Category Archives: Investments

Fill The Seats Or Go Broke!

If you were the owner of a NFL football team, your number one goal would be to fill all the seats every week. To fill seats takes a multiple approach. You must put a winning product on the field and you must sell seats. Seats don’t sell themselves. It takes a huge effort to create sellouts at profitable ticket prices.

Over the last ten years, you didn’t have to sell very hard to keep profitable revenue flowing into your company’s coffers. If you put a mediocre team on the field, called the usual plays, and used an average business strategy, your customers would keep coming back for more, if your price was somewhat competitive. And because business was plentiful, you didn’t have to try to win over many new customers. You stayed focused on doing the same type of work for the same type of customers and your business grew. Because there was enough work, you also didn’t have to try different types of projects, customers, or contract delivery methods. In fact, you even prided yourself as a specialist in a very focused type of business niche.

Fast forward. Today it is hard to fill the seats, revenue is scarce, and customers are hard to find. Having a winning team doesn’t matter if they can’t find a game to play in. You’ve cut your overhead and reduced your expenses as low as you can to survive. You continue to bid more and more work against too many competitors at lower and lower prices. Now you are even calling on new and potential customers you really never wanted to work for. You’re trying to get on any bid list you can including public works, which you always avoided because of the paperwork and prevailing wage issues. You’ve assigned your office manager or estimator to cold-calling and emailing any lead they can find in hopes of a miracle. Nothing is working and getting new business at a reasonable price is next to impossible.

Now what? You’re thinking you’ve got to fill the seats with paying customers or go broke. If the sudden slowdown in the economy taught everyone one thing: ‘Putting all your eggs in one basket won’t work forever.’ Many contractors and business owners focused their efforts on doing only one kind of project and service for one type of customer. For example, to keep revenue and jobs flowing in, many focused on only building housing tracts, or shopping centers, or industrial parks, or custom homes, or office building interiors. Some focused on building for general contractors, developers, or home builders. Some expanded and did more than one type of project. But, most didn’t crossover into totally different or diverse types of work. And offering a service component to their revenue stream wasn’t even considered as they were too busy to mess with little jobs.

Multiple streams of income sells more seats!
A diverse business plan includes three types of revenue streams with many different types of projects per stream. For example, here is a partial list of the unlimited revenue and business opportunities contractors have to choose from:

Multiple Revenue Streams & Opportunities          

1. Contracts & Bids

Private Construction
Retail shopping centers
National chain stores
Industrial buildings
Manufacturing & factories
Metal buildings
Office buildings
Banks
Medical buildings
Hospitals
Self storage
Renovations
Interior Improvements
Utility Company Projects
Housing Tracts
Custom homes
Residential remodeling
Residential home upgrades
Residential replacement work
Site improvements

Public Works Construction
Schools
Offices
Hospitals
Facilities
Roads & highways
Transportation projects
Sewer & water projects
Storm drain systems
Plants

2. Service Work & Ongoing Accounts

Ongoing Monthly Or Annual Accounts
Property management
HVAC maintenance
Electrical maintenance
Plumbing maintenance
Landscape maintenance
Site service & management
Spring & winterization
Light bulb replacement
Roof service
Road and drainage repair work
Generator service
Energy management & controls

Repairs & Service To Fix Broken Components
Plumbing & mechanical repairs & upgrades
Window replacement
Tenant improvements
Tenant relocation
Carpet and flooring service
Building damage repair
Clean-up and debris removal

3. Wealth Building & Passive Income

Own income producing real estate

Rental homes
Apartments
Shops and yards
Industrial buildings
Offices
Shopping Centers

Own income producing businesses
Rental equipment companies
Wholesale materials
Supplier
Services Continue reading

The Business Do Over!

In sports, the coach gets to start over every season. Winning coaches look at their past records and make positive decisions of what they need to drastically change and achieve better results. If they continue to play the game the same as they did last several seasons, they won’t continue to build and win. They have to look at how they play the game, players, coaches, methods, offense and defense, training, strategy, and tactics.

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. 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

Re-View, Re-Do & Re-New

12 Steps To Re-Vive Your Business (Part 3 of 4) 
Re-Structure |  Re-Focus | Re-Build

7. Re- Structure!
Most companies use the same unwritten organizational chart for years without ever changing it. The owner is at the top of the chart and accepts most of the important roles like chief salesperson, general manager, chief estimator, and money manager. But over time, the old chart doesn’t work as business and customer demands change. For example, on a professional baseball team, the marketing manager used to be in charge of advertising on television and in the newspaper to sell tickets. Now ninety percent of marketing is done over the internet. Managing internet marketing requires a different skill and talent than the old role of marketing manager.

What outdated positions do you still have? What new positions do you need to compete today? Using the example of a professional sports teams, you should also consider changing the way you stay in touch with past customers and attracting potential customers. Your old equipment manager was a glorified mechanic. Now he needs to be fully responsible to get a return on your equipment investment plus keep everything working efficiently. The old role of an estimator was to prepare quantity take-offs and put a price on jobs. Now he must be a director of presentations, video modeling, power point slide shows, and master of negotiating complicated design-build contracts with professional engineers. The old role of general field superintendent was a pusher and problem solver. Now he has to be fully computerized to coordinate complex challenges, field scheduling, material expediting, crew productivity rates, and contract management. Perhaps it is time to RE-STRUCTURE and take a hard look at your company organizational chart, job responsibilities, and who is in charge of your operations.

8. Re-Focus!
If you’ve never played ice hockey, you’ll find it’s a hard game to follow, confusion, low scoring, and very technical. Therefore you probably would never consider buying a ticket or going to a game. To expand professional hockey into the warmer lower states in the USA, the NHL had to offer more than hockey to the non-hockey crowd. They had to realize the game they had always played in Canada, while exciting to Canadians, won’t sell tickets in the USA. They had to change their focus from hockey to entertainment.

What does your company offer or do different to attract customers to pay full price for your services? Have you changed your marketing strategy, proposal, bid presentation, image, or guarantee to gather new fans of your company? Have you changed your target market, project types, or delivery systems to expand your customer base? Trying to convince customers to hire your company using the same old bid strategy and low price methodology won’t get them to buy tickets from you at premium prices. It is time to RE-FOCUS your customer strategy and look for new customers in new markets and new project types by offering something exciting that will fill seats and get customers excited about paying your company what it’s worth.

9. Re-Build!
When the National Hockey League added the Anaheim Ducks, it quickly became one of the hottest teams in the league in merchandise sales. They had teal and purple jerseys which stood out and attracted lots of attention. But over time, they looked dated, too cute, and not tough enough for true hockey fans. So sales of their gear slowed. A few years ago, Disney sold the Ducks and the new owners who decided to change the look of the team. The fans were skeptical and said it wouldn’t work. When the new tougher black, gold, and orange jerseys were revealed, fans started buying again and the team won the Stanley Cup championship the next year. Now, merchandise sales of Ducks gear is at the top of the charts in the league.

Image isn’t the only reason the team won the cup. But it did help. The Ducks were able to change their colors, look, slogan, music, theme, and perception in the league. The new look felt like a winner and created excitement. It gave the fans a new reason to cheer and opponents a look to fear. Take a fresh look at your overall company image, logo, stationary, proposal format, communications, presentations, uniforms, trucks, job signs, office, showroom, business cards, and website. Do they create any excitement or are they old, tired, and like everyone else’s? Do they give out the right professional clean impression to your customers? Does it make your employees proud to be a part of a winning team? Does it promote technical expertise and value? Now is the right time to RE-BUILD your image. To be the best, customers must perceive you are the best.

The Sad Truth About Small Business Owners

Talk to 95 out of every 100 small business owners with less than 100 employees and follow their progress for 10 to 20 years. You will hear the same sad story repeated over and over. They work too hard for the effort and risk they take. They don’t make any real money or have enough left over to invest. They can’t stop working or take much time off to do what they want. They can’t find any good help. They sell low prices to get most of their customers and revenue. They’re out of control and spend too much time putting out fires. They wish they could start saving some money and can’t figure out how to make their business better.Only 5% of small business owners will ever become wealthy or financially secure.

Why? 95% don’t implement the 8 key success factors that guarantee you can get your business to work for you:

1. Have a Passionate Vision
2. Written Clear Targets & Goals
3. Structured Organization
4. Accountable Responsible Management Team
5. Operational Systems Run the Business
6. Hit the Numbers & Make A Profit
7. Unique Delivery System
8. Pro-Active Sales & Marketing
9. Seek Wealth Building Opportunities

What key are you missing in order to help your business reach it’s full potential?

Why Companies Fail!

The number one cause of small business failure is when the owner doesn’t make the necessary changes required to build and sustain a successful company. They continue to tread water and do business the same way they always have. What do entrepreneurs do when they face tough times and need to make some big changes? They do something! Anything! They try new ways and work different. They start moving and call the necessary plays to win in any environment.

You have to make tough decisions. When one of your subcontractors asks to get paid for the 27th time without a signed change order, give him the right answer: “no!” When your project manager is over-budget again, replace him with the right person. When one of your 20 year superintendents doesn’t fill out his timecard correctly for the 8th year in row, give him one last warning to do it right or don’t come back. When a family member employee isn’t cutting it, do the right thing and let them go. When your estimator makes another mistake on the bid, replace him with the right person and the right software. When one of your long time customers doesn’t pay you on-time again, tell them never again and start looking for the right customers for you. When your accounting manager gives you the monthly financial statements four months late again, find the right controller who will do the right job. When you catch one of your employees lying to you or stealing time or money, eliminate them and find the right people.

You have some choices to make. You can ignore reality and continue to tread water by sitting and waiting for “it” to change and hopefully get better. Or you can make a decision to do and work differently. In other words, be an entrepreneur and get back to building, or do nothing and hope for change. Here is a small list of 15 changes you can make to ‘re-entrepreneur’ your company:

1. Preserve cash now!
Postpone purchases except those which will make you money. Invest in marketing, your website, sales, and customers.

2. Cut overhead now!
Hold a contest for your employees to find ways to cut your overhead by 25%.

3. Keep the best & fire the rest!
Now is a good time to get rid of your poor performing employees or those with bad attitudes. You can easily find great replacement people who want to do an excellent job.

3. Control job costs now!
Hold an all field meeting and ask for money saving ideas. Reward the best ideas with an incentive. Have them think about your general conditions, labor costs, productivity, safety, and schedule.

4. Get out of debt now!
Meet with your banker and work out a plan to pay off all of your high ticket loans. The interest rates are now lower. So consider consolidating all of your loans into one low cost payment plan.

5. Cut equipment costs now!
Get rid of every piece of equipment you own that doesn’t make you a profit every month. If you haven’t used it in weeks, sell it now. You can always rent equipment when you need it.

6. Subcontract more now!
Why keep extra crews sitting around waiting for the next job. Make a deal with another competitor to share your crews to keep your costs lower.

7. Add profit centers now!
What can you do to expand your business? A roofing contractor started a pallet company and now does over $1,000,000 in pallet sales.

8. Add new project types now!
To grow you must expand your project types. Go out and land some new work in new territories and project types.

9. Buy real estate now!
Seek opportunities to turn your built-up cash reserves into wealth building investments. Start buying a small rental property you can fix up with your expertise and crews.

10. Seek better subcontractors & suppliers now!
The slow down gives you the time to find better subcontractors and suppliers who will give you better service and lower prices. Do it!

11. Get close to customers now!
Go and visit your top 20 customers this month. Take them to lunch or to a ballgame. Get to know them better. Ask them how your company can offer more services to get more of their work.

12. Find new customers now!
Make it your urgent goal to find at least ten new customers in the next 3 months.

13. Offer more services now!
What else can you offer your customers to get more of their work? Consider design-build, pre-construction services, total team approach, partnering, maintenance, build-to-suit, joint ventures, asset management.

14. Bid more work now!
You will need more work to keep your total profit margin at the same level. Gear up to bid at least 33% more projects.

15. Have more fun!
Make a decision to stop whining and complaining about the economy, the market, your competitors, your customers, the President, or your current situation. Be positive. Look for the good in everything. You attitude is your choice. Choose to be happy.

Are you acting like an entrepreneur?

When you look at successful businesses and how they succeed in good times and bad, you’ll notice they are focused on building their business. They focus on hitting their numbers, making a profit, increasing their stock price, purchasing or investing in new markets, seeking joint ventures, growing their revenue, finding new customers, buying new businesses, developing strategic alliances with other companies, or finding new business ventures.

Today is a great time to approach struggling competitors and ask if they would consider joining their company with yours. The strong will survive. The weak shall perish. Why not take advantage of the opportunities right in front of you and do something to be successful?

Do You Have Your Act Together?

A balanced and ‘On-Purpose” business is never built with good intentions. It happens when the business owner stays focused on what really matters. As you observe successful and profitable business owners who have their act together, think about:

What characteristics set them apart?
What do you admire about them?
What’s their primary focus?
How do they spend their time?
Do they get to their priorities?
What’s their key to success?
What do they do that you don’t?
What don’t they do that you do?

Successful Business Owners Live Their Priorities!
When you observe successful business owners, you notice they live their priorities. I have a very successful business friend who owns a major construction company we compete against. His company is continually recognized as providing the best service and quality in our marketplace. Plus, he makes lots of money, and seems to have lots of time for his family, friends and customers. He surrounds himself with a top management team. He makes customers his top business priority. I see him at the golf course weekly with a foursome of well know business executives and customers. He annually hosts numerous customer fishing trips to Alaska and other outings. In addition, he takes several extended vacations with his friends to great golf resorts, and weekends with his wife and children on a regular basis. He is truly living his priorities. And his personal and business bottom-line is doing very well as a result.

Check Your Priority Scale!
When you put immediate business pressures first, you don’t have time for the important things that make you the most money and give you the greatest returns

Continually Ask Yourself:
– Is this a good use of my money, my time or my energy?
– Is this activity moving me towards achieving my targets
   and goals?
– Am I doing what I should or want to be doing?
– Am I living my priorities or someone else’s?

It is meaningless to waste energy on doing things right, while doing the wrong things. The more problems you fix for others, the less they do for you. Employees work for their boss. The boss doesn’t work for employees. As soon as you realize the reason for having employees is to get them to do what you want them to do, allow you do grow your business, allow you to make more money, and allow you to work on your top priorities, the sooner you’ll start getting your business to work for you.

Only accomplishing YOUR priorities will make your business successful. But, if you never get to them, your business will continue to struggle and you’ll have to keep doing all the ‘important’ work yourself. The more you do, the less they’ll do! The more you do tasks that your employees should be doing, the less you’ll make! What are your priorities this week? What will make you the most money and give you the greatest return over the long haul? What activities will give you the greatest return – taking a loyal customer to a major league baseball game or sitting at your computer and ordering all the materials needed to keep your employees working today?

Boost Your Bottom Line! 20 Business Tools To Build Bigger Profits

1. Buy Low and Still Sell High
2. Double Every Discount!
3. Be Low & Then Charge More!
4. Buy In Bulk!
5. Get Another Quote!
6. Mark-Up Your Mark-Up!
7. Trash Your Tools!
8. Estimators Are Not Professional Visitors!
9. Empty Your Yard!
10. Finish Faster Quicker!
11. Clean Out The Dead Wood!
12. Do More to Get More!
13. Markup Smaller Bigger!
14. Fire The Deadbeats!
15. Collect Your Cash!
16. Multiply Your Money!
17. Stop Giving It Away!
18. Two Heads Are Better Than One!
19. Accurate General Conditions
20. Motivate With Money!

Increasing your bottom-line is a tough task. Many competitors price work too low  which doesn’t allow you to charge enough for the service and quality you want to provide. Your employees aren’t as efficient as you want them to be. The weather and other trades get in your way and slow you down on the jobsite and hurt productivity. Poor plans and specifications stop your progress while you get clarifications from the architect or engineer. And then, trying to get paid is not an easy task either.

Every dollar counts. Every penny wasted is precious and can add up to thousands of dollars at the end of the year. So what are you to do? Maximizing your profit must be a top priority right along with getting your projects completed. By taking a little time focusing on increasing your net profit will boost your bottom-line and allow you to make a lot more money. When you’re too busy working, don’t forget to take enough time to focus on your finances, financial tools, and business strategies which will make you more money. Consider implementing these tips and tools to grow your bank balance.

16. Multiply Your Money!
When I ask construction business owners specific questions about their finances, many respond they don’t really know much about their numbers. They let their wife or bookkeeper worry about the money. To me this is an oxymoron! Work all day stressing and struggling trying to get things done but don’t really care or know much about how much money they’re making. The main purpose for owning and managing a company is to make a profit and increase its’ net worth. In order to make this happen, you should also focus on your numbers as part of your everyday activities to stay on track and get the results you want.

A simple way to multiply your money and increase your net profit at the end of the year is to manage your cash aggressively. It doesn’t take much time, but can return a nice sum of money for your efforts. If your company is generating $3,000,000 in annual sales, you will average $250,000 in monthly revenue. Most likely you collect your money throughout the month but only pay your bills twice a month. This means, on average, you should have a bank balance of around $125,000 at all times. If you average $50,000 monthly in materials and are offered a 2% discount for quick payment, this will generate an extra $12,000 annually. And if you invest your cash balances in interest bearing accounts or programs, you should be able to make another $5,000 to $15,000 every year. Not bad for a few minutes a week of time focused on your money.

Make an appointment with your business banker and discuss the many options and programs they have to maximize the return on your bank balance. Ask them about “sweep accounts”, “overnights”, “money market accounts” and “T-bills”. A good banker wants you to make as much money as you can. After the meeting, decide how your company will invest their money and then delegate the task to your accounting manager. Track your monthly progress and watch your money multiply.

17. Stop Giving It Away!
If you had ten dollars for every extra work item your company, project manager, field superintendent, or foreman did without a signed change order before the work was performed, could you have retired several years ago? When your customer asks for extra work, why is it so hard to get it in writing? Everyone knows the contract requires signatures on change orders prior to starting extra work. But when you postpone getting a formal approval for extra work until days, weeks or months after the event occurred, you have no leverage. And when you have no leverage, your customer is in a great position to negotiate the final price with you, change their mind, or decide the work wasn’t really extra and should have been included in the original contract.

Present a complete cost breakdown for every proposed change order your customer requests in advance of starting the work. Use a standardized format and cost template to make sure you include everything the additional work actually costs. Every time extra work is performed, the followings costs occur:
   – Project Management to process the paperwork
   – Supervision to supervise the work
   – Accounting to pay for the work
   – General condition costs – job takes longer to build
         • Trailer & toilets
         • Power & power poles
         • Utilities
         • Truck
         • Equipment
         • Small tools, ladders, etc.
         • Small items: nuts, bolts, hardware, etc.
         • Temporary protection, barricades, etc.
     – Liability insurance
     – Overhead
     – Profit

Don’t short change your company by not asking for everything you deserve. I see most change order requests presented as labor, materials, and subcontractor costs plus a markup without extra costs for the many items listed above. If your company does $3,000,000 in annual sales of which $300,000 is performed as change orders or on a cost plus basis, not charging for everything you spend can cost you as much as $30,000 or more per year in lost revenue for things that you actually had to pay for.

18. Two Heads Are Better Than One!
As a progressive leader of a growing construction company, I wanted my key project managers and superintendents to accept more responsibility. As a result, I tried to delegate as much of the work to them as possible including writing subcontracts, ordering materials, signing contracts, and approving change order requests from subcontractors. Time went on and my inspection of their actual work became less and less as I trusted them more and more. But then the worst scenario happened and we experienced some major financial setbacks. A customer pressured a project manager to agree to some contract clauses that seemed innocent. Months later, when the project was nearing completion, the customer held us to these clauses which added lots of items into the scope of work we never had intended to do. Upon my review, it was obvious the project manager had agreed to contract terms he didn’t understand.

This caused me to take a hard look at how we do business. I discovered many problems with our ‘trusting’ system we were using. Some project managers were not getting the complete scope of work included in many subcontracts they were writing thus causing cost overruns on several projects. Some managers were not tracking their employee timecards properly and keeping track of all the vacation time they were taking. Some managers were approving expense accounts without reviewing all the bills in detail. The payroll department wasn’t charging costs accurately to the right jobs and cost codes. And I found some people were ‘stealing’ from the company using creative accounting. Oh well, some much for trusting your long term employees 100%.

It is my opinion people over time feel entitled to a little bit extra the longer they work for your company if you give them the chance to take advantage of the situation. Little things like leaving early without docking their own pay, asking a supplier for a little material for their home remodel, filling their car with gas using the company credit card, and lots of other little things add up to big bucks. In order to remedy the situation, we re-implemented our company policies and made it clear there would be no exceptions for anyone regardless of their tenure, relatives, or position in the company. Theses new rules required two people to review, approve and make every decision involving company contractual commitments, financial obligations, payments, or monetary transactions including the following:
      – All contract terms and conditions
      – All subcontract pricing, awards, terms & conditions
      – All checks issued
      – All change orders
      – All expense account approvals
      – All employee reimbursable items
      – All overtime pay or requests
      – All vacation or time-off requests
      – All payroll preparation
      – All sick time approvals
      – All project payables
      – All job purchases

19. Accurate General Conditions
Estimating accurate general conditions for projects can be a simple task when the estimator is accountable to get it right. Most estimators use unit prices which are never checked against the actual final job costs. For example, creating a budget for temporary toilets seems easy. An eight month job should cost 8 times $100 per month = $800. But when the field superintendent sees there are 40 men on the job, more than one toilet and more than one servicing a week is required. This might increase the actual job cost by as much as $200 per month. These extra costs will add up to lots of lost cash.

The estimator’s job is to calculate an accurate bid of what it will cost to build each project. After every job he must look at the actual job costs and see if he miscalculated any items. Before he prices the next job, he should get with the project manager or superintendent to determine what will be required to run the project he is currently bidding. Take a hard look to determine if you are charging the right price for:
     – Project manager, superintendent, and their vehicles
     – Project photos, sign, as-built drawings, etc.
     – Temporary facilities, trailers, toilets, sanitation, etc.
     – Temporary utilities, electricity, power poles, water, phones, etc…
     – Temporary fencing, gates, barricades, site lighting, heating, etc…
     – Safety, first aid, shoring, access roads, security guards, etc… 
     – Water quality control, dust control, etc….
     – Trash, cleanup, window washing, final punch-list

20. Motivate With Money!
I get asked about profit sharing programs at every convention I speak at. Incentive compensation can be broken down into two types: earned or arbitrary. Earned incentive compensation is based on a specific formula that rewards for results based on tasks, accomplishments, or results you want to measure. Arbitrary compensation bonuses are based on what the boss feels is the right amount to pay for good work, reward for a positive attitude, or a thank-you for a job well done. It is often based on what the boss thinks is expected to keep employees happy.

I don’t think arbitrary compensation encourages employees to do their jobs faster or better. But often it is expected as a part of the overall employee compensation package because other companies do it or employees feel entitled to something at year end. To me this is no more than a gift of generosity from the employer as it is not required. It’s a nice gesture and will keep some employees from looking for jobs elsewhere until after they get their year end bonus. But they usually don’t make the company any more bottom-line profit.

Extra compensation based on measurable results will produce positive bottom-line results. If employees know what’s expected and are compensated for hitting their targets, they will hit them.

If they don’t know the exact results expected and don’t have a reason to achieve them, why should they want to go the extra mile? This requires the boss to determine the exact results that will make the company more money. For example, if you want an eight month project finished in 7 months, a generous bonus for the crew or superintendent will keep the team focused on achieving the goal and motivate them to hit the early completion target. Without a financial incentive, the target is a nice idea but of no benefit to the crew to finish early or work harder.

Our workers compensation insurance rating was suffering due to field employee claims for jobsite injuries. We implemented a ‘Safety Bucks’ program to motivate the crews to work closely together and watch out for unsafe workers or conditions. Each worker received $1 per day if the entire crew had no accidents. If anyone on the crew had an accident, no one received the safety bucks for the period. We paid this cash bonus out quarterly. This instantly focused everyone on all of our field crews on safety and making sure their were no accidents on the jobsites. This program really worked as it kept everyone focused on the target. Plus I always enjoy giving out bags of bucks to my field crews for no accidents! Examples of measurable clear targets can include:
     – Total man-hours to complete a job
     – Hours without an accident
     – Project milestones completed by a date certain
     – Customer referrals
     – Project punch-list or close-out completion
     – Improving your bid-hit ratio
     – Customer satisfaction
     – Project profit
     – Project completion and sign-off by customer
     – Change order profit
     – Estimating accuracy
     – New customers signed-up
     – Average job size increase

Making the most money you can is fun if you make it your priority. Too often you get so busy you don’t have time to do the little things to boost your bottom-line. Give several of these twenty tips and business tools a try and you will make more money. See you at the bank!

Don’t Get Caught With Your Pants Down!

Last month I reported the recession is over. I received several emails responding that it is not over. Some of you even sent me articles and statistics showing the recession will last a lot longer into the future. I realize the business slowdown is here to stay. But, it is your decision to wallow in the negative or look for positive things you can do to grow your business and make a profit.

When the financial tides kept coming in for years, we were lifted up, up to our eyeballs in business, and making money was easy. When the tides went out, we were left standing in shallow water with our pants down. An ugly sight!

In an issue in Forbes magazine, it shows that most industries have bottomed out and are now making more profit than they were when the economy was booming. Why? They have trimmed the fat, increased efficiency, improved productivity, reduced excess inventory, eliminated poor performing products or services, and have intensified their focus on attracting profitable customers.

I am looking forward to 2011 as a fresh new beginning. Your choices are to “Be a has-been in 2010” or “Win in 2011!” I choose winning! When the economy was booming, most companies only had one source of revenue. The recession has shown us we need 3 types of income to weather the storms. Over the next few months we will be increasing our business in 3 different areas. First we will be expanding our ongoing continuing revenue and service business. Second, we will be seeking wealth-building investments that will bring in positive monthly cash-flow. And third, we will be working hard to improve our one time contract business.

What about you? Will you get caught with your pants down as the tide goes out some day in the future? As a thought, why don’t you consider joining one of our ongoing Executive Roundtable Groups. I am forming 1 or 2 groups starting in 2011. These groups of up to 12 other company owners and managers will meet 3 times per year in a peer group format. Everyone will get to share their challenges and get input to help them improve and grow their business. Shoot me an email to get the complete brochure: gh@hardhatpresentations.com.

Learn more about the Executive Roundtable Groups by clicking the link below

Profit-Builder Circles – Executive Roundtable Groups