on Tue, Mar 18,2014 @ 06:00 AM

10 Steps To Building A Successful Construction Company In This New Economy

Construction business growth strategies

 

For the last five years or so many construction business owners were operating their businesses in survival mode. Now, with the economy improving and residential construction activity picking up, many contractors will be looking to grow their businesses again.  If you are looking to grow your business here is my list of 10 steps contractors should take to make the switch from surviving to thriving. 

 

  1. Build your team.  You can't do it all; no matter how much you try.  Find the right people with the right attitudes, skills and personalities to be part of your team.
  2. Be ready to take advantage of opportunities for growth.  Hire and properly train employees before you already need them and their required skills up and running.  
  3. You are not the Energizer bunny!  Make sure you have a plan for recharging your batteries and keeping up the motivation you will need to make your dream business happen.
  4. Construction company leadershipBe 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.
  5. Be careful about and watch your overhead expenses.   Many construction businesses failed during the recession because they could not cover the cost of the overhead they were committed to when volume and or gross profits dropped.
  6. No Wild Ass Guesses (WAG)!  Know the costs of doing more business before you do more business so you can use the right markup to price your jobs profitably.
  7. Dip your toe in the water before you dive in.  Before you actually increase your overhead costs test the marketplace you plan to work in to make sure you can sell at the increased pricing you'll need and can sell enough work at that price.   Consider if you are in the right market to do business but also if you have the right marketing and sales skills in place.
  8. Don't be blind-sighted by increased job costs.  If you like the idea of an extended backlog of work find a way to protect your planned profits from escalating costs.   Labor and many material costs are expected to go up dramatically before the end of the year.  Be sure to price your work for the actual costs you will incur at the time you produce it.
  9. Manage construction company growthKnow 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.
  10. Think things through first and create a written plan to guide you. Successfully growing your remodeling business or construction business takes much more than just selling more work and adding employees.   Without a plan to commit to, business success might only be a short lived dream for you and your employees. 

 

 

Increase the likelihood of your success

Be sure to build accountability into your business and your leadership.  Share your plan and your measurables with someone who can and you will allow to hold you accountable to following your plan and achieving your goals.  This could be a spouse, relative, business coach or a mentor.   Make them part of your team and give them permission to be brutally honest with you when needed. 

You can't do it all; no matter how much you try.


Topics: New Business Realities, Margin and Markup, Business Management, Success Strategies, Business Growth, Sage Advice

Know Who You Are, Then Build a Contracting Business That Works For You

Posted by Shawn McCadden on Sun, Feb 16,2014 @ 01:10 PM

Peter Schneider

 

 

Guest Blogger: Peter Schneider, Peter Schneider Builder Contracor, Inc. has 20+ years experience and knowledge of residential custom building managing each project hands-on. He's been featured in national trade magazines and local publications and he's served on the Board of Directors of the Fairfield County Home Builders Association.  Peter offered this guest blog topic after reading my blog article titled: "Are You Less Of A Contractor If You Sub Everything Out?" I think Peter's message is a valuable one for contractors to consider.

 

Contractors; Know Who You Are, Then Build a Contracting Business That Works For You

Subs vs employeesUpon a little reflection I’ve realized there are a lot of ways to organize a contracting business, none of which are the “gold standard” and all of which either purposely or inadvertently express the personality of the owner.  At your inner core are you a manager or a craftsman? Are you a little of both? Are you neither?  Generally, I’ve noticed successful people have figured out who they are and how they add value to the equation.  Then they’ve set up a business system to capitalize on their strengths.  

If you are good with your hands, and want to be left alone to do your work, you probably will be a good one-man show type of contractor who can keep busy working for a few General Contractors. I work with carpenters, tile guys and drywall tapers that operate like this – most of whom survived the 7 year long down-turn OK.

If you can teach others a trade like framing, painting, drywall, etc, you can assemble a crew that will make you a nice profit, but you will need someone to run the “business” end of things, at your direction, leaving you free to estimate and sell and manage production. Profitably managing direct employees is a job unto itself and in my opinion is only appropriate when you have a crew that specializes in one type of work.

Peter Schneider Builder Contractor CrewIf you are excited about putting a team of specialized professional craftsmen together to construct a series of varied job types where organization & management are key elements of production & profitability, you’re a good fit for a general contractor operation. A GC set up is generally best for larger jobs like a custom home, a larger addition, or a whole house remodel job. Sometimes smaller jobs that require a higher level of craftsmanship like a special faux finish on walls, or custom built in cabinetry, or precision stone work are best left to the specialist sub contractor.  Higher end bath remodels are also a good fit for a GC with a loyal team of trade contractors. You absolutely must develop a team that you work with regularly so you can be assured of consistent quality and integration between trades.

For me, I’ve noticed the comparatively greater value of leveraging my time providing work opportunities for, and coordinating the activity of other professionals. 

There are inescapable sales, marketing and overhead costs of running a business not directly associated with performing your revenue producing activity. A good GC-Sub relationship takes this into account, or at least I like to think it does in my case.

 

 

Topics: Guest Blogs, Building Relationships, Subcontractor Considerations, Opinions from Contractors, Business Planning, Sage Advice, Business Considerations

3 Objections Your Boss May Have About Hiring an Industry Expert

Posted by Shawn McCadden on Thu, Feb 06,2014 @ 06:00 AM

We Can't Do That -3 Objections Your Boss May Have About Hiring a Construction or Remodeling Industry Expert

Remodeling Industry Expert

As an employee often times I bet you see challenges and opportunities at the business where you work that you believe your boss doesn't.    It’s not necessarily that you might be smarter than your boss, although that sometimes is the case.  It’s typically because you are involved in the business in a different way than your boss. If you are a Lead Carpenter perhaps that involvement exposes you to the day to day realities in the field while your boss is working on other things.  Or maybe as the production manager you're the one who has to manage the projects and build from the information provided by your boss; but you can't.  You have to constantly call him to get answers and or details. 

Often times I find that employees can be the eyes and ears their bosses are missing in certain areas.  If you are a dedicated and conscientious employee you may want to share what you see and offer solutions to help your boss.   One solution can be to hire a construction industry expert to come in and help right the ship.  This suggestion might probably be a good one.  However, if your boss objects to it, what can you do or say?  

Here are a few suggestions you can consider depending on the objection.

 

Objection #1: It cost too much.  

Remodeling company improvementsHiring a construction or remodeling industry expert certainly can be expensive.  Depending on the nature of the problems to be addressed the fees can add up quickly.   However, compared to the money lost over time by not correcting or improving things that slow you down or increase project costs, years perhaps, the lost revenue and compromised profitability can far exceed the initial cost to fix the problem.  Perhaps you could help your boss see the cost as an investment.  To do this consider using a simple analogy from your world as an example to help get your intended point across.  Maybe consider using the example of having a table saw.  Sure you could do your job without one, but it sure would go a lot faster and come out a lot better, and at a much lower labor cost, if he made the investment in a good one sooner than later.   And by doing so the labor savings alone would quickly cover the cost of buying the table saw.  

 

Objection #2: Don't have the money right now, so we would have to wait for a profitable job to pay for it.  

Improving profits at a construction companyIf you hear that objection it may be the truth.  But you know what they say about the definition of insanity.  Depending on your relationship with your boss perhaps you could ask what he has already done or will do different to get that profitable job.  The positive news is that often times the business is actually already in pretty good condition.  I find many construction businesses might only need a few tweaks and or new processes to make significant improvements.  If the expert helps start with low hanging fruit the initial changes can often generate the additional money needed to finance additional changes.

 

Objection #3: This isn't a good time, we are straight out right now.

Again, this may be completely true.  And again I'm not sure how you would do or say this depending on your boss, so be careful and be respectful.   Come up with a safe way to remind him that it's been pretty much like that every day and all the time for quite a while now since the company started running more than one or two jobs at the same time.  If true, also remind your boss that things were going really well on the jobs when the company only did one or two jobs at a time. Point out that maybe some additional preconstruction activities and or introducing a Lead Carpenter system might be the answer.  To help really make your suggestion practical you could also share your willingness and desire to take on additional responsibility provided you get the right training and tools to do so.

 

Last thoughts

Hiring a construction business expertMost construction business owners are thoughtful and kind people.  They are also typically very busy and put in a lot of hours to help keep the business going and keep the employees working.  If you see things that your boss doesn't, keep these considerations in mind.   Choose a good time to share your opinions and offer your suggestions.  Most importantly, do it with good intention and respect.  I hope you have a boss who is willing to listen and will hear your suggestions.  

If you give any of these suggestions a try let me know how you made out by posting a comment.  If you’re afraid to say anything I hope you'll share that here as well.  If you're afraid your boss will react negatively to a posted comment, email me your comment and I will post it anonymously for you.

 

Topics: Success Strategies, Employee Advancement, Business Growth, Mentoring/Coaching, Sage Advice

Contractors; This Year Could Be The Turning Point In Your Business

Posted by Shawn McCadden on Tue, Dec 10,2013 @ 06:00 AM

Stars are Aligning for Contractors; This Year Could Be the Turning Point in Your Business

Remodeling industry improving

 

The economy and the remodeling marketplace finally seem to be improving.  It’s not happening as fast as we all might like, but it is slowly improving in what appears to be a sustainable way.  And, as a result, consumers have been gaining the confidence to once again spend money on and invest in their homes.   If the recession caused your business to downsize or slow down, now might be the time to decide whether you want to and will commit to improving and growing your business.

 

Indications that contractors and the supply chain are both optimistic

I am still being cautious about making such a statement about the marketplace, but a few key indicators have prompted me to do so.  

First, is the number of contractors not only contacting me for help with their business systems, but actually committing to the investment required to do so.  About a year ago I noticed the inquiries picked up, but after we discussed the typical costs to put business systems in place many contractors decided to hold off, citing concerns about short work backlogs and protecting their cash flow requirements.   Now, with a good backlog of work under contract, both the calls and the commitments have dramatically picked up. 

Contractor seminar speakerSecond is that the supply chain is finally spending money again on marketing to and investing in their remodeling contractor customers.  Although still not as busy as they used to be, trade shows this past year have grow in size again as more manufacturers and distributors are back participating at the shows.   Also, since about early this past summer, the number of manufacturers, distributors, dealers and trade associations contacting me about speaking at their events has also dramatically picked up.   The supply chain is once again spending money to educate their staff as well as their contractor customers, as a way to grow their businesses as well as their customers’.  The Rhode Island Builders Association Boot CampsThe Rhode Island Builders Association Boot Camps I was involved with is just one example of this trend.

 

Don’t get left behind

generic contractors

 

If you’re a contractor thinking about the future opportunities and potential for your business now is the time to act.   As I discussed in a previous blog titled “Generic Contractors Are Fading Away, Brand Names Are Shining”, those contractors who are investing in their business systems and their brand have been capturing good projects with good margins.   Those who have been and continue to protect “their status quo” are going out of business or continue to struggling financially. 

 

Here’s how I look at it. 

About 75-80% of remodeling consumers buy predominately on price.  Also, my experience tells me, about 75-80% of contractors are generic commodities in their market place.   That means that if you want to capture business from the 20-25% of consumers who select a remodeler for reasons other than lowest price you better get going improving and differentiating your business.  The idea is to build your market share, in your target market, before someone else does.

 

Here’s a quote by a famous baseball personality that I Improving remodeling marketplacethink sums things up

"There are three types of baseball players: those who make things happen, those who watch it happen, and those who wonder what happens."     

 Tommy Lasorda

 

 

 

Topics: New Business Realities, Remodeler Education, Contractor Training, Business Growth, Differentiating your Business, Earning More Money, Sage Advice, Shawn's Predictions, Business Considerations

10 Sign’s You’re Playing The Game of Contractor Roulette

Posted by Shawn McCadden on Thu, Aug 29,2013 @ 06:00 AM

10 Sign’s You’re Playing The Game of Contractor Roulette

Contractor Roulette wheel

 

Most contractors are great craftsman but terrible at accounting and financial management.   Most can build a house from the ground up without any plans but have no clue how to identify and create the financial reports they need to know whether they are making or losing money. 

Building or remodeling a house without any idea of whether you are making money or not, and if you will be able to pay all the bills as they come due, is like spinning a roulette wheel at the casino.   You put money down, spin the wheel and hope to make money.  Problem is that you have no idea or control over where the wheel will stop.   If you run out of money the casino is happy to let someone else step in, lay down some money and do the spinning. 

Like most gamblers, contractors always brag when they win, but never want to talk about it when they lose.

 

Contractor Roulette Is Not A Good Gamble

If it sounds like I'm describing you and your business you are playing what I call "Contractor Roulette".   Sure, once in a while you may win, and even win big.  But remember the odds are with the casino.   How about you?  Have you been spinning and winning or has the “casino” been winning and encouraging you to keep playing?

 

My list of 10 signs you’re spinning the “Contractor Roulette Wheel”

  1. You lose sleep at night worrying about money.
  2. You have no idea what markup to use.
  3. You think margin and markup are interchangeable terms.
  4. You never know if you will have enough money to pay your bills until they're paid.  Again
  5. You guess at project payment schedule amounts and when they're due.  As a result you constantly suffer from cash flow challenges.
  6. financial mistakes contractors makeWhen a prospect asks you if you will match someone else’s price for the same job you figure if the other guy can do it for that price so can you, so you say yes.
  7. You are always putting the whip to your production employees to beat the labor allowance in your estimate because you need to make up for dropping the price of the job just so you could sell it.  Again.
  8. Even though you got price quotes for the materials before you sold the job, after you take the job you either bid the materials out to a get a lower price or beat your vendors up to sell them to you for less than they already quoted you.  Again.
  9. You do little or no marketing so you have to try to sell to everyone who contacts you, even if you have a feeling they will try to beat you out of any profit.  Again.
  10. You need to sell a job this weekend and get a deposit just so you will have enough money to meet last week’s payroll.  Again.

 

Strive to become a Big 50 Remodeler

Big 50 class of 2013If you believe in the idea of relative success, where you convince yourself you are doing pretty well if you compare your results to other contractors who are doing far worse than you, then maybe you can be happy staying where you are regarding financial management at your business.  On the other hand, if you want to measure your success against truly successful contractors, perhaps use Remodeling Magazine’s Big 50 list as your reference.  To qualify for that list you need to be making a decent net profit.

 

 

There is hope!

Financial advice for contractorsIf you have been playing Contractor Roulette here is a simple three-step plan to help you end your gambling habit:


 

  1. Admit you have a gambling problem and commit to do something about it.
  2. Get the professional help you need to help you stop gambling and eliminate the causes of your gambling addiction.
  3. Find someone you can trust to hold you accountable to doing what it will take to make the switch.

 

 

Related articles:

The Five Biggest Financial Related Mistakes Contractors Make

Remodelers: I Bet You Don’t Know Your True Burdened Labor Costs

Five Ways To Think Like A Business For Business Owners

 

Topics: Business Financials, Pop Quizes, Success Strategies, Financial Related Topics, Earning More Money, Sage Advice, Self Quizes

Joining A Contractor Trade Association Should Be An Informed Decision

Posted by Shawn McCadden on Thu, Aug 22,2013 @ 06:00 AM

Nicole Allen of R2R Marketing

 

Guest Blogger:  Nicole Allen is the Social Media Manager at R2R Marketing where she is responsible for maintaining and executing a clearly defined social media strategy to increase brand equity and awareness for current clients.  She is also the group manager for “Home Improvement Industry Specialists” group on LinkedIn.   Nicole is an expert in Social Media Management and has a military background as an Aircrew Survival Equipmentman.

 

Joining A Contractor Trade Association Should Be An Informed Decision

Trade associations for contractors

 

 

There Are Many Reasons to Join a Professional Organization…and many questions you may want to ask before you join.  Here are some things to ponder.

 

 

Membership in a professional organization is an investment in your professional credibility.

  • There are many organizations out there that will help your credibility. However, there are a few out there that do not. Check them all out before you join no matter how cheap the dues are. Are their agendas in your best interest? Are the key members upstanding in their field and community? They are the face and voice of the association and if they are unprofessional or unethical in their choices, you will be seen the same.

 

It’s an investment in personal development, and growth.

  • Contractor training by trade associationsChoosing the right association should involve doing a little fact checking. Does the association promote and foster a learning environment or does it seek to push its own agendas on you? Does it offer you training materials that are relevant to your company? Does it offer you a place to network with your industry peers? What is the overall tone of the association? Above all, does it portray a professional appearance? If their agenda is not in-line with yours you may want to re-think your membership.

 

It’s a place to get and expand your knowledge

  • Membership is a way to stay connected to your professional peers who are going somewhere, and don’t mind sharing knowledge on the journey. The age old adage, “If you want to be successful, surround yourself with successful people” applies here. The association you join should promote professionalism, ethics and training to help you succeed. Many say this is what they do- make sure they actually do it.

 

As a professional association, they should work hard to help you succeed.

  • You should receive tools (including a high-quality member website) and training to help you grow. They should offer support as you meet professional challenges, and opportunities to develop your business.

 

Here is an example

Networking at trade association meetings

 

As a member of the Associated General Contractors of America (AGC), for example, a contractor has access to all-inclusive member resources and tools through the AGC Legislative Action Center and receives member discounts on AGC products and services. Additionally, with a nationwide membership of more than 32,000 firms and a network of 96 chapters, AGC offers its members the opportunity to meet and build relationships with fellow professionals, owners and suppliers.

Can the new association you are checking into offer you something that is comparable? Even if they are charging you low or a no-fee membership, is it really worth it if they cannot help you succeed?

 

Last thoughts

Choosing a Construction Trade AssociationMembership in trade associations can not only benefit the employees of your company, but it can also project a positive image of your firm to your customers; if you choose your association wisely.  Membership in associations shows a business’ initiative, its engagement in a particular trade and its commitment to staying abreast of current developments in the market. It can also affect you negatively by conducting itself in an unprofessional manner and by throwing business and moral ethics out the window. Look closely at the way their key members hold themselves in a public forum and ask yourself one question- Is that the way you want yourself and your company to be seen?

 

Topics: Contractor Training, Trade Associations, Differentiating your Business, Guest Blogs, Building Relationships, Sage Advice