Tips for Improving Your Business
Question: I have been having production problems. As my business has grown, my guys are not getting the job done on time. What can I do to fix this problem?
Answer: There is no magical answer when it comes to production. There are several lines of attack that you can take when trying to turn production around. Option one is to use your cost information to identify the foremen, exact types of jobs, etc. All types of discoveries can be made. You may discover a training problem or possibly that a particular foreman cannot handle the job. Maybe your crew sizes or the type of work you do has changed. It is easier to go right after the source by identifying and isolating the problem. As companies mature, leadership must be able to recognize and concentrate on problem areas.
The other option is to roll up your sleeves and get in the center of it all. Contracting is a field business and it is easier than you might imagine to be a shirt-and-tie contractor. Regardless of how large your contracting business becomes, the field is where both the gold and landmines exist. Many contractors mistakenly think they never have to be around the job. When the field guys don’t see you on the job, some begin to think the boss is made of money. Others simply get sloppy — almost like children who act up because they want attention. As odd as it may sound your employees may simply miss the owner’s input.
Other issues are foreman training, job set-up and communication systems. My experience has been that when a small contractor stops working with his or her tools, production costs can increase as much as 20 percent. Most individuals believe this happens because the employees don’t work as hard. While this may be true, such logic is really driven by the Depression-era value system your dad beat into you. Hard work alone will not guarantee success and the project probably misses the owner’s intellect more than his or her hard work.
Owners are usually excellent frontline supervisors and perform a much better job of layout, planning and material handling than a new foreman might be capable of doing. It is also important to remember that the person who estimated the job clearly understands what production strategy, materials, tools, equipment and other details were used to develop the estimate. If the owner is not going to be on the job, it is important to have a system that clearly defines how the job was estimated and the time allotted for various tasks.
Question: The seasonal nature of my contacting business seems to devastate my company’s ability to have a consistent workforce. Do others have this problem?
Answer: Absolutely. The seasonal nature of contracting makes employment even more difficult. In the ‘60s and ‘70s, many construction employees were content to draw unemployment, hunt all winter or just accept the fact that seasonal employment was the nature of the job. Today the general shortage of skilled people has made it difficult to keep people who are not employed year round.
A key to overcoming this problem is to focus on developing key foremen and field supervisors. Successful companies must have foremen who can help expand the workforce by managing inexperienced people. Selling enough winter work to keep your people busy and then expanding in the summer must be part of a successful contractor’s strategy. Some contractors use seasonal workers, others use students or just accept the fact that the summer people will be much weaker than others. Foremen must understand and appreciate this. If foremen merely moan and groan about the poor workers who are hired and perceive the problem to be strictly an office problem, a difficult situation becomes unbearable.
Hiring skilled people can really be tough. Most good people are employed somewhere else and not looking for a job. Focus on hiring people who will work hard and having your foremen manage them.
Question: I try to give good estimates to customers. I take careful measurements, try to match the products I think they need for the job and try to be fair with my pricing. However, I seem to be getting fewer and fewer jobs. Not as many people seem to call me back once I have mailed them the estimate. Are other contractors having this problem?
Answer: You sound like a “stealth bomber” contractor to me. The stealth bombers come into neighborhoods while people are away, measure their house and mail an estimate. Or at best, they meet with the customer once and then mail the estimate. These contractors do very little selling with almost no connection between themselves and the owner. They seem to think that by reading the estimate, the customer will somehow magically understand why their prices are higher and they are a better investment than the competition.
We all know that the “station wagon warriors” and “trunk slammers” are cheaper than a contractor with a real business. Ironically, even the most successful contractor probably started out with this type of business profile. In the beginning start-up contractors can afford to be stealth bombers. Prices can be really cheap because the owner performs much of the work. Most of the jobs are referrals because they do little or no advertising. Competition is usually not a big issue; so they can mail the estimate and automatically win the job.
But as the business grows, costs begin to rise, and the contractors start to do things like buy bigger yellow page ads. Suddenly, they finds themselves marketing higher-priced jobs to non-referred customers. What worked in the past, may not work anymore.
Another factor that can hurt stealth bomber bidders is the economy. As people get a little more price-conscious and get more quotes, the stealth method just does not work. Take more time to talk to your customers and work on selling the job. Simply ask customers what they are looking for. Try to get the customer to talk more while you talk less. If you are a great tradesperson but not the best salesperson, just chat with the customer. Don’t sit down at the kitchen table if that makes you nervous. Simply walk around, ask questions and point things out. Even if the job is too complicated to give a price on the spot, you can still connect with the customer and make sure that the estimate you are going to put together is for the type of job they are looking for. Don’t be afraid to ball park them with a price. The more the customer talks, the more information you gather, and the more likely you are going to get the job.