Any aspiring contractor needs to think through these five critical areas before starting a new company:
1. Insure you have capital to carry you for 2-3 years.
2. Develop a business plan that reflects growth objectives for markets served and expansion steps for adding employees, equipment, etc.
3. Have a marketing plan.
4. Hire wise & solid players.
5. Set weekly, monthly, & quarterly goals.
Listen as Brad expands on these areas, and learn how to better position you and your company for the future!
[TRANSCRIPT]
OK, seriously, starting any new business is taking a huge risk. I love new business start-ups, and the owners who start them. Over the years, I have supported many such new companies, especially new construction companies, but I also realize that starting any business is often begun on some less than ideal facts.
After conducting many educational sessions at a few construction industry conferences, I was amazed how many new start-up owners were attending. Many of them were searching for answers to strengthen their leadership, their firm’s sales and profitability, and the proverbial search of the “holy grail” of workers. Let me share a few insights that I shared with these new and young owners.
- Prepare for the Worst; Plan for the Best
Old advice that fits more contractors today than ever. I have found three keys to success missing from many new start-ups.
- Under Capitalized – honestly, the owner simply doesn’t have enough money to keep their dreams a float till they obtain enough work.
- No Business Plan – even the older seasoned business owner needs a business plan. You just can’t run a successful contracting business for long without one.
- Focus on Sales OVER Quality – hate to say the obvious but you can sell all the work you want but if you have no workers who can complete great work…the right way…the first time…you got nothing but problems coming your way.
Obviously there are many other things that can throw a wrench into the dreams and hard work of a new contractor but my goal isn’t to write a book on such things (at least not yet!).
Now, let me share some wisdom from many of the best start-up contractors I’ve had the privilege to either work with, listen to, or read about.
New Contractors Start-Up Starting Five
- Insure you have capital to carry you for 2-3 years.
- Develop a business plan that reflects growth objectives for markets served and expansion steps for adding employees, equipment, etc.
- Have a marketing plan.
- Hire wise & solid players.
- Set weekly, monthly, & quarterly goals.
OK, again, there are at least another one-hundred things that need to be done by the new owner but this list of five will get you heading in the right direction. Let me expand each point with some greater clarity.
- Insure you have capital to carry you for 2-3 years.
Either flush out your retirement money, borrow from relatives, or line up some credit with a banker (be willing to mortgage your life) but shoot to have 2-3 years in available money to pay wages, rent equipment, buy materials, etc. To say money is the root of all problems would be stating the obvious. More businesses, and marriage relationships, can be brought to a very unpleasant ending if the needed capital is not secured. To believe that your first year will produce an incredible ROI is grossly mistaken. Create a budget and consider what your financial needs will be. Sure, cut to the bone initially, but realize that you will need to pay employees, your family needs to eat, and banks will take your home, or equipment if you fail on payments.
- Develop a business plan that reflects growth objectives for markets served and expansion steps for adding employees, equipment, etc.
A business plan is not that difficult to build but is more often missing from new contractors than any other of the four items addressed in this article. The business plan needs to clearly identify: Where are we going as a company? What markets are we to pursue? At what levels of growth will we add workers, equipment, etc.? Will we leverage production by “sub-contracting” sold work to other contractors?
A business plan is a roadmap of sorts, sometimes needing to be adjusted and edited, but still providing some well thought-out strategies on how to best attack our future.
- Have a marketing plan.
A great companion plan that new start-ups need is a market plan. Combined with a business plan and the contractor has two key weapons to address the future. The marketing plan should address more clearly what business that the company is in, what markets will they be serving, and what strategies will best gain greater recognition, reputation, and branding. I always encourage contractors, especially start-ups to determine how they will be selling their wares, products, and services. Certainly the entire “electronic tool box” opens the door to outlets to spread the news of our company and what we can deliver. Check all outlets including your own Web-site, Face-book, Linked-In, etc.
- Hire wise & solid players.
Now, here we have perhaps the toughest of all the five recommendations to overcome. Hiring “wise and solid” workers any time can be a herculean effort but with our current transition in the generations, the lack of mechanical minded education in more and more communities, just finding available workers who really want to work can be daunting. But finding capable workers is still greatly needed and must be pursued aggressively.
Over the years I’ve written about finding, hiring, and retaining workers, so I’ll be brief here. However, the best thing any new owner can do to find and hire wise and solid “players” is to first create a clear description as to what is needed in the company, specifically related to what is expected in the job including the roles that might be fulfilled and more importantly, the responsibilities that will be completed.
To strengthen this fourth recommendation it is critical for even new owners to prepare to make “on the job training” and education a major part of their weekly efforts. Unless you can hire seasoned and proven craftsman, prepare to spend a lot of time teaching, keeping workers a little late some afternoons to train on a needed technique. Even consider hiring technical consultants, even retired workers, to assist in the training. Such an effort early will provide greater returns later.
- Set weekly, monthly, and quarterly goals.
This final recommendation is key because it sustains a new contractor to keep his or her vision focused on what is attainable in shorter segments of time. Sure you need the business and marketing plans, but its’ just as important to have short-term objectives that can be measured and managed on a regular basis. Keep the goals clear and important to the upcoming week, month, or quarter, and review the results regularly. Make such a review part of your weekly meetings with your team of leaders and workers.
Starting up your own company is hard work. If you do it, have more than just some dream and an emotional hunger…both will die out if that’s all you have. However, if you are starting a new construction company then determine to be methodical, persistent, and never say “quit.”
Living the life of a successful contractor is only achieved via the extremely hard work known by those who have paid the price. Work to be the best that you can be…stay away from comparing your success against other contractors. Seek the best for you, your family, and your company and enjoy all of the learning experiences you will endure. Let them form and mold you to be the best that you can be!
Here’s to building your best!
