Right or wrong, most construction business owners and managers continually run their projects and manage their companies the same way they always have. They hope for something to happen that will eventually deliver better results. When the economy was strong, there was plenty of work to manage your company like everyone else and make a reasonable margin. As the economy got worse, everyone cut their expenses to stay alive. When the market improved, most owners went back to their old business models which won’t deliver the same results they used to achieve. Why? Construction is now demanding tighter, cheaper, tougher, more competitive, and high tech services; while customers require more performance, communication, options, documentation, and solutions for less money.
When’s the last time you:
- changed your standard bid proposal
- added a weekly supervisor meeting
- revamped your standard company chart of accounts to match how you bid work
- reviewed your labor burden rate to make sure it’s right
- looked at your equipment charges versus rental companies
- reviewed your production rates to make sure they’re improving
- added a few new customer targets
- implemented a new marketing or sales strategy to achieve better margins
- fired a customer who never gives you any profitable work
- took a hard look at who’s 100% responsible to finish projects on time and under budget
- delegated some additional major responsibilities to one of your managers
If you’re stuck doing business like you did years ago you are discovering the same customers, project types, operational systems and processes that will not take your company to the next level and deliver the results you want. The companies that use new increased work opportunities to improve and positively change how they do business are becoming the new industry leaders in performance and results. I’ve been getting lots of e-mails asking what company owners should do as their market improves, their profit margin shrinks, and the stress level increases. To solve this problem, you first have to realize a quick band aid or simple fix won’t heal the deep wound. You also can’t blame things on the competition, customers, economy, or your people. It’s usually the company leader who has gotten stuck in the past ways of doing business and not willing to try new ideas or make real change.
Positive change starts at the top!
Company owners (or the presidents) are 100% responsible and accountable for everything in their business: sales, profits, growth, quality, customer service, organizational systems, people, productivity, cash-flow, management, and results. The results your company delivers is the leader’s report card for their performance. In other words, the buck stops at the top. Weak leaders blame poor results on circumstances beyond their control. Weak leaders make excuses like: “I can’t find any good help!” or ‘You don’t understand my customers, competition, or market we are in!” Weak leaders sit and wait for something to happen; hope better customers call; want their people to perform without proper training, systems, scorecards, or accountability; or wish some other miraculous event occurs to change their fate. All while they don’t change, make tough decisions like eliminate poor performers, implement new company procedures, or do anything different to make better results happen. Effective leaders realize they are the problem and they need to change how they lead.
I drove by a well-located Sears department store and their parking lot was nearly empty while the rest of the shopping center was jammed full. Sears can blame their decline on Wal-Mart, Target, Amazon, or the internet. But in reality, the leaders of Sears were stuck in the past and made decisions to do nothing about their old business model, customers, image, products, services, technology, strategy, and pricing. Rather than trying innovative products, unique concepts, or improve their standards, they didn’t change and kept keep offering the same tired comfortable things that used to work. Sear’s leaders likely hoped their new competition would go away and customers would keep buying from a business that was old fashioned and out of touch with the new economy. The leaders didn’t do what they needed to do. No vision or innovation, and afraid to try new people, ideas, systems, strategies, and things. They got eaten alive and now continue to scramble to stay in business and become profitable again.
Change the leader first!
Getting great results in this new faster and more competitive economy is an indicator of the leader’s vision and innovation. Real leaders make quick decisive decisions to adjust and stay ahead of changing business climates. Effective leaders invest in new software, better people, training, clear accountable job descriptions, upgraded systems, scorecard tracking systems, performance based pay, production standards, ongoing education, and consultants to help them get to the next level. Poor leaders wait for something to happen and complain about everything except their own performance.
Business owners rarely come into their office and say, "I've made a decision! I need to change how I manage, how I lead, and the direction of the company.” Poor leaders walk into the office and say: "My employees are too slow and aren’t making it happen. My customers want lower prices and more service, but don’t pay us fast enough. My competitors are too cheap and willing to work for next to nothing. I can’t make enough profit. Therefore, everyone will have to work harder and we’ll have to cut costs.”
Effective leaders realize they must have courage to change themselves first before anyone will follow their lead. They must have a vision of where they’re going, be willing to try new markets, different customers, additional project types, new technology, standardized systems, and go against the grain. Over ninety percent of employees rate their company leadership below excellent due to many factors including tolerating poor performers and non-team players to stay at the company, allowing some people to not follow the company systems and standards, not making people accountable for results, and lack of truthful communication.
Doing something about results?
I coach a lot of contractors and speak at many meetings every year. The common challenge is how to get organized, build a strong management team, grow with better customers against less competition, and make a higher profit margin. This only starts when the business leader has a dynamic focused vision their players and team can get excited about achieving. People want to follow a leader on a positive mission with a vision of where they want to be into the future. They won’t follow someone who’s negative and complains about problems, people, performance, results, competitors, and why they can’t compete or make enough money. Poor leaders say to their people: "Work harder, then we'll see how it works out; and if we do well enough, maybe we'll be able to stay in business, you can keep your job, and we might have some profit left over to share." This attitude doesn't make people excited about coming to work and improving bottom-line results. Effective leaders who really lead, stand up, seek ideas, look for new strategies to implement, and then proclaim: "Here's where we're going, the changes we need to make, and how we’ll make it happen."
When I coach business owners, we have to decide what needs to be changed or fixed. To get a copy of the first chapter of George’s book to help you decide what you need to change, email: GH@HardhatPresentations.com I often ask all the employees and managers to complete this confidential ‘Company Improvement Survey’ to gather lots of input and ideas to work on.
Company Improvement Survey
1. What’s right or works well at our company?
2. What’s wrong, doesn't work, needs to improve, or needs to be fixed?
3. What's missing or confused at our company?
4. What is the biggest challenge you face doing your job?
5. If you owned the company, what would you change or do differently?
6. What are your ideas to improve:
- Project results, quality, field productivity or profits
- Service, scheduling or on-time completion
- Teamwork, accountability, responsibility or safety
- Your supervisor or company owner’s performance
- Your performance
- Any other suggestions to make your company better?
Start changing for better bucks!
Leading and getting the results you want starts with you. You decide that you need to change and you are willing to do what it takes to transform your company into a high-profits and high-results machine. Now go make change happen! You can sit and wait, or stand up and get your company moving towards where you want it to go. What’s your choice? Only you can decide if you will accept responsibility for results and do what it takes to start the bucks rolling your way.
ABOUT THE AUTHOR
George Hedley CSP CPBC is a professional construction BIZCOACH and popular industry speaker. He helps contractors grow, make more profit, build management teams, and get their businesses to work for them. He is the best-selling author of “Get Your Construction Business To Always Make A Profit!” available on Amazon.com. E-mail GH@HardhatPresentations.com to sign-up for his free e-newsletter, start a BIZCOACH program, attend a BIZ-BUILDER Boot Camp, get a discount at www.HardhatBIZSCHOOL.com online university for contractors, or visit www.HardhatPresentations.com for more information.
George Hedley CSP CPBC
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