Revitalizing an Aging Roofing Business
I have often used these terms to describe businesses: as wonder (just starting with owner making wages), blunder (lots of work but little control and money), thunder (very profitable and driving the market) and plunder (aging with old systems and management).
In many ways the “plunder” business is the hardest to turn around, as it is dying a slow death. Many plunder businesses are an organization of people who are a little fat and happy. Often, there is cash in the business and credit with the bank. Having no cash pain can postpone necessary changes. Since the business is capitalized with many long-term employees, change involves pain, which in many cases, the organization is not used to dealing with. I’m not a slash and burn MBA-type and value longevity and loyalty, but I do believe in holding people accountable and staying competitive.
Start by introducing a little youth into the organization. Nothing like an enthusiastic fire breather who’s too dumb to know better. An aging company I was working with hired a very bright guy with no trade experience. A large Fortune 500 company headquartered in the area called wanting an estimate. Since the company didn’t get any work from them, they sent “the kid.” Being his first sales call he hurriedly went out and was presented with a very small job. He took lots of pictures and the senior estimator reluctantly helped him put a winning $1,200 quote together.
The Fortune 500 company called back for a $2,800 job and the youthful salesperson followed the same winning process. A few months later, “the kid” gets another call and has lunch with the facilities manager of this huge plant, during which they socially chit chatted. After lunch they’re walking through this massive plant and the facility manager asked, “What would it cost to do the entire place?” Stunned, the youthful salesperson replied, “I’m not sure, but with 30 years’ experience, can you come with me and we can put it together?” Now he had to beg and plead with the senior estimator to help him. The senior estimator’s reply was, “You were just lucky on those little jobs; they never give us any work.” They did the estimate and the company was awarded a $350,000 contract because “the kid” was too dumb to know better. Youthful energy can sometimes run amok, but energy creates more energy. Stagnation creates more stagnation.
Develop a new estimating and target market strategy. Mature companies frequently are doing certain types of work because they have always done so. I was doing an in-house business strategy workshop for a large commercial contractor that was struggling. I asked if bidding on schools was still a winning strategy. The 70-year-old owner banged his fist on the table and said, “We cut our teeth on schoolwork.” Maybe so, but when we looked at the facts, they still bid three or four schools each year even though they hadn’t won a school contract in 14 years.
Tabulate your job costing and profits from low to high. Sort it by putting all your winning jobs at the top and less profitable ones at the bottom. What are the common traits of losing jobs? What are the common traits of winning jobs? Sort job cost by type or work, customer, foreman, estimator, etc. Sometimes we’re so busy working we fail to identify where we need to change behavior.
Junk old equipment; throw away leftover material and other outdated stuff. It cost more to find it, store it, and insure it than it is worth. Paint and carpet the building and offices. Cleaning the place up sends the message you’re not an outdated company. Let everybody see changes.
Figure out who the successors and leaders of tomorrow will be and get them to stand up. The problem in being vice president is no one remembers your name. Who were Teddy Roosevelt’s and George Washington’s vice presidents? Don’t cheat by Googling it. Think about it and I bet you don’t know their names. They were Charles Fairbanks and Aaron Burr. You need to identify the next generation of leadership in the company and give them more visibility and responsibility.
Corral the dinosaurs. Make sure senior people are doing their jobs and not impeding the progress. You can exercise a little loyalty to cut long term employees some slack, but the real issue is not letting the dinosaurs get in the way of progress and perform at certain standards. Too many of the long-term “sacred cow” employees are never held accountable due to their seniority and connection to founders. Years of poor accountability leads to mediocrity. It can be tough to teach an old dog new tricks, but even if they’re slow to change, you can’t let them growl and bite you.
Forbes magazine reports that only 50% of family businesses make it to second generation and only about half of those make it to third. Don’t let your business become one of these statistics.