Growing on Purpose, With Purpose
authors Shawn McCadden | August 22, 2018
When times are tough, just keeping your remodeling business open might be a necessary and acceptable goal. However, if you are still running around like a chicken with your head cut off—and you are not dropping at least a 10 percent net-profit after paying yourself commensurate with what it would cost you to hire to replace yourself—you are missing an opportunity. This economy provides perhaps the best opportunity you might ever get in your career to build the business you want and deserve. It’s also time to assemble a business method and organization to get there and get you down to 40 hours or less per week.
No, I’m not kidding.
Take the Time to Assess Your Current Business and ROI
If you are not earning a healthy salary as well as a 10 percent net-profit, I suggest you determine why. List the things you think are holding you back. Then for each item on that list, assess whether that item is a reason or an excuse for why you are not where you want or deserve to be financially. I’d be willing to bet that most, if not all, of those things you think are holding you back are either excuses or myths, not reasons.
For example, illegal and unfair competition is an excuse, not a reason. If you use this one as a reason, I bet you do little or no marketing. If you do marketing, you may lack a written marketing plan that explains how your marketing will differentiate your business. I say this because if you already had one, you would not be in competition with illegal and unfair operators. Instead, purposely decide your differentiators, write up a marketing plan that explains them, and then use the plan to choose measurable marketing tactics that will make it happen.
If you are working way too many hours, is it because you can’t afford to hire others to join your team and carry some of the load? If you can’t afford to pay someone else to do what you do, chances are you’re probably overworked and underpaid, on top of being understaffed. If you wear several hats in your business but only charge your customers enough to pay yourself for one position, you may think of it as low overhead, but that’s only because you are volunteering in the other positions. This economy provides a great opportunity to raise your prices and increase your compensation. Selling at a 40 percent gross margin in this economy—or higher—should not be a problem, provided you have differentiated your business.
Take Advantage of Industry Best Practices
Too many remodelers live in a cave, building and running their businesses with information learned there. As a result, their businesses suffer from a lack of knowledge on how to grow successfully. They suffer all alone in that cave with no one to talk to, no one to reach out to when challenges arise, and no one to tell them the negative effects of doing the same stupid stuff others before them also stupidly did.
Get out of that cave. Go to a trade show, join an association, attend seminars and webinars, and work with a coach or mentor. Instead of limiting your business and your future by staying in the cave, step out into the sunshine where others who have already learned from the lumberyard-school-of-hard-knocks can help you discover and implement industry best practices. Find out how design/build can help you eliminate bidding and speed up your sales process. Find out how a real lead-carpenter system works and can free you up from micromanagement in the field. Find out how to properly price your jobs to cover the overhead your business will have and need. This way you can afford to hire overhead employees and do the marketing that will help you find and sell to prospects who will buy at your 40-plus margin—and thank you when they give you your final payment.
Instead of reactively hiring out of need, find out how to strategically design and grow an organizational chart that helps your current employees grow with the business. You may not know how to do all these things, but that would be an excuse, not a reason, for not doing them.
Find the Right Purpose
I find that without the right motivation for all the work and time it takes to strategically design and grow their businesses, remodelers often give up and fall back into the comfort zone of their old ways of doing things; the same holds true for employees. To avoid this, identify why you want to do it. Perhaps it’s a new home, comfortable retirement or that antique car collection you have always dreamed about. For employees, perhaps it’s owning a home, sending their children to college or buying a second home. Without the right motivation, it’s all hard work. With the right motivation, it’s just a stepping stone on the path to your and your employees’ future. |QR