Growing your construction business requires two things: being good at CONSTRUCTION and being equally good at BUSINESS. So, what does that mean? Think of running your construction business like hammering a nail – Your skills swing the hammer, but your business management is the nail that holds it all together. Without it, things will fall apart.
To put this into context, here is an example of what we mean.
YEAR 1 – You start your business and complete a couple of jobs. Word of mouth starts spreading, and people are calling you – well done, success! The money starts rolling in and now you purchase a couple of things like some new tools or lease a new truck. You’re excited and the dream starts to take shape. You think bigger for next year.
YEAR 2 – You start the year bidding and winning more work. The jobs are getting bigger and more complex. The days are long, and schedules are tight. Paperwork starts to pile up and bidding new work gets pushed so that you can finish up current projects. You start the grind of working during the day and managing your business at night. Maybe you purchase some software to help. You are managing, but you are finding that you want to be working, not digging yourself out of paperwork all the time. You just keep going and some nights the business part gets done and sometimes it doesn’t, but no matter what, you are always thinking about it.
YEAR 3 – Year 3 starts very busy, but you are frustrated because the demands of your projects and your business are just becoming too much. Profits on your jobs dwindle even though the value of the work you are doing is so much bigger than when you started – why? You think you need more work and help. So, you take on more projects quickly and you grab all the help you can get. Paperwork is now really piling up, you don’t know if you’re profitable anymore, project budgets and schedules are falling apart, and your clients start complaining things are not going the way you originally discussed. Panic and fear take over and become your normal state of being. You forge on and hope that it will work itself out. You work harder instead of smarter.
This example glorifies things, but you get the picture. A lot of businesses operate this way and not just in the construction industry. This is a reactive business approach and is tough to manage when there doesn’t seem to be any clear plan. The attitude is to keep going and work harder.
What does business management mean? To put it simply, it’s having a plan and tools in place to record, monitor, and proactively respond to the needs of your business. In construction, there are some very simple steps that can be taken right away that will have immediate impact:
SIMPLE CONTRACTS – you absolutely 100% need a clear and simple contract with your clients. This MUST outline the WORK, the BUDGET, and the TIMELINE. Without these 3 fundamentally important components clearly described at the beginning of the job, you will not be able to manage things properly.
PROGRESS MONITORING – You need a simple system to track the progress of your work in real time. Without this, you are guessing, and your clients will be frustrated quickly with verbal responses. Reporting regularly and with confidence will show professionalism. Happy clients keep projects moving and the money flowing.
PROJECT CLOSEOUT – Finishing the project is not handing the keys back to your client. It finishes when all the paperwork is closed out and you assess the successes and challenges of the project. Without taking time to do this properly, you will not be able to apply what you’ve learned to your next job.
Who have we worked with? Hardcore Renos has been a client of e6analytics for a year now and over that time, we have set up a fully customized progress monitoring system for Manny and his construction projects. This system has streamlined the paperwork and provided real time financial monitoring on his projects, helping to manage the business part of Hardcore Renos more efficiently. It has started to really give Manny back more time to do what he loves – construction. We are in the process of working with Manny to set up full monitoring and tracking systems for his next big venture – The Construction LIFE.