5 Stages to Contractor Success
By bcbmelanson
SUCCESS! You started out doing small jobs, gradually worked your way up to medium sized jobs, and now you can take on anything that’s thrown your way. Surely you had some help getting there, but what was the processes you used to ensure your success?
In the past, just keeping your head down, working hard, and having a good reputation with lots of referrals was enough to be a successful contractor. Times have changed, and it’s not necessarily the companies who do the best work who win the best jobs. We’ve outlined the five stages to running a successful contracting business below – which stage are you in?
In the past, just keeping your head down, working hard, and having a good reputation with lots of referrals was enough to be a successful contractor. Times have changed, and it’s not necessarily the companies who do the best work who win the best jobs. We’ve outlined the five stages to running a successful contracting business below – which stage are you in?
1 – Plan
Every successful business in every industry starts with a plan. Your plan could be as simple as deciding what you’re going to provide, who you’re going to work for, and how you’re going to price your services, or it could be an in depth look at your operations, marketing strategy, financials, and sales forecasts. Typically for contractors, we only need a simple, strategic plan
The main goal in your planning should be to get something down on paper that provides clarity on who you are and what you do, why you’re in business, and what your values are, with a direction on where you want to go in the future. If you’re a plumber who works on commercial projects for general contractors, then write that down. Don’t overthink here, keep it simple and let the plan evolve with your business.
We’ve developed a simple, one-page document to help you create a strategic plan. If you want access to our one-page strategy plan, you can download it for free here.
We’ve developed a simple, one-page document to help you create a strategic plan. If you want access to our one-page strategy plan, you can download it for free here.
2 – Market
Whether you’ve been around the industry for 50 years or you’ve just started your construction company, marketing will be one of the most important aspects of your business. Even the most successful construction companies in the world still allocate 7-10% of their top-line revenue to their marketing budgets.
A marketing strategy will allow you to define your ideal client and the type of projects you want to work on, and then allow you to create a game plan in order to reach those markets. Everything becomes easier when you have a dialed in marketing process because you’re no longer chasing the next project or worried about where the next job is coming from. When you develop and implement an effective marketing strategy, you’re able to get consistent, quality incoming leads for the right type of work.
A marketing strategy will allow you to define your ideal client and the type of projects you want to work on, and then allow you to create a game plan in order to reach those markets. Everything becomes easier when you have a dialed in marketing process because you’re no longer chasing the next project or worried about where the next job is coming from. When you develop and implement an effective marketing strategy, you’re able to get consistent, quality incoming leads for the right type of work.
3 – Document
This might not be the sexiest part of running a contracting business, but it’s the one that will get you noticed, get you paid, and keep you out of the court room. Your client is forming an impression of you from your first conversation, and the way you communicate (especially through written communication) can dictate your success or failure throughout a project.
Starting with the bid process, you need to present yourself and your company professionally. When you ask questions about the bid, submit a formal RFI document. When you submit your bid, use the bid form provided (if applicable) and attach your own professional quotation document. When you’re asked to do extra work, have a formal change order process that includes documenting the revisions in time and cost and having that approved by your client. Having some simple templates in your toolbox can save you thousands of dollars and countless headaches every year.
Starting with the bid process, you need to present yourself and your company professionally. When you ask questions about the bid, submit a formal RFI document. When you submit your bid, use the bid form provided (if applicable) and attach your own professional quotation document. When you’re asked to do extra work, have a formal change order process that includes documenting the revisions in time and cost and having that approved by your client. Having some simple templates in your toolbox can save you thousands of dollars and countless headaches every year.
4 - Track
You can’t manage when you don’t measure. You should understand what you need to do as a company to be profitable, and then have a system to track against those key performance indicators (KPI’s). Almost everything you do in your contracting business can be flushed out by understanding your numbers at a deeper level. If you’re constantly making less profit than expected on your projects then there’s an issue somewhere in your organization.
Issues can range from estimating errors to productivity issues, and every aspect of your operations can be analyzed when you look closely at your numbers. Why did you make a better profit on Job A than on Job B? Was it because your management team spent more time planning? Were your workers more productive? Was the site better laid out or better organized? You should understand why some jobs turn out better than others, keep doing what’s working, and stop doing what isn’t working.
Issues can range from estimating errors to productivity issues, and every aspect of your operations can be analyzed when you look closely at your numbers. Why did you make a better profit on Job A than on Job B? Was it because your management team spent more time planning? Were your workers more productive? Was the site better laid out or better organized? You should understand why some jobs turn out better than others, keep doing what’s working, and stop doing what isn’t working.
5 – Standardize
Implementing systems and processes into your construction company is a game changer. When you’re able to implement a structured process into your day-to-day activities, everything becomes more efficient. Adopting standardization doesn’t mean that everyone has to be a robot and refer to a step by step guide for every task, but it allows everyone the opportunity to share knowledge and create better ways of operating as a team.
From quality control checklists to standard operating procedures (SPO’s) and hiring processes, standardizing the core processes in your business will allow you to sustainably scale your operations. It is recommended to involve your team, the ones who will actually be using the newly created procedures, when creating SOP’s or checklists. When the team is involved, everyone becomes more accountable and the process of adopting the new standards goes much smoother.
From quality control checklists to standard operating procedures (SPO’s) and hiring processes, standardizing the core processes in your business will allow you to sustainably scale your operations. It is recommended to involve your team, the ones who will actually be using the newly created procedures, when creating SOP’s or checklists. When the team is involved, everyone becomes more accountable and the process of adopting the new standards goes much smoother.
Next Steps
Once you have a plan to get you from where you are now to where you want to be, you’ve got a steady flow of qualified leads knocking at your door, you have the tools to properly document your projects, you know your KPI’s and you’re consistently hitting your profit goals, and you’ve standardized the core processes in your business, then you can start to scale.
Scaling your contracting business comes with inherent risks as you will ultimately need more of the limited resources available. By dialing in the 5 stages above, your team will be able to have more success on more projects, and you’ll be able to sustainably scale without biting off more than you can chew.
If you want to talk to us about any of these stages, or you think you’re ready to scale your contracting business, you can book a free strategy call here.
Scaling your contracting business comes with inherent risks as you will ultimately need more of the limited resources available. By dialing in the 5 stages above, your team will be able to have more success on more projects, and you’ll be able to sustainably scale without biting off more than you can chew.
If you want to talk to us about any of these stages, or you think you’re ready to scale your contracting business, you can book a free strategy call here.
