1. Don’t be an island! 
Get involved with a group of like-minded business owners to seek advice, share challenges, get invigorated, and get accountable with on a regular basis. Personally, I made a decision to join a structured weekly group of men who discuss their personal and professional lives facilitated by a top business/life coach in our area. Consider looking into joining one of our BIZ-GROUPS or a local group in your area. Bottom-line – do it!

2. Take time to plan your plays!
Bill gates said that the best thing he did while building Microsoft was to take his management team away on a regular basis to plan for the future. At these regular retreats they discussed their strategy, options, new opportunities, what’s working, what’s not, and what they need to do to achieve their goals. When you don’t plan your future, you get what the market gives you instead of paving your own path.

3. Innovate or die!
Your business won’t work doing what you did when the economy was growing. In a flat economy, you have to change your business and evolve into a new kind of profit making machine. What new customers, markets, systems, technology, people, production methods, contract type, services, and products should you add or delete from your business to grow fast. Sit down and rate every part of your business as: keep doing, stop doing, start doing, or change how we do it.

4. Revamp your calendar!
Your calendar says it all. If you want to save money, your calendar is full of job meetings, ordering materials, scheduling crews, and doing take-offs. If you are focused on making money, it’s full of time with loyal customers, new customer targets, networking, mingling with potential customers, and building relationships. At least 33% of your time needs to be with customers having fun and enjoying each other. Make it your goal to revamp your calendar and pro-actively grow your business.

5. Put yourself first!
When I coach business owners, we always look at the income statements to see how they are doing. I almost always notice that business owner pay themselves way too little for the time, risk, and work they perform. In addition, their investments are often slim or none. When you put other people, employees, and customers ahead of yourself, you can’t do the best you are capable of. Customers want to do business with successful people, not poor struggling people. Make a commitment to pay yourself what you are worth and start an investment program starting now. Then spend the rest on overhead and expenses.

The second most popular “Do-Over” I hear from seasoned business owners is they wish they would have built up a broader base of customers, worked on many different type of projects, and developed a solid marketing and referral program that delivered diversified types of profitable work. Today I hear sad stories of underground contractors who kept very busy only doing private housing tracts for a few homebuilders. I also hear similar stories from contractors who didn’t want to mess with government jobs because of all the added paperwork. And I hear stories from companies who didn’t add any extra services like green technology, design-build, post construction services, or maintenance to attract and keep customers. These companies are now left without any customers.If you were to do it over, what additional customers and project types would you target? Perhaps you would go after at least three or four different types of projects and add a broader list of customers. How would you stay in contact with them? Most business owners say they would have setup an ongoing system to build loyal customer relationships via more lunches, ballgames, and simply spending lots of quality time with them. They would have also developed an automated email marketing system tied into an expanded resource website to keep their name in front of potential customers.

Additionally construction business owners say they would have invested in diversification by adding more in-depth capacity such as in-house engineering, green capabilities, and design-build services. This would have expanded their ability to take on more complicated work with higher profit margins. Lastly, they would have added service divisions relying on ongoing maintenance accounts that regularly provide them with steady revenue.

If you were to do it over again, wouldn’t you start diversifying, marketing and serving customers sooner than later?

Now imagine it’s your turn to start a new season. You are the coach of your business and want to keep your job and make a lot of money for the owners. What should you do differently to win the game of business? What tough decisions should you make? What new plays will you call? What players should you replace? Where should you play the game and how? Will you keep doing what you’ve always done or decide to do whatever it takes to grow your business and make a profit? Below is the list of the top “Do-Overs” I hear from the many business owners I have surveyed.

Do-Over # 1: Invest Sooner Than Later!
When your business was busy, you didn’t have enough time to stop and look for investments. And you were growing, so most all of your cash-flow went to fund your company’s growth. The snowball effect was keeping you excited as your business got bigger and bigger. It was like a shot of adrenaline as you did more and more work. The more you grew, the bigger you wanted to get. Volume is addictive, so you bid work too cheap and never missed an opportunity to grow or gain a customer. Everyone thought this gravy train would never end.

As you look back, did all that effort give you a long-term lasting return? Most business owners grew 50% or 100% or 200% in volume. But they didn’t make enough to set aside any real money to invest. They spent their extra cash on more trucks and equipment, bigger homes, faster boats, or generous bonuses. Some even lost large amounts of money by not making good decisions as listed above.

The best decisions business owners can make is to use their business to create opportunities to invest in long term wealth building assets. Wealth building assets include investment real estate or service businesses that produce passive income over the long haul. If you had invested as little as $10,000 a year over the past five years, you could own property today worth at least $250,000 cash-flowing $25,000 to $50,000 annually. A small investment over time returns much. No investment returns nothing.

The richest construction business owners I know, own lots of investment real estate or several service businesses that compliment their construction operations. If you were to do it over again, wouldn’t you start investing sooner than later?

So what’s the next Do-Over? Lets talk about Diversifying the market and how that effects our customers…. Please share your thoughts on how we can begin doing this as we start the New Year.

]]> http://getyourbusinesstowork.wordpress.com/2011/12/08/the-business-do-over/feed/ 0 georgehedley Do Over http://getyourbusinesstowork.wordpress.com/2011/11/28/if-you-could-start-over-what-would-you-do-different/ http://getyourbusinesstowork.wordpress.com/2011/11/28/if-you-could-start-over-what-would-you-do-different/#comments Mon, 28 Nov 2011 20:15:05 +0000 georgehedley http://getyourbusinesstowork.wordpress.com/?p=463 Continue reading →]]> Think of all the decisions you made over the last five to ten years that affected your future and where you are today. Now think of all those decisions you didn’t make you wish you had. Remember when you were busy signing new contracts, getting plenty of business, trying to juggle all your commitments, scheduling crews, putting out fires, and doing everything you could to keep everyone happy? During this time it was hard to do everything you wanted to do.

Because of the stress and workload, many construction business owners postponed making good critical decisions. Some of these might have included:

 - Paying a subcontractor for extra work without a signed change order.
 - Keeping a project manager who was consistently over-budget.
 - Putting up with a project superintendent who is always late finishing jobs.
 - Overlooking a foreman who didn’t do the required paperwork.
 - Not requiring a relative to follow the same standards as all employees.
 - Not replacing an estimator who didn’t keep accurate job cost records.
 - Relying too heavily on the same customers for most of your work.
 - Relying on being low bidder to win most of your contracts.
- Continuing to work for customers who paid slow or shopped your bid.
- Allowing your accounting manager to give you reports 3 to 6 months late.
- Overlooking employees who didn’t follow the rules and ethical boundaries.
- Not letting go of poor performers fast enough.
- Not taking the time to train your field workers properly.
- Not investing in technology soon enough.
- Not taking time to invest some of your profits into investment real estate.
- Not taking enough time for yourself and your family.

Today, my most requested speech topic is “How to get your business to work in a tough economy!” During my presentation, I stop and ask everyone to write down what they would have done different with their business over the last five to ten years. The answers consistently describe many of the problems listed above.  I call these “Do-Overs!”

Business owners don’t generally get a second chance to get it right. Your long season never seems to end. Yes, you make adjustments to weather the economic storm, alter your budgets, change a few players, and look for a few new customers. But most continue to play the game of business doing what they’ve always done, with the same rules, the same plays and the same strategy. The only thing different is your competition and how hard it is to win the game.

What is your company planning to DO OVER?  Next week that’s what we will be focusing on.  

After you have established reasons why customers should hire your company, now it’s time to find jobs to bid where you can be successful. Your overall estimating and bidding strategy is to get enough signed contracts at your price to cover your job costs, overhead, and then make a profit. This requires several winning plans. The first strategy is to have a strategy! Many contractors bid any job they are offered to bid. They don’t have a strategy that helps them decide which jobs to bid and when to say no. What’s your estimating and bidding strategy?

Before agreeing to bid a project, create a list of questions to determine if you will have an excellent chance to win the contract.

 1. Do you want to negotiate the project?
- How will you convince the customer to negotiate with you?

2. Do you want to be the select or only bidder?
- How will you implement this strategy?

3. Do you want to get the last look?
- How will you make this happen?

4. Do you know your bid-success ratio against your competitors?
- How do you keep track of your success versus competitors?

5. Do you have competitors you don’t want to compete against?
- How will you discover this information?

6. Do you have some competitors you will bid against?
- How will insure the bid list gives you a chance to be awarded a contract?

7. Do you have an ideal number of bidders you’ll bid against?
- How will you insure this happens?

8. Do you have a maximum number of bidders you’ll bid against?
 - How will you decide when not to bid a job?

Implement your bidding strategy!
To help you determine which jobs you have the best chance of winning, always pre-qualify your customers. Make it a policy to not waste your time bidding jobs you can’t get or don’t really want. Always insist you have a chance to meet with the decision maker to present your proposal. Interview your customer before the job goes to bid to ask them some tough questions including:

1. Will they negotiate?
2. Number of other bidders?
3. Who have they awarded the last several jobs to?
4. Chances the job will be built?
5. Does the job have funding?
6. Can you present you bid in person?
7. How will the bids be reviewed?
8. Can you get a meeting after your proposal?
9. What is the most important selection criteria?
10. Who makes the final decision?
11. If all else is equal, what are the chances we have to be awarded the job?

The main purpose of every bid is to get a meeting with your potential customer. Think of your bid as bait to get a customer to bite by calling you and ask you to meet and present your proposal in person. Without a meeting, you proposal looks like the others, just a list of items on paper with a price attached to it. In a meeting, you can discuss the inclusions, exclusions, price, and present what your company will do for your customer that your competitor doesn’t offer.

Remember, the purpose of your bid is to entice your customer to meet face to face with you and your project team. At the meeting, your role changes from just another contractor reviewing their bid to a producer of a dynamic presentation that sells the many reasons why they should only consider hiring your company. There are many ways to entice customers to meet with you. Giving them a reason to meet is an most important concept to grasp. Make a list of five reasons customers need to meet with your company after you present your bid. Constantly call them to ask for meetings. Leave messages like these: “Regarding the bid we submitted last week, I have a way we can save you money, finish faster, make your job easier, improve the quality at no extra cost, give you better payment terms, help you with supervision, do more for less, etc.” If you can’t give customers a reason to meet with you, you can only hope your low bid is low enough to win a contract.

Winning contracts at your price is not easy. It takes more work than it used to. Now you must also sell and present your company as the best choice. This takes a restructuring of your time and commitment to excellence. Learn how to upgrade you presentation, improve your proposal, be more aggressive with follow-up, and don’t take ‘no’ for an answer.

Give customers a reason to hire you!
The best way to win a contract is to have a relationship with your customer that goes beyond doing past projects for them. It is based on trust and friendship developed over time. It is built by spending lots of time together having fun fishing, golfing, or doing other activities together not related to work.

If you don’t have this kind of loyal customer relationship, you have no other choice but to differentiate your company from competitors. Low price is one way and creating and offering real differences is another. Before you bid the next project, ask yourself why the customer should hire your company for this project. Are you better or faster? Do you have more qualified trained people who know how to perform this type of work? Can you help your customer make more money?

As you create a list of reasons the customer should hire your company for the project, think about what you offer that no other competitor offers. Think about what else you can do for the customer that is not required by the scope of work. Think about how you can help your customer meet their goals, make more money, increase sales, grow their business, build a better project, reduce risk, or have more fun while working with your company. I know what you are thinking: ‘We don’t get paid for all those extra things!’ If you want to win jobs today, you must do more than the minimum.

After you create a list of three to five reasons why you are the best choice for your customer to award this contract, what will you do to prove your company is the best choice? In your proposal you can include a list of past projects where you beat the schedule and delivered results that made the customer excited about your company (this is more than the standard reference list). Include pictures of completed projects similar to the one you are bidding on. Include a draft schedule showing how you can help your customer complete the project ten to twenty percent faster than a normal contractor can. Schedule a field trip with your potential customer to other jobsites where you can show them how you solved difficult problems. Give them a list of added services your company will provide if awarded the job. Offer a guarantee such as completion date, punch-list completion, quality, or added warranty they will not get with another competitor.

Now you are in the sales business!
In private work, it takes a lot more than just bidding and negotiating to win contracts. You’ve got to give customers a differentiating reason to hire your company. It’s not just about the price, inclusions, and exclusions. Now there are too many competitors who can do the same job as your company and will cut their bid below their cost to get a job. To win more contracts at your price, you must face reality. You are not in the construction business. You now have to also be in the $ALES business!

Estimating and bidding used to be the only sales tactic you needed to win jobs. Today that’s only a small part of the process. Sales involves more than pricing jobs, delivering bids, and negotiating with the decision maker. It is about giving your customer what they specifically want on each job you’re bidding. You need lots of sales strategies to make a positive difference in your customer’s decision making process:

1. Create the perception of best value
2. Offer completion, service, and quality guarantees
3. Be the specialist or expert in the project type
4.  Professionally present your company
5.  Use cutting-edge technology
6.  Be well financed and bondable
7.  Have well trained foreman and crews
8.  Have large crews available to man the job
9.  Be able to finish job faster than competitors
10. Offer more than the minimum required
11. Understand the contract terms and project
12. Understand the project goals and deadlines
13. Offer value-added engineering budget ideas
14. Build confidence you are the right choice
15. Be aggressive following up on proposals
16. Show appreciation for the opportunity
17. Have a trusted customer relationship
18. Do whatever it takes
19. Meet customer’s goals
20. Give customer what they want

What differentiates your company?
Imagine you are driving down the freeway and need to fill up your gas tank. Do you look for the best quality, service, or price? No, you look for the closest gas station because it doesn’t matter which gas station you visit because they’re all the same. The construction business is the same. It doesn’t matter which contractors customers use. Customers generate bid lists of 4 to 6 or more contractors or subcontractors who are all equal in the customer’s mind. Most of these contractors do a pretty good job, with expected quality, in an acceptable and professional manner. But what doesn’t set them apart from their competitors are their proposals. They almost always bid the minimum required per plans and specifications and don’t offer much different or value-added to meet their customer’s specific needs.

Next week we will continue this blog discussing how customers can really tell the difference between your company’s bid proposal and your competitors? 

Every construction company business owner wants to charge a higher price for their services and products. And especially today, I’m sure you are looking for the magic ingredient that will give you more jobs at your price. But why should customers award your company a contract? In this tough economy there are less jobs to bid and more competition. Many of your competitors are pricing jobs at prices lower than their costs. They are trying to keep their doors open and crews busy hoping something good happens soon. Ask yourself this question:

Why should customers award your company contracts at your price or higher than your competitors?

It is what it is!
Perhaps you are starting to realize that it’s not what it was. The new economic reality is here to stay for at least 3 to 5 years. If it hasn’t hit you yet, get ready. Just a few years ago you could do a pretty good job and get lots of work from your customers. But today, your old sales strategies won’t get you enough work to stay profitable. It takes more than doing a good job, producing quality work, and bidding projects per plans and specifications to win contracts. Now, you must do more and offer something different than your competitors to win contracts. You need to renovate, innovate, change, improve, and upgrade your estimating systems, bidding strategies, proposal format, presentation methods, customer contact approach, marketing plan, and sales tactics to be successful today.

I started my construction company in 1977. At that time there was not a lot of competition and getting work was relatively easy. Through my business contacts, I could find a nice job to bid, call the customer, meet them, get a set of plans to bid, do the take-off, estimate the job, and then turn in my proposal with a reasonable mark-up on it. A few days later I would call to see if I could meet with the customer to review our bid. At the meeting we would negotiate the terms, inclusions, exclusions, and agree on a final price. Simple. 

Joseph decided to set up a new division that focuses on service work. He moved his chief estimator into the role of division manager to build the customer base, added a service manager, and put a bookkeeper in charge of managing the accounts. He started by asking his customers what other type of services they needed on an ongoing basis. His homeowner customers trusted his company, liked their work, and actually wanted his company to provide more ongoing maintenance for them as well. They asked for weekly lawn and garden service, annual weed removal, yearly tree-trimming, winterization service, and annual irrigation repairs. Some of his customers owned pools and also wanted his company to do their pool service, maintenance, and repairs. Some customers had young children and wanted swing sets and playground equipment installed. Some wanted new barbeques installed, fencing added, stables for their horses built, cages for their pets, and patio covers added. Some customers asked him if he installed annual holiday lights as well. Some customers even wanted his company to offer debris and junk removal and hauling. WOW! All that business and Joseph hadn’t even thought about providing it for his customers.

Start slow and build steady!
As you contemplate the future of your company, what are your choices? Would you rather own a fast and furious company 100 percent dependent on acquiring new contracts, one at a time, if and when your customers decide to build something, and when you are the low bidder? Or would you like your company to have a slow and steady division with an ongoing revenue stream, and regular service customers to help you weather the ups and down of the new construction business?

When you have a slow and steady company you also have an asset you can sell. Service companies with annual contracts are more valuable than construction companies. The average construction company sells for 3 to 5 times net earnings before interest and taxes (EBIT). The average service company sells for double that amount.

Start a service division now. Determine your goals and implementation plan. Hire a manager to run the division for you. Setup your office to succeed with a dedicated service manager, accounting manager, and sales person responsible for the success of the division. Your job is to provide direction, vision, and hold your managers accountable for achieving the results you want.

So, what ever happened to the donut shop mentioned earlier? Last week I drove by and they were closed. The owner never understood what business he was in, what it took to keep the doors open, and how to add more recurring customers by doing more than the competition. What about you? What are you waiting for? Go make it happen! Slow and steady beats fast and furious every time!

These successful contractors don’t rely solely on bidding single jobs, one at a time, to generate most of their revenue. When you mainly rely on bidding or negotiating work to win contracts, your business becomes ‘fast and furious.’ Your business is either hot or cold, fast paced or dead, busy or slow, and you cant’ control your workload and your revenue isn’t steady or reliable.

‘Slow & steady’ business keeps your crews busy as the workload keeps on coming regularly over and over every month. You can count on a steady flow of work as annual service contracts provide ongoing revenue. With steady regular service accounts, you can plan your schedule, workload, and cash-flow.

Multiple types of income, contracts, and revenue sources compliment each other. This business model allows these type of companies who do both bid and service work, to become very efficient, generate steady workflow for their employees, and create wealth for the owners. But they require two different types of management, sales efforts, cost accounting, customer service, employee training, professional standards, and marketing efforts.

Steve is an electrical contractor who has two separate companies that work together. He has a new construction division that bids to general contractors and does commercial projects, large shopping centers, and office buildings. He has ten steady general contractor customers who typically give his company enough work to make a small profit during good times.

As an offshoot to his contracting company, Steve started an electrical service company several years ago that installs, services, and maintains back-up power generators for homeowners, commercial facilities, industrial plants, hospitals, government buildings, and offices. This company seeks annual contracts for all service work required to keep customer’s buildings electrified during power failures. This specialty service work includes design, engineering, preparing studies, permitting, new installation, repairs, maintenance, testing, fueling, implementing technology, and ongoing monitoring work to insure the generators will work when needed. This service business has grown as he has focused on acquiring new customers, providing excellent customer service, regular weekly employee training, and lots of sales and marketing to attract potential customers.

Slow and steady wins!
Generating slow and steady business is an answer to improving your company’s future. Especially in light of the current economy. Slow and steady business is not dependent on new construction to generate work for your crews and keep your doors open. In Steve’s case, his customers can’t afford to shut down during a power outage and will pay for the service his company provides. What type of slow and steady service business can you start or acquire to generate ongoing steady work and revenue for your company? Consider one of these following service business models to add and compliment your revenue sources:

- Plant piping and repairs
- Industrial electrical service and maintenance
- Exterior building cleaning and sealing
- Full service plumbing, electrical, and mechanical
- Roof maintenance and repairs
- Site cleanup, road service, and river bed maintenance
- Landscaping, tree trimming, lawn service, weeding
- Snow plowing, Christmas lights installation, and light bulb service

 Jim goes slow and steady!
Jim’s business is typical for small to medium general contractors. He specializes in new construction of commercial buildings, remodels, renovations, and interior improvements. His job sizes run from $50,000 to $700,000 and does $5,000,000 in annual revenue in this type of work. But his competition is growing and his customers are asking for lower prices. He is at a point where he couldn’t make enough profit to make it worthwhile.

Jim called me and asked what should he do? I asked who his customers were. He had built local several stores for national retail chains. I asked what he did for these companies on an ongoing basis. He hadn’t pursued service work as it took too much time and his company had stayed fairly busy building new construction projects. I suggested he go see these companies and offer a complete full service package to them.

Jim listened and implemented. Within a few weeks, he set up a separate company with a different name. He put a manager in charge, added an in-house customer service coordinator, a marketing manager, and a full time salesperson. Fast forward three years later. His company now has four to five service crews busy seven days a week and often working nights to accommodate these retail businesses. His service company provides anything retail store customers need: emergency glass repair, overnight painting, quick repairs, clean-up, installation of new fixtures, electrical, plumbing work, flooring, doors, heating or cooling maintenance, trash removal, or remodeling. After only three years, Jim’s service company generates over $2,500,000 in annual revenue and significantly more to his gross profit than his new construction company does.