We spend a lot of time thinking about our competition. We want to understand who they are and what they do. We review pricing for our products and services. We want to know how we ‘stack-up.’ We don’t want to lose business to competitors.
But there’s a point here that needs addressing. In most cases, our competition is not who we think it is. Our competition is not the contractor down the street. Our biggest competitor is — time.
Running a successful remodeling company is an ongoing challenge. In this robust market, we face a variety of daily challenges: trade contractor availability; rising building costs; supply chain delays; emotional clients; COVID-19 among many others. All of these challenges demand our time to the detriment of more productive uses of it.
Business or Practice
What type of business do you own? Most remodelers are construction companies that provide a variety of services. Some do additions. Some do basements. Some do decks and gazebos. Most have just a handful of loyal employees. In these companies, the owner is the company. When the owner doesn’t come to work, the company can often experience difficulties.
In owner-focused companies, one person oversees marketing, selling, project management, and office administration. They make the sales calls. They write-up the estimates, get contracts signed, line up all the subcontractors, arrange material deliveries, work on-site to get the projects finished, and they follow-up on any warranty work.
These hard-working remodelers are getting burned out. In this robust market, they are struggling. They are getting tired of 10-to-12-hour workdays, and the 50-and 60-hour work weeks. While they are the masters of their domain, they get tired of being on call seven days a week — tired of working morning, afternoon, and night, month after month, year after year.
These entrepreneurs launched their businesses to create freedom and choice. But in this robust market, they’re finding less freedom and less choice. It is a great market, but owners are struggling and due to market uncertainty. There’s little hope this will change in the immediate future. We are in uncharted territory—the construction market is presently strong, but it is also uncertain and due to supply-chain difficulties. It is unstable.
Value Creation
I have written several blog posts in the past regarding business transition and exit-planning. I want to amend that message. The principles that apply to a potential business exit also apply to good business management. Long-term, effective management means that an owner also commits to look at each area in their business to review where they can delegate ongoing day-to-day company activities and functions. It’s a daily practice that allows owners to regain some time in their life.
This business strategy depends upon accepting a simple realization that your daily business demands will not change. Unless addressed, daily demands will increase as your company grows. The complexity of business operations grow proportionately with the widening array of product choices, and with changes to city and state building codes, which are becoming more complicated and complex. You must change the way you conduct your business.
Integrating documented standard operating procedures (SOPs) into daily business operations will bring the power of systems into your company. They can shift the load you carry each day. Effective systems maximize the time spent within your business. As a business owner, your most valuable resource is time. Strong systems can assist you in getting 12 hours of work out of an eight-hour day.
Many of you have come up through the ranks. Your construction career started in the field learning the construction trade. You may have become an apprentice, learned specific construction skills, taken on a supervision role, and then after a certain amount of time, went into business on your own. Most of the business owners I know have done it this way. Not everyone, but most.
There is no remodeling degree—no formal remodeling university. If there is a school, it’s not a place where you take classes. It’s the school of hard knocks. You learned from experience. Construction training took place in the field, not in a classroom. This field training has had great benefits but has left most of us unprepared as our companies grew. What was lacking was business development training. It’s not our fault. We did not realize how important these skills would become.
The first step is understanding that change is required. Working harder is not the answer. As you may have guessed, working smarter is what is needed.
1. The owner must effectively manage their time. You can’t work 50-and 60-hour work weeks. The price is too high, and it leads to burnout. You must put your attention where there is the highest return. You do not run to the lumber yard for materials.
2. The owner must delegate, delegate, delegate. Never do any job that you could pay someone $15 to $25 an hour to do. Create clear standard operating procedures (SOPs) for every position in your company. Yes, it takes time, but the eventual payoff is huge. McDonalds does this. The US Military does this. It puts expectations into writing so that employees understand the required task and outcome.
3. Company volume should not exceed a comfortable max. A business can grow only when owners become better at getting more sales and production within a reasonable number of working hours, or no more than 55 hours a week.
Where do you start? To begin, start with those areas where, 1. mistakes are being made on a regular basis; 2. where employees are constantly coming to you to ask for direction; 3. where you want to give a certain job away, a job you do not like doing; 4. And this one is primary, where it involves any task you could pay someone $15 to $25/hour to do.
Documenting company operating procedures assures you that all job functions in your business will be performed the way you want them to be performed—at the office or in the field—or on the beaches of Hawaii! It also builds long-term value in your company. When the company runs as well without you as it does with you, you have created a company with transferable value.
Getting started is not easy, but I have access to an owner centricity checklist. It reviews the different areas in your business that indicate your level of responsibility. This tool will analyze the dependence of your company on your involvement in operational duties and functions as indicated using the following designation:
- Principal: You make the decision largely by yourself.
- Approval: You approve the decisions of others.
- Delegated: You are not involved in the decisions.
- N/A: You don’t have this function in your business
If you would like to review and complete this owner centricity checklist, please contact me at david@remodelforce.com. I will forward a link so that you can access the checklist. I look forward to hearing from you. QR