Introduction
You are an exceptional craftsman. You are second to none on the tools, your customers adore what you do and your reputation in quality is spreading. The phone is ringing and you cannot count the number of leads you have. You are successful by all means. But you are also beat, overworked and feel like you are permenantly attached to your toolbelt. It is not that you are working on your business, but you are the business.
It is the turning point most crucial and difficult to any contracting company. It is the point when you have to decide what you want to be: a highly skilled (and limited) tradesperson or a real business owner, an entrepreneur, who is able to create something, which will grow out of these two hands of yours.
Growing a business that is in a contracting industry does not necessarily mean working harder, but working smarter. It is about the strategic exchange of your toolbelt with a clipboard, your hammer with a spreadsheet and your personal effort with a system that is driven by teams. This is your map to making that trip, to go ahead of your personal victories on the job site to creating a victorious, scalable and profitable company.
The First Step: The Mindset Shift from Technician to CEO
To transform your business, you have to transform your thinking. The traits that enabled you to become a good carpenter, plumber, or painter will not be the same traits that will enable you to become a good CEO. This is the E-Myth that business guru Michael Gerber authored about the deadly presumption that a person who is excellent in the technical aspect will be excellent in running a business that performs the technical aspect.
Letting Go of the Tools
This step is most difficult and painful to most contractors. Your identity is tied to your craft. It is because it is feared that unless you are the one doing the trim cutting or tile setting, then the work will not be up to standards. But the truth is this: you cannot scale your business if you are the bottleneck. So long as you remain the main individual performing the physical labour, the income of your company is limited by the amount of hours you can bill yourself. In order to grow you have to raise yourself to a new level of performing the work to designing and implementing the systems that enable others to perform the work to your high standards.
Working ON Your Business, Not Just IN It
This is the essence of scaling. Years of experience in the business are years of experience in the job site, with a hammer in hand. Hours spent on the business are hours spent on high value-adding activities which cannot be outsourced:
- Building contacts with valuable customers and architects.
- Analyzing your job profitability and financial statements.
- Creating marketing and sales strategies.
- Hiring, coaching and developing your staff.
You want to methodically get yourself fired out of all the jobs that can be done by a system or by some other person so that you are free to concentrate on these CEO kinds of activities.
Building Your Foundation: The First Key Hires
You can not scale by yourself. The people you hire first will be the building block of your whole company. Getting the wrong individual can be a painful experience as well as getting the right individual can grow you exponentially.
Your First Hire: The Lead Carpenter or Project Manager
A cheap laborer should not be your first important employee. He or she should be a very competent professional who can serve as your surrogate at the work site. This becomes your Lead Carpenter or your first Project Manager (PM). This individual will have the sole responsibility of reproducing your attributes of quality and efficiency in the premises leaving you with time to concentrate in sales and business expansion. Seek a person who:
- Technical Mastery: They should be able to master the respect of the crew and to be able to solve problems on their own.
- Leadership Potential: They should be capable of leading a small team, should be excellent communicators with the clients and must be able to own the success of the project.
- Alignment with Your Values: They must share your commitment to quality and customer service.
The Office Support: The Administrative Linchpin
When you grow the paper work will threaten to bury you. The second important person you hire is usually an office administrator or a bookkeeper. This individual does the invoicing and bill payments, payroll and phone answering. This role might be expensive, but it is well compensated by the valuable time it saves you and your PM.
Creating the Machine: Systems and Processes
Any business that lacks systems is merely a group of individuals depending on improvisation. Systems are the written, duplicable method of doing things here that guarantee uniformity, economy and quality, no matter who is doing the job.
The Sales & Estimating Process
What is your process when dealing with a new lead? How does the process work based on the initial phone call to a signed contract? All this process must be organized. One of this is the ability to make professional, consistent and most importantly accurate bids. When the bidding process is not consistent, the profits will not be consistent. This is why having a rock-solid method for estimating is crucial, as we detail in our guide on How to Win More Construction Bids.
The Project Management Process
What happens to a project after a contract is signed and how does it become a happy, completed client? Your project management must consists of:
- Pre-Construction Checklist: A typical procedure of placing material orders, sub contractor scheduling and a pre-construction meeting with the client.
- Communication Rhythm: A set schedule for weekly updates with the client and daily check-ins with your Project Manager.
- Change Order Procedure: It is a written procedure that is formal and deals with all the changes that occur in the scope of work.
- Project Completion Checklist: A “punch list” procedure to make sure that all the details are faultless and a final stroll through with the client to make sure that they are totally happy.
The Power of Outsourcing: Your Ultimate Scaling Tool
Once you get down to developing your business, you will soon find out that there are certain tasks that must be performed but do not require the attention of a full time employee. Smarter business owners do not ask, “How can I do this?” Their question is, “How can this be done in the most efficient and expert manner possible?” This is the place where outsourcing turns into a scalping power of a contractor. Bookkeeping, marketing and web design can be outsourced.
However, the most influential activity that a developing contractor can outsource is estimating.
Why Outsourcing Your Estimating is a Growth Hack
Developing detailed and realistic estimates are very skillful yet very time-consuming activity. It is the ideal thing that needs to be done in your business but is it the best use of your time as the CEO?
- It Frees Up Your Most Valuable Asset: Your Time. When you outsource your estimating to a professional estimating service such as Fusion Assist you immediately purchase up to dozens of hours back per month. It is time you can instantly put back into sales that are high value, into relationships with clients and into the management of your team.
- It Allows You to Bid on More Work. And you are no longer the holdup in the bidding. You are able to go after a greater number of opportunities concurrently which vastly multiplies your possible revenue pipeline.
- It Improves Accuracy and Profitability. Professional estimators possess special software and are well versed in takeoffs. Not only will they make sure your bids are fast, they will make sure they are flawless-saving your profit margin on each and every job.
Case Study: From “Stuck” to Scaled
Client
An extremely talented general contractor that had reached a plateau.
Challenge
This contractor was a one man operation; doing the sales, estimating, project management and even some of the skilled labor himself. He was pulling 80 hour weeks and was continually having to reject good projects as he just did not have the capacity to put in a bid. He was profitable but stagnated and could not expand beyond his own capacity.
Fusion Assist Solution
The contractor chose to do an experiment where he outsourced estimating of three prospective projects to Fusion Assist. Rather than working on developing bids in the evenings and at weekends, he spent this time perfecting his sales presentation and also interviewing prospective candidates to fill a Project Manager position. In under 72 hours we had turned around 3 professional, highly detailed bids on his behalf.
Result
With the best proposals in the business, which he did not even need to draft, he landed two out of three jobs, which were also his most profitable projects ever. These wins coupled with the new found free time provided by those wins pushed him along. He employed a skilled Project Manager. As the PM was on the job sites and the estimating being done by Fusion Assist the contractor was able to concentrate on sales and client management. He increased the yearly revenues of his company 3-fold and employed two additional crews in 18 months. The one domino that started his growth in action was outsourcing his estimating.
Conclusion: Build a Business, Not a Job
And it is your prowess as a tradesperson that has brought you where you are today. However, the destination tomorrow will be based on your vision as a business owner. The process of growing your contracting business is not an easy one, yet so worth it. It involves a radical change in the way you think, a dedication to assembling an excellent team and the tactical acumen to put in place systems and to delegate authority. Quit being the most diligent worker in your own business and begin being the CEO that your company requires you to be.
Ready to take the first and most powerful step in scaling your business? Free up your time and supercharge your bidding process. Delegate your estimating to the experts at Fusion Assist and start working ON your business today.
Frequently Asked Questions on Scaling a Contracting Business
What do I do to know when it is the right time to hang up the tools?
The minute you find yourself regularly rejecting profitable work due to a lack of time to bid on it or to administer it is the minute you should get off the tools. When the growth of your business is constrained by the number of hours you can work, then you have reached a ceiling and it is time to find your replacement at the work place.
What is the most common mistake contractors do when they want to scale?
The worst blunder is to employ cheap labor force other than skilled leadership. Most contractors will attempt to get a cheap helper initially to save on money. It would be the wiser step to get a competent Lead Carpenter or PM first, who can do the projects and crews to your standard. This executive recruitment leaves you free to secure more work, the driver of growth.
What can I do to ensure quality control when my company expands?
Through systems. Your quality standards must be written down in checklists, procedure manuals and training manuals. Enforcement of these standards on-site is the role of your Lead/PM. Quality should not be in your head but it must be in the documented process of your company.
What is the best way to finance the development of my company?
The scaling would need funds to employ new people, acquire new equipment and do marketing. Begin by making sure your jobs are always profitable through the right estimates. Keep your bank on good terms and look into the possibilities of a business line of credit. The main engine of sustainable growth is reinvesting a large part of your profits in the business. There are business resources, such as SCORE, that may provide free mentoring on business financing.
Is it not costly to outsource my estimates?
When you outsource estimating, you need not think of it as a cost, but rather as an investment with a humongous ROI. Determine the value of an hour of your time when it is used in high-value sales activity. When outsourcing your estimates saves you 10 hours/week to secure an additional profitable project each month, the service is more than worth its weight in gold.
