Category Archives: Business Plan

Draft A Winning Playbook!

I played a lot of touch football when I was around ten years old. Eight of us boys from the neighborhood would gather at our local park and choose teams. Then the two teams would line up across from each other, agree on the rules, and get ready to start the game. After a coin toss, one team would kick off to their opponent. The receiving team would have their fastest player catch the ball and run down the field as far as he could without being tackled. A tackle occurred when the defensive player touched the runner with two hands below the waist.

Then the offensive team huddled to decide their offensive play for the next down. The quarterback usually called the plays, even though he wasn’t always the smartest player on the team. He was usually the one who was the tallest, fastest, or had the best arm. Obviously, there wasn’t a playbook nor did the teams have time to practice their game plan. Before each down, the inexperienced quarterback gathered his team in a huddle and called plays based on what he thought would work and surprise the opponent. The players were also loosely told what position to play, who would run which way, who’s job it was to block, and where they were to go. Not a very good strategy for a winning outcome.

Are you better than a 10 year old?
Think about your company. Is your business strategy better than a neighborhood pickup football game? Do you huddle up before every decision? Do you tell your players what to do before every project? Do they know what to do based on written systems and strategies from your company playbook? A professional football team is a good model to copy for small business owners. Professional teams have a written strategies for every season and each game. They also have written plays designed to work in every situation they encounter. Do you?

Unless you want to run your company like a young inexperienced quarterback, you need a winning playbook to follow. Thinking like a professional sports team, what needs to be in your company’s business plan?

1. Overall company mission, vision and values
2. Coaching and staff assignments and responsibilities
3. List of players and their strengths & weaknesses
4. Training program
5. Equipment inventory management
6. Offensive plays and strategy
7. Defensive plays and strategy
8. Business development plays
9. Financial plays and strategy

Draft your business playbook!
A professional team must have all their bases covered to put a winning team on the field plus make as much money as possible. Where should you start to draft a winning game plan?

1. Determine your overall company mission, vision and values
Sit down with your key managers and take time to discuss why you are business and what’s the purpose for owning your company? This exercise will get you focused on the real reason you go to work every day. I often ask business owners why they are in business. They answer: ‘to make money doing whatever they do like plumbing or construction.’ You are not in business to do plumbing or construction. You are in business to maximize your resources of time, energy and money so you can get the biggest return in whatever manner you desire.

For example, a construction company is a great start to achieve what you want. It is very rewarding but demanding work. But, it is limited in net profit margin potential as it is very cyclical with thin margins. In my opinion, a construction company creates an excellent opportunity to seek opportunities to build wealth versus just building for others. When you build for customers, that allows you to make some money. When you build for yourself, that allows for passive income, freedom, and equity growth. What is your overall company mission, vision and values? Continue reading

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Hire the Right Players Now!

If you were the owner of a NBA basketball team, one of your top goals would be to have the best players on your team. With only five players on the court at any one time, every one of them is critical to winning. If you don’t do a good job hiring the right players, your team won’t win many games. And eventually the fans will stop coming out and spending their money on tickets. In other words, the success of your winning team is to have the right players on the floor at all times.

Business owners tell me they can’t find any good help. But how much time do they actually spend finding the right players? What you get is a direct result of your priorities. When you don’t take enough time to find, cultivate, and train new players, how do you expect to grow a winning team? Professional sports teams have a full time executive in charge of player personnel – finding the right players, managing their contracts, and keeping them happy. But most small companies don’t spend more than a few hours a year making sure their roster is balanced, robust, and excellent.

Before the annual draft, every professional sports coaching staff makes a list of all the positions and their current players to analyze what they need to change or add to improve. In your company, the draft is now. To get started, make a list of all of your company positions, the talents required at each job, the player currently assigned each position, and then rank how well you think they are doing.

Player Personnel Ranking Chart
Position Talent Required Player Ranking

  • Estimator Knows accurate costs Jim B C+
  • Completes bids on-time Jim B A-
  • Maximizes sub-bid coverage Jim B B-
  • Presents company well Jim B B
  • Project Manager Manages budget Bill C+
  • Maximizes change orders Bill B
  • Keeps customer happy Bill A
  • Paperwork on-time Bill B-
  • Superintendent Finishes jobs on-time Dave A
  • Pushes crews to the max Dave B+
  • Safe jobsite and no accidents Dave C-
  • Coordinates subcontractors Dave B-
  • Foreman Manages crews and jobsite Sam B-
  • Brings jobs in under budget Sam C
  • Knows how to build quality Sam A
  • Follows company procedures Sam C-
  • Carpenter Can build per plans Joe A-
  • Hustles & works efficiently Joe B
  • Takes initiative & action Joe B-
  • Team Player & good attitude Joe D
  • Office Manager Completes tasks on-time Sue B-
  • Understands accounting Sue C+
  • Understands construction Sue B+
  • Team player & good attitude Sue A Continue reading

What Is Your Bidding Strategy?

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? Continue reading

Do your customers want more?

Joseph owns a residential landscape company doing new installations for homeowners. He mainly works on referrals from custom home-builders, architects, and past customers. Sometimes his company is busy and other times he waits for the phone to ring. By chance he was asked to do some hauling for one of his contractor customers. In the past he didn’t pursue this type of business because is was a nuisance and disrupted his operations. But this got him thinking about how he could expand his revenue sources.

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. Continue reading

The 8 Traits Of Great Companies! Traits 5 through 8

Competition | Pro-active Sales | Operational Systems | Investments
Part 3

Trait #5 – Set your company apart from your competition!
When I drive down the freeway and see contractors’ trucks, they often have signs on like: “Joe’s Electric – Commercial, Industrial & Residential.” I chuckle and ask myself: “What do they excel at, what kind of jobs are they the expert in, and why should I hire them?” Based on my experience working with tens of thousands of contractors, my best guess is they chase any kind of work they can get and don’t make a lot of money doing it.

Are you in the “Yes” Business taking any kind of job or project thrown your way? Experience shows that companies who specialize in a specific type of project or service do better work, are more competitive, have more loyal customers, and make a lot more money than their “jack of all trades” competitors. Perceived experts are the first called when a customer needs a professional to complete a tough or special project. Experts get the first chance to propose on jobs which require complex engineering or technical knowledge.

To set your company apart from your competition and get hired at higher prices, you must be the perceived expert in your market and offer more than your competitors. According to a survey from the Society of Marketing Professional Services (a national association of construction sales and marketing professionals), the top two reasons construction companies don’t get awarded projects are 1) Their inability to market and properly present the differences between themselves and their competition, and 2) Their lack of expertise in a particular project or service niche. When you continue to be and do everything for everyone, you won’t have enough time to satisfy your customers and you can’t make enough money for all the different types of work you attempt to complete. Continue reading

Me, Myself and I

The best advice you can get is from outside, unbiased professionals who know your business, can give you real opinions of how to improve, and are not afraid of telling you the truth and hurting your feelings. I founded my commercial construction company in 1977. After only seven years in business, I had built up to 150 employees and we were doing $50,000,000 in annual sales. I thought I was doing great (and knew everything there was to know about business) for a young thirty-five year old. A friend suggested that a company board of directors could help me take my company to the next level. So, I asked five very successful businessmen to be on my advisory board of directors. At our first meeting, I proudly presented my goals, financials, and plans for the future. I then asked for their input. One by one they proceeded to rip me apart and ask questions I couldn’t answer.

Their laser-like questions included: 

 “Is that all the money you make for the risk you take?”
“Why are you only doing that type of work?”
“Why is your employee turn-over so high?”
“Why do you do so much of the work yourself?”
“Who else on your management team do you review the financials with?
“What is your plan to improve profitability?”
“What new customers and markets have you tried in the last year?”
“Why are you afraid to let go of major decisions?”
“Do you have a strategic business plan?”

These questions and many more made me feel really stupid and about two feet tall. I couldn’t answer any of them with good answers. I thought I had done fairly well building a company with me as the leader. But my inner circle and executive management team consisted of just me, myself, and I. And, I had obviously missed the boat on many major issues required to become VERY successful and VERY profitable. Does this scenario sound familiar to you? Are you alone making most of your strategic decisions. Do you continue to do business the same way and expect better results if you work a little harder?

Get some help!
My advisory board recommended I hire a professional management consultant and coach who specialized in helping construction business owners grow and make a profit. They also recommended I quickly work with the coach and my management team to draft a strategic business plan before I made another dumb decision. After several days of mourning and shock from the reality of the board meeting, I took the advice and decided to invest in the future of my company and get some help. I hired a construction business management consultant and coach who helped me look at my leadership style to become a better leader and analyzed our management team to determine who were valuable assets to our long term growth. He also reviewed and improved our overall operational systems, standards, and procedures to help us get organized, systemized, and more in control.  In addition, he reviewed our numbers and give us advice on how to make more money. After getting to know our company, he then did a great job at facilitating our two day strategic business planning workshop. I could have never made the moves and changes I needed to make without the help, advice, and pushing of an outside person who had no agenda except to make me and our company better.

Think about some of the steps you can begin to take to improve your business.

Two Heads Are Better Than None!

Take Time To Plan Your Strategy

Imagine yourself stranded on a tiny island trying to make a strategic decision how to get off the island quickly and safely before you run out of food and die. Without any input, advice, or ideas from other people or outside advisors, it would be very difficult to decide what to do next or the best way to get off the island. Now imagine an entrepreneur or business owner sitting in their office alone trying to make all the decisions how to run their company. These scenarios are similar. Without input from others, making decisions based solely on what you know and your experiences are no guarantee you’ll choose the right path to take. Your chances are less than fifty percent, or twenty percent, or perhaps ZERO! Not good odds when your future is at stake.

Do you continually struggle with big decisions that shape the course of your potential success:

“What should my organizational chart look like?”
“Do I have the right people in place to grow my company?”
“What type of new business should we go after?”
“How can I cut or control overhead expenses?”
“Who should I fire to balance our budget?’
“Should I promote from within or hire a trained manager?”
“How can we make more money in the field?”
“How can I make my managers more responsible and accountable?”
“What financial reports should I be getting?”
“How much money should I be making?”
“How should I give out incentives and bonuses?
“How can I get my people more motivated?
“Where am I losing the most money?”
“What’s working and what’s not?”
“How can I get my company to go where I want it to?

 It’s Lonely At The Top!
With the fun and excitement of owning and running a company comes much stress and strain. Overwhelmed with tough questions, no easy answers, and difficult decisions, frustrated business owners delay deciding what to do about their direction, management team, customers, equipment, marketing, profits, financial reporting, investments, and growth. When you delay or postpone necessary key strategic decisions, you continue living with mediocre employees, poor results, inadequate organizational systems, and continually struggle to keep everything moving in the right direction. Eventually you come to the realization you can’t do it all yourself and need to seek some help. Unfortunately most never get off the treadmill to look for professional advisers and make time to improve their companies. This is kind of like postponing a trip to the doctor even though you know that nagging pain in your chest must be attended to before it’s too late and you have a heart attack.

We all know that two heads are better than one. Guess what? Two heads are better than NONE too. You can’t do it alone. You might as well be stranded on an island. The odds are less than one in five or ten you’ll make the right decisions when you do it alone. And when you ask your managers or key employees for advice, they only give you their perspective on what’s best for them, not you or your company.

Want To Stay Busy Or Make Money?

Earn More, Work Less, Live Life!
As a business owner, I bet you love what you do. You’re really good at doing your work with pride, integrity, and quality workmanship. If asked, you tell people you are the best at what you do and stand by your finished product and personal service. You have spent years working hard, building your company, grooming your management team, developing supervisors and foreman, training your crews, and growing your equipment fleet. You have a small list of customers who keep your company busy and provide you steady work on an ongoing basis. Your business pays your bills and often there is a little left over to buy a boat or recreation vehicle to enjoy on the weekends. Life is good as an entrepreneur and business owner.

Then the economy gets slower. Now what?
Never thinking a slow down will affect your business, you continue to do business the same way you’ve always done and hope the economy gets better. But it doesn’t and there are less jobs to bid on now. So you lower your prices to stay busy and keep your crews and equipment working. Your good old customers don’t have much new work so you venture out into new territories. Your competitors lower their prices even more and project bid lists grow from three to six to twelve to fifteen or more. The only way you can get any work now is to be ‘stupid low’ which guarantees you’ll never see any bottom-line profit for a long time in the future. So you bid more and more jobs in hopes of landing any work you can find. You start bidding on projects where you have no experience, track record, or expertise. Anything to keep your doors open, your crews busy, equipment working, and cover your overhead. Now what?

Then you finally land a few new jobs. Relief! Back to work. But within a few months, these new jobs start coming in over-budget. These projects are different than the ones you usually work on and the unfamiliar contract clauses and specifications cause you some grief. You have a tough time working with these new customers. Your crews aren’t very efficient and productivity is poor as they know there isn’t much new work for them when they finish the jobs they’re on. So it starts costing you money to finish the few projects you have going. And your paycheck is only a distant memory as you begin to feed your company to stay afloat and keep unneeded employees and managers on the payroll as you hope to land some new work some day soon. Then your lenders start calling to meet and review your monthly profit and loss statements before they renew your line of credit. And then your suppliers call to notify your monthly accounts are late, you must get them current, or you will be put on COD. Now what?

Stop! Time out! Hold Everything!
What are you doing? Why are you slowly going out of business by spending your savings and trying to keep your crews and equipment busy? How long can you survive feeding your company every month? Do you think something good will happen quickly to renew your bank account balance? Will your long time employees help pay your monthly expenses as a thank-you for keeping them busy when you are totally out of money? Will your underutilized equipment fleet be able to produce enough cash-flow to survive? It’s time to stop and take a hard look at what you are doing right now before it’s too late.

Re-View, Re-Do & Re-New

12 Steps To Re-Vive Your Business (Part 4 of 4)
Re-Vamp | Refresh | Re-live 

10. Re-Vamp!
Every year professional teams take a hard look at their playbook. They bring in new coaches to replace the ones who didn’t develop winning plays. Even the Los Angeles Lakers are now trying a new offense instead of the triangle they have used for years. What plays do you call over and over, year after year? Have you called any new plays lately? Your management style most likely is not the best in today’s competitive marketplace to maximize the bottom-line results you want. Perhaps it’s time to RE-VAMP your field, project management, and operational systems.

Make a list of the systems and procedures you have in place which guarantee and deliver consistent results every time. Then make a list of all the problems you have experienced over the last year that has cost your company money. Then decide which problems can be solved with new plays for your team to use. For example, if you are challenged with getting paid for extra work, create a system for field changes and implement it companywide. If your employees are not being productive, challenge them to design a productivity program that increases their efficiency. If you are not achieving your project goals on a regular basis, facilitate a discussion of your team leaders and develop a system to achieve every project goal.

11. Re-Fresh!
Even winning professional teams take a break between seasons to rejuvenate. I like reading how athletes spend their time off. Most go back to their hometowns and hang out with family and friends, fish, golf, hunt, workout, do nothing, and refresh. This allows them to return to training ready to hit it even harder with renewed energy. How much time do you give yourself on a regular basis to renew?

I was speaking at a company annual convention in New Orleans earlier this year. The opening party was incredible. They had a mardi-gras parade for the group with music, jugglers, clowns, and lots of beads to throw. At the party there was a fortune teller offering advice. She approached me and asked if I wanted her ideas on my situation. She told me I needed more down time in my life. I rebutted that I play golf two or three times a week and take lots of trips with my wife. She smiled and said that sounds like work, not relaxation. She was right. I fill my down time with competitive activities or meaningful work. I rarely sit down and do nothing, read a novel at the beach, or just swim in the ocean. Wow! Stop and smell the roses. To continue building your business, take time to RE-FRESH on a regular basis. Take regular two or three day breaks to do nothing. And take a two week vacation every year. You deserve it. Plus your customers and employees will appreciate the new you too.

12. Re-Live!
Every once in a while, I dream about owning a golf course. I imagine as the owner, I will get to play golf every day, be surrounded by my golfing buddies, have lots of fun, and make money enjoying my hobby. But the fantasy becomes reality when I talk to a friend who actually owns a local golf course. He works seven days a week, sixty to eighty hours per week, is on call full time, and rarely plays any golf. Not the dream I had in mind. Are you living your dream? Is your company delivering exactly what you want it to? Why not? Never forget your dream. Write down specifically what you want your business to do for you. Next decide what you must do to turn your fantasy into reality. RE-LIVE it every day by reviewing your wish list and taking the actions required.

RE-NEW
Think like a winning coach. Stop and RE-VIEW where you have been, the results you have accomplished, and what changes you need to RE-DO your company to develop a winning team. Starting over gives you the ability to go in new directions, change what doesn’t work, and capitalize on what gives you’re the biggest return. For example, every year you decide if you’ll RE-NEW the magazine subscriptions you subscribe to or not based on which you like or give you’re the biggest bang for your buck. Do the same in your company every year. Decide which strategies, plays, and players you will RE-NEW to build a champion.

Re-View, Re-Do & Re-New

12 Steps To Re-Vive Your Business (Part 2 of 4) 
Re-Visit | Re-Tool | Re-Finance 

4. Re-Visit!
Football teams have evolved over time. Players have become more skilled, bigger, and faster. The plays coaches called twenty years ago won’t win many games today. The great coaches have had to learn to manage their team differently if they want to continue to produce winners. Now’s the time to take a hard look at how you do business and if your current strategy is viable today. I received an email from a construction company owner asking what they could do to win more work. He stated that because of the economy, there were fewer projects to bid on, and there were often twenty or more bidders on each bid opportunity. I was shocked. What was this business owner thinking?

How can you make any money competing against twenty other companies for jobs awarded based solely on the lowest price? Obviously he had been somewhat successful in the past when work was plentiful and there was enough business for everyone. But in a tighter economy, the old strategy won’t work. He needs to change how he does business big time and RE-VISIT his business plan and what he offers customers. Offering the same things every competitor does creates no competitive advantage and no profit large enough to build wealth or a sustainable company. Is your business strategy viable in today’s marketplace? Will it build a winning company that works for you? It’s the right time to take another look at how you do business and what you can do to offer something different than your competitors.

5. Re-Tool!
The business world is getting more and more competitive. Even professional sports teams are doing whatever they can to cut out the fat. As a season ticket holder to the Anaheim Ducks hockey team, I have observed their ticket renewal process becoming super streamlined and efficient. I get an email to renew my tickets with several automatic payment plan options. No phone calls or personal contact. Everything automatic. And if I can’t attend every game, they give me the option to email my tickets to friends, sell them on their website, or donate them to charity. All with a click of the keyboard online.

What should you do to RE-TOOL how you manage your business to save money and increase efficiency? To streamline your daily business activities, perhaps you should consider using your website, technology, emails, or the internet to pay your bills, invoice customers, post shop drawings, order supplies, send proposals, market your company, track deliveries, schedule employees, communicate with customers, maintain vehicles and equipment, or invest your money.

6. Re-Finance!
The best professional sports teams usually are also the best funded and financed. A strong financial foundation gives business owners the opportunity to hire the best players, market better than their competition, try new types of business models, and take advantage of opportunities. Now is the time to take a hard look at your finances, your financial systems, and your cash equity investment. I often see small companies struggle when they don’t focus on making their numbers, have good financial controls in place, and are under funded.

By installing excellent financial software managed by an experienced accounting manager, you will take a large step towards building a better company. With these tools in place, you’ll be poised and ready to seize opportunities like finding property at a reduced price or other companies in need of a cash infusion. But if you discover you are actually cash strapped, you’ll have the financials to present to another company you may want to join forces with. By merging your company with a stronger one, the joint effort will enhance the financial viability and strength of the total entity. Keep your eyes open for strategic alliances and joint ventures that will make your operation better. Look for ways to RE-FINANCE your company via mergers and acquisitions. And seek investors who will strengthen your balance sheet to negotiate tough times.