Grow an Established Construction Business – Part 3

Business growth through managing cash flow and developing processes

Business is great

Business is great – until it isn’t. The construction contracting business is well known for its boom or bust nature. Using the boom to prepare for the bust is simply a matter of having good business sense. And, two ways you make the preparation are considering future financial needs and creating documented, sustaining processes.

This is the third in a three-part series dealing with growing an established construction business. Taking it up a level. Getting better at running with the big dogs. If you missed the first two parts, they can be found here and here.

Business is all about business

Getting better at doing business is how you position yourself as the owner of a growth-oriented business – a construction business that is in it for the long-haul. Now, we’ll take a look at the last two areas of importance in growing an established construction business.

Prepare for financial needs in advance

Save

Access to capital is what makes the difference between owning a winning business and owning a business that limps along, never quite making it. One of the easiest ways to make sure you have cash to see you through the famine is to save it during the feast. Oh yeah, it is also one of the hardest ways. Like my dad used to say, if it was really easy, everyone would do it.

You can scour the internet and find a multitude of tips and tricks concerning how to save money. I even wrote one post about it here.  Yet, reading about ways to save money without taking action will not get you to the end of the block, much less all the way to the other side of town.

Time to take action

Now it is time to buck-up. This is when, if you’re not a natural saver (and few are) you need to find someone to aid you in making the right decisions concerning spend or save.

So, I’ll go ahead and throw this out there. The folks here at Schulte and Schulte are good at providing financial reports and teaching you how to interpret them. Yet, we have even more than that to offer. We, ever so gently, guide our clients into the act of saving. OK, some would say we hold their feet to the fire. Whichever way you interpret what we do, we help our clients get into position to save for a raining day.

Saving is a strategic maneuver which takes guts, determination, and (sometimes) help from an outside source.

Borrow

There is another way to have cash when you need it and that is to borrow it. I know, I know. There are those who say the only way a lending agency will hand over the funds is if you can prove you don’t really need it.

Truth is, there are a number of things you need to prove, but lack of need isn’t one of them – usually. 🤔

Your financial records and reports are key to being able to borrow the cash you need at any given time.

What lenders want

Here is a sampling of the things a construction-wise lender is likely to want to know about you and your business:

  • How long have you been around?
  • Have you run your business well so far?
  • How much outstanding debt do you have?
  • How safe are your jobsites?
  • What is your credit score?
  • What is the credit score of each of your clients?
  • Is there collateral you can offer?
  • What is the dollar amount of your annual sales?
  • Have you experienced a bankruptcy or tax lien?
  • How much do you need?
  • What do you need it for?

Once again, having your financial reports at hand and knowing what they’re saying about how good you are at running a construction contracting business is essential.

Knowing where to go for the loan is also important. Check around with your fellow contractors for suggestions. Contact your mentor or other trusted advisor for his or her input. Look for a loan provider who is a member of your trade association – they often have insight into your trade’s specific needs.

If you’re interested in working with someone who provides Accounts Receivable Financing, we suggest Contractors Capital Solutions

Create documented, sustaining processes

There may be a number of factors concerning how the “big dogs” in your sector of the construction industry made it to their status, but you can be assured that one of the things they did is create documented processes. They use documented processes in both the field and the office to maintain consistency throughout their organization.

Yet, most small to medium construction subcontractors overlook or avoid this step in building their businesses. Here at Schulte and Schulte, we think this point is so important we go so far as to say put process improvement before technology adoption.

The GPS of processes

Think of it this way; when you begin documenting your processes you’re creating what equates to an internal GPS. Rather than Global Positioning System, you can see it as your Great Processes System. While regular GPS gives information that helps people determine their location on a global scope, internal GPS gives information that allows you and your people to determine their duties (and actions) on a companywide scope.

Beyond consistency, creating and documenting processes gives you:

  • Ability to analyze your processes
  • Knowledge to make improvements in the processes
  • Understanding for better managing your business
  • Capability to monitor service levels
  • Competence spread throughout your organization

Create a library of standardized processes

Creating internal processes (then implementing them) brings a real challenge. It is especially difficult for small companies with mostly operational staff who are very busy “doing what they do” to get this additional task done. That doesn’t even take into consideration that most people are unsure of what all should, could, or must go into the step by step writing of the processes.

That’s why we’re quite excited to let you know we’re working on building a system in which our clients will have access to the tools they need to build their own library of standardized processes unique to their subcontracting business. We hope to have the roll-out by January of 2019. How’s that for a cliff-hanger?

Want to know more? Get in touch with us here.

Grow an Established Construction Business – Part 1

Grow a construction business

You’ve gone beyond finding your first client. You’ve gotten past all the start-up issues. You are ready to take the next steps to grow and prosper your construction business. Grow and prosper in ways which are likely to surpass your original dream.

It is fun to look back on and remember those heady days when you first became a business owner. It is even more fun to look ahead at what you’ll accomplish next.

Now it is time to roll up your sleeves and get to work – on the next steps.

Grow – it isn’t an easy task, yet it is enjoyable

There is so much involved; from mindset to cold sweat, from legislation to duration, from tool advance to tech enhance – there’s just a lot going on.

Think about it. Consumer behaviors are changing, the culture is shifting, and it is happening rapidly. It’s rather exciting!

You’ve brought your business this far. And now, the real work fun begins.

Grow – the next steps

The first thing to consider is your own attitude and a willingness to position yourself as the owner of a growth-oriented company. From there you can look at specific areas which need your attention to facilitate growth.

The areas we’ll be discussing in this three-part series are:

  1. Dealing with changing regulations
  2. Managing project risk
  3. Planning for new technology
  4. Preparing for financial needs
  5. Creating documented, sustaining processes

Deal with changing regulations

Staying on top of all the changing regulations isn’t a job for the faint-of-heart. It takes time as well as a team of trusted advisors. Following are five suggestions which will help you in your efforts.

Join a trade association. For big picture insights into which regulations to be aware of in your segment of the construction industry, joining a trade specific association is a no-brainer. A good association will keep you informed of upcoming changes.

Subscribe to magazines and online industry related blogs or websites. One type of website that is helpful concerning construction regulations is that of attorneys who specialize in construction law. Put your search engine to use. The search can be as simple as “construction attorney [your state] dot com” Search through and find the ones which keep up-to-date relevant posts then subscribe or bookmark.

Track down a tax advisor. Because you’re not only dealing with federal taxes you will do well to locate an advisor who is abreast of the regulations in your state. One recommendation we make for our Arizona clients is Conover Asay. If you’re unsure who to contact in your state, you may wish to ask your fellow contractors who they use and why they recommend them.

Find a human resource expert. Freelance human resource firms are an excellent way to stay on top of regulations concerning employee and subcontractor issues. We recommend Lynda McKay of HRextension to our clients.

Locate an accounting advisory firm. (And yes, that’s us. 😉) Beside the fact we know how to deal with your sales tax issues, we’re excellent at helping you use the information obtained from your tax and human resource advisors. They can tell you what the rules are, we can help you make sure your firm remains compliant.

Grow through the use of proper resources

Finding the right resources as well as discovering ways to stay on track will be your biggest challenges through the process of growing your construction contracting business. Our clients tell us we’re good at assisting in both areas. In next week’s post, we’ll tackle “managing project risk” and “planning for new technology.”

We’ve created a waiting list for those who are prepared to work with us in growing their construction contracting business. To get in on “the good stuff” call 480-442-4032 or get in touch here.

10 Qualities Needed for Scaling Your Construction Contracting or Service Business

10 Qualities Needed for Scaling Your Construction Contracting or Service Business part 1

Being an entrepreneur in the construction field comes with a few challenges other entrepreneurs don’t face.

There are a lot of ideas concerning what it takes to be an entrepreneur. For example, you’ll hear things like:

  • You need to be motivated by challenges
  • You’ll have to be tenacious
  • You’ll need the support of your family and friends
  • You will be one who loves new ideas
  • You must see and fulfill needs
  • You should notice how things can be improved

And, those are all good ideas about entrepreneurship, (you’ll do well to heed them) yet there are 10 very specific qualities it takes to be an entrepreneur in the construction field, to be a construction contractor who is ready to scale.

  1. You need to get “shower ideas” – and act on them

Even if it means you need to bolt from the shower to call your superintendent to tell him the solution you’ve discovered concerning the nagging problem you been having with [you fill in the blank.]

Perhaps you need to keep one of those gizmos in the shower meant for writing on in wet conditions – although you’re more likely to make a few drawings then add a note to get true measurements.

Or, it could be you create a mantra in your head as you’re driving down the freeway, so you’ll still remember your great idea when you reach home. Therefore, you’ll have the basics of the good idea, and you can put it into action.

The main point is, no matter when (in the shower or not) you get ideas you’re willing to put the idea into action in order to make your construction contracting or service business better tomorrow than it was yesterday.

  1. You’ll have to love growth – in oh so many ways

The unique position in which you as a construction contractor find yourself is one in which growth; your own, your businesses, your employees, your community all meld together into one cohesive unit that turns out to be rather stunning.

As you and your employees work together to grow your business while being a part of the growth of your community there comes a moment when you can stand back and say, “I did that!”

It can start at the level of being able to say, “Because I and my team had the right system in place in my construction business, I took Joe Right from apprentice, to craftsman, to master craftsman, to supervisor.”

It might take the shape of understanding that because you and your employees showed up there are more families across your city who need not worry about how to stay cool or warm or protected.

Or, it could be you drive past the latest of your builds and see the finished project knowing you had an integral part of making sure that location houses a family, or provides a place of employment for many, or allows a space for medical personnel to care for patients, or improves the infrastructure of your city or state.

Growing your business is important to you, partly because you know you’re growing more than “just” a construction contracting or service business. You’re growing, your people are growing, your community is growing. Stunning!

  1. You need to understand you’re a leader – and lead the way

Whether or not you awaken in the morning thinking, “I’m a leader,” you really must possess the qualities of a leader if you’re going to pull this off. If you own a construction contracting or service business you’ve already taken a lot of steps in the leadership role.

Being THE leader means you’re the one with the vision of how your construction contracting business fits in the industry now, how it will look a year from now, and what it will look like in the long term.

You also have to be able to communicate the vision in ways that enlighten your potential customers, enable your employees, and empower you as well as your team to each next level.

You are the one who is creating the work culture for your employees, delegating, making decisions, encouraging your team, and (bottom line) working on your business, not in it.

It doesn’t matter if you know how to pick up and use the tools necessary to build for or provide a service your customers. You can and should get someone else to do that. It does matter that you know how to be an entrepreneur, how to use your financial reports to lead into the future, how to see the big picture and take the necessary next steps to scale your business.

You may wish to join a structured entrepreneur group where other members will be available as mentors or advisors concerning the specific issues you face as a business owner.

  1. You need to network with your colleagues – for their sake as well as your own

Let’s face it, people like doing business with people they like. Beyond that, when can you ever have too many contacts in your chosen field?

Join your trade association

Most trade associations host various conferences, events, and meetings on a regular basis. By getting involved you have an excellent place to make new connections. It takes more than just paying the membership fees, it takes becoming a recognized and trusted face. When you become known as the “go-to person” it just makes sense that when business opportunities do arise, so will your name.

Yet, if you live in a location where regularly attending meetings of your trade association (think – more than a 2 hour drive) requires too much time and travel you may want to consider the next option.

Join or develop a private group

I recently read about a fellow who had formed a private group which he said included eight to nine other subcontractors, developers, and a land broker. They call their group The Meeting of the Geniuses, and they get together every six weeks at a favorite (in his words) “watering hole to discuss what is going on and what we are working on at the time, and football, and cars, and…….”

The crucial aspect is they can support one another, discuss their problems or issues then talk about possible solutions.

Attend networking events sponsored by large contracting firms

When you’re invited to attend an event sponsored by a contractor for whom you’ve worked GO! It is a great opportunity to spend time getting to know other subs, suppliers, and vendors. Besides, there is usually food and drink on hand at these events.

Network on the job site

Don’t overlook the construction industry’s unique ecosystem of enmeshed, intertwined, and overlapping network of professional connections. Take time when you’re on the job site to check around for other subs. Who knows when a brief chat on a job site may lead to another job or a relationship which adds value to your construction company.

Maintain contacts

Having good relationships with former employers, coworkers, and subcontractors with whom you’ve worked in the past is a networking tactic worth the time and effort.

And, because most people do genuinely appreciate it when you seek them out with questions you have concerning their area of expertise you’re likely to get a good response when approaching them with your needs. BUT, more important than seeking them to solve your problem you may approach them when you have a connection you think they may be interested in or you’ve come across a solution you know they would appreciate seeing.

Your main networking goal

Your main goal when thinking about networking should be finding ways to help your new contact! Miss this important aspect of networking and the truth is you miss it all.  Don’t become the guy who interrupts conversations, thrusts business cards on everyone, talks incessantly about himself, and annoys the heck out of everyone.

Instead, be the guy who focuses on how he can help those he meets. The simple equation is when someone needs a contractor in your field and you’re the one he thinks of because he has been helped by you, and has seen what you’ve done for others he is most likely going to give you the call.

  1. You’ll have to surround yourself with advisors – who mean business

Getting the right business advisors in place as soon as possible helps any business grow. Getting the right advisors in place for your construction contracting business can make the difference concerning whether you live in the paycheck to paycheck lane, of if you move into the lane where the big dogs are running.

Some of the advisors you’ll need to consider are:

  • Attorney
  • Banker
  • Accounting Advisor
  • Information Technologist
  • Insurance Agent
  • Marketing Guru
  • Tax Preparer

Surround yourself with good people who offer good solutions to your bad problems.

Surround yourself with good people who are honest and have integrity.

Surround yourself with good people who aren’t afraid to stand up to you and let you know when you’re missing an important part of the picture.

There is more to come

Part 2 coming soon. We’ll present 5 more Qualities Needed for Scaling Your Construction Contracting or Service Business.