Several years ago, while facilitating a Remodelers Advantage Roundtable meeting, I shared some of the key things we did when running our company to grow it from $1.3 million to $2.5 million. Here they are.
Small Jobs
Only do small jobs (under $15,000) for past clients. They can be a major distraction from your core focus. Charge 50% gross profit (100% markup) when selling these jobs. If you get them, it will be worth it. If you don’t, you might be better off.
For bigger jobs (over $15,000), price at a minimum 33% gross profit (50% markup). Better yet, try 40% gross profit (67% markup).
Production Manager
Hire a superior communicator. This position will free you up once the jobs are in production only if the production manager listens well and engenders trust in those they work with and work for.
Make sure your production manager is results-oriented, not activity-oriented.
Your production manager must be manageable. Too much of a cowboy/free spirit can make your workday very long. You must manage your production manager. Any high-level employee who reports to you needs your routine attention to be successful.
A construction management degree is good for your production manager to have. I believe that people and information management skills in this position are more important than technical skills.
Have your production manager track their time. You want to job cost to your projects at least 50% of their time, so your overhead is lower.
Delegation
Have a separate pad of paper, electronic file, or the like for each person you manage. When discussing a task both you and the person you manage, write down what is being agreed to.
Have a weekly meeting with each person you manage. Check in on what was accomplished and agree on what should be added to the list. When laying out a task, you and the employee should both write down what the task is. The employee tells you what was agreed to, referencing their notes when doing so.
Agree on:
- Check-in times and/or progress points.
- Deadline for completion.
Praise publicly what went well. Discuss privately what could have gone better.
Meetings
All meetings have unchanging agendas. Groups that could/should meet include these:
- Entire company
- Sales/design/estimating
- Production
- Administration
The owner only attends the meetings of the departments that the owner is responsible for. Otherwise the manager of a department the owner is not managing would meet weekly, for a short time, with the owner to keep the owner informed.
All meetings happen no matter who is away. A meeting is never rescheduled.
Go Away
Have a system of files for the info you as the owner need/want to see upon your return:
- Lead intake sheets.
- Meeting minutes from the lead carpenters’ meetings with their respective clients.
- Job costing for each job.
- Income statement and balance sheet if at the end of a month.
Don’t check in while you’re away. Set your people up before you leave by helping them think ahead. The goal is to have them anticipate now what they might want to ask you while you are gone. When you get back, praise publicly what went well and meet privately with the appropriate manager to discuss what could have gone better.
Be Productively Unreasonable
No reasons, no excuses, just results. Clients want their projects to get done. Results create progress. Activity that is interrupted by issues and problems does not. So don’t get sucked down the rabbit hole of “Why didn’t…” Instead, say, “Okay, those things happened. Let’s focus on getting the project done, not why it is not getting done.”
Proactive Outbound Sales Calls
The least expensive marketing a company can do is to call past clients. The salesperson (which I was) is the best person to do this because that person built the relationship with the client. The salesperson needs to remind clients of how smart they were to hire the company, to help them remember what to tell their friends when referring the company, and to have them ask the company to come and do more work.
If your company does work with outside architects and/or designers, the salesperson should be doing the same with them.
Departments
There would be three:
- Sales would include the sales manager, who managed the salesperson, the designer, and the estimator.
- Administration would include the office manager, responsible for finance, administration, and often marketing, with an assistant.
- Production would include the production manager, managing three-plus lead carpenters and a floating carpenter.
Here’s some more information you might be interested in:
We had an average job size of about $90,000, doing about 25 to 30 jobs a year (some years we had a very large job in the mix, which would reduce the number of jobs we did those years). The larger the company’s average job size, the less work the company has to do. Ultimately, we were selling at 42% gross profit. The higher your gross profit, the less work the company has to do.
The two most important skills I worked (VERY hard) on getting better at were managing people and sales.
We subcontracted virtually everything except for project management and carpentry. There were 10 of us in the company: five in the office and five in the field.
Even though I was the sole salesperson and the sales manager, I was gone four months a year, doing other professional activities and personal travel. My wife, Nina, head of administration, was gone about three months a year. When I was in town and at work, I worked no more than 45 hours a week. Nina worked 30 hours a week. Her assistant worked 32 hours a week.
No one in the company was supposed to work more than 40 hours a week routinely except the production manager, who put in 45 hours a week. We felt that people’s lives outside of work needed to be respected. Anyone who needs to work more than 45 hours a week to get their job done has an impossible job description or is not a fit for the position.
What do you want your relationship to your business to look like? Get clear about that and make it happen. Otherwise, growing it could kill you!