Category Archives: Strategic Planning

[AUDIO] Market Research Chapter 7: Understanding the Needs and Expectations of the Repeat Customer

In our consulting work with contractors across the globe, nothing is more important to the contractor than the Repeat Customer (also recognized in this book as RC). This special customer not only extends the number of working hours a contractor can give their workers, keeping them busy, but such a relationship reinforces all that a contractor is doing right.

The information you can research from your existing Repeat Customers is a wealth of greater know-how for you and your company. Don’t go to sleep in giving your Repeat Customers attention and always go to them, repeatedly, to discuss new trends, needs, and expectations.

 

 

[Audio] Expanding Your Company Through an Acquisition

In the big picture of acquisitions, the current economic time could be a great time to look at enlarging your market dominance through an acquisition.  If you are confident about your firm’s strengths and have addressed the eight questions above, buying another construction company may make sense.

As we all know the only two things for sure in life are taxes and death.  (We have Ben Franklin to thank for that quip.)  We can see what our politicians are trying to do about our taxes but more importantly, don’t allow all of this deciding to acquire or not lead to an early death!

Learn more in today’s Learning While Listening podcast, “Expanding Your Company Through an Acquisition.”

 

[TRANSCRIPT]

Expanding Your Company Through an Acquisition

Eight Questions You Better Ask!

This topic is significant for two important indicators.

Indicator #1: in light of the recent economic woes for many construction oriented companies the going has been rough, leading some to put their business up for sale.  This could be a great time to buy another company. 

Indicator #2: we’re getting older in this country.  With a greater number of soon to retire “Baby Boomers” fast approaching, many owners, in this age group, may well be looking to sell their business if they have no children or interested employees to carry the company forward.  Thus, we have an interesting chapter in the construction industry approaching.

Buying other companies to expand one’s market place is not new to contractors, suppliers, and equipment dealers.  It’s just that with today’s two primary “indicators” the opportunity may be more easily accessed.  But before we jump to too many assumptions, let’s first explore why you might want to consider buying another business.

Market Dominance

No doubt, getting more of the market is every contractor’s goal.  Adding a broader presence of the same type of work performed may be all that you need to do to shore up more work.  Therefore, purchasing another “like” company could be your answer.

Geographical Expansion

Wanting to take your company’s strengths to other towns and cities might also be better attained by buying a similar company who already has a presence in the new town.  They might also already have the needed equipment and “boots” on the ground to support fulfilling the work.

New Service or Product Application

Wanting to expand into a service or the use of a specialized product may bear you a great return.  Thus, finding another company who provides such a service or product could easily add to your company’s resume of total services and products supporting the market.

Now that we have briefly highlighted a few reasons why you might want to expand, let’s now look at the Pros & Cons associated with making such a monumental decision.

The Pros (+) of Acquisition

The company you are considering to purchase:

  • Already exists; you don’t have to draw up new company plans
  • Has a customer base (loyal customers are hard to buy)
  • Have relationships established with suppliers, dealers, associations, etc.
  • Has vehicles, equipment, tools, and supplies
  • Has an owner who is motivated to exit (especially due to economy or lack of successors)
  • May be purchased at a reduced price today
  • Has an existing workforce and leaders who already know their workers
  • Can adapt to our marketing and business development strategies
  • May provide us with some new trade “secrets” that we didn’t know before

As you can see already, there are a lot of good reasons that might work in your favor should you determine to buy another contractor, supplier, or dealer.  Just like purchasing a home in today’s market, you may be able to get more for your investment than a few years ago.  However, while there appear to be several very compelling reasons to consider expanding your company through making an acquisition you must also consider the Cons that could be involved.

The Cons (-) of Acquisition

The company you are considering to purchase may have:

  • Corporate debt that you may have to support financially
  • Equipment that is “shot” and needs to be replaced
  • Key employees who will not stay with the new ownership
  • Customers who were loyal to the present owner but not to new owners
  • A company culture that is vastly different from yours
  • An owner who will not work well with you in the transition
  • An owner who will think you are “stealing” their company and refuse to provide ALL the company “secrets”

The Cons listed above tend to put a wet blanket over the benefits of the Pros, right?  Hey, this is what is needed however when considering making an acquisition.  You need some honest and tough reality checks as to “what could happen.”

Now, let’s consider a few additional things that could strengthen your decision to make an acquisition, or not.

  1. Do you have a strong and positive reputation in your market area and that of the possible seller?  Then you may not need to be concerned with how much or little the seller assists your efforts to welcome the new clients.
  2. Do you have strong field leaders and enough laborers that could help mix in with the seller’s employees?  If you do, then losing a few of the seller’s employees, even key employees may not be a concern.
  3. Can you keep the seller’s debt from becoming yours’?  If you can then the seller’s debt is his or her problem, not yours’.  In fact, it may be another reason why the seller might lower the purchase price just to make enough money to pay off their notes.
  4. Do you have a strategic plan developed that includes a marketing plan?  Do you have a work plan on how to incorporate the seller’s company past work, their workers, etc.?  If you do, then adding more potential firepower or more customers to your already existing customer base might make sense.
  5. Does the seller possess a particularly specialty service or product that would make a significant impact to your existing business AND that would cost too much to develop on your own?  If YES then maybe this is a good company to consider buying.
  6. Will the seller agree to a strict buy-out contract and will contractually commit to NOT compete with you in any form or fashion?  Non-competes contracts are difficult to enforce but you will need to make this part of the purchase or the deal is off.  This may not be an issue if the seller has no successor.  However, if the seller has children that may want to go into the same business and use “old dad or mom” as salesman or work to move old customers to the kid’s new start-up, you better be careful.
  7. Do you have the cash flow and financial strength to make the purchase and then “feed” it for a period of time?  “Cash is king” with the banks so you may work hard to find available financing without putting down a lot of money.  Then, you’ll need to show the cash flow to pay your bills of the acquired company.  However, some owners of business might be willing to carry a financial note until you can arrange for third party financing.  Lots of options to explore.
  8. Do you have good legal and financial support?  You’ll need a good attorney who specializes in acquisitions.  If you move forward in your pursuit of buying another company DO NOT try to construct all the needed documents.  Buying another business, even from a good friend, can lead to some horrific “post purchase” experiences.  Secure a good “M&A” lawyer and a trusted financial expert who deals with acquisitions.

In the big picture of acquisitions I think that this current economic time could be a great time to look at enlarging your market dominance through an acquisition.  If you are confident about your firm’s strengths and have addressed the eight questions above, buying another construction company may make sense.

As we all know the only two things for sure in life are taxes and death.  (We have Ben Franklin to thank for that quip.)  We can see what our politicians are trying to do about our taxes but more importantly, don’t allow all of this deciding to acquire or not lead to an early death!

Stay in the hunt!

Brad Humphrey, A Contractor’s Best Friend

 

 

[AUDIO] Vision Casting Made Simple

Every leader should have a vision!  They should definitely have a personal vision for their desired leadership but there is also a need to have a vision for their crew, project, or company.

Learn more in today’s Learning While Listening podcast, “Vision Casting Made Simple.”

 

[TRANSCRIPT]

Every leader should have a vision!  They should definitely have a personal vision for their desired leadership but there is also a need to have a vision for their crew, project, or company.  While many leaders possess a mental vision of what they see, they rarely “cast” that vision effectively.

When one cast their vision, they are presenting that vision to those involved with contributing to the success of that vision.  Such an effort works to clarify mission, refine focus, and inspire productive work efforts.

Early in President John F. Kennedy’s presidency, he cast a vision to the American people and to those engaged with space exploration.  His vision was to put a man on the moon by the end of the decade.  While he didn’t live to see that day, Neil Armstrong would soon take,

That’s one small step for a man, one giant leap for mankind.”

Those who closely monitored and reported on the efforts that ended in the first ever moon walk, all agreed that there was incredible energy and extra focus committed to achieving that vision.  It probably didn’t hurt the USA spirit by trying to accomplish the feat before our space competitor, the USSR, could do the same, but excel they did in winning that race.

While sending an astronaut to the moon may be a little more dramatic than what many construction leaders deal with, the same sense of importance and purpose of casting a vision is still at play.  So, how then does a construction leader cast their vision to those who are participating in the work at hand?  The effort may not be as difficult as you think; in fact, it’s actually quite simple.

  1. First, be sure that you have a vision and that it is clear to you.

As stated earlier, every leader should have a vision.  Related to what we are addressing in this article, a leader should have a vision for how they want their workers to cooperate and collaborate in accomplishing a project.  This vision might also include how they want to see their job or project approached, including the complete respect and compliance to safety requirements, quality standards, and documentation needs.

  1. The next step in casting your vision is to simply share this vision with those who make up the team engaged with achieving the desired result. This effort certainly requires that you address your team verbally. I have found it beneficial to sometimes use diagrams, stories, or other similar work examples to further the understanding of my vision.  The old saying, “A picture is worth a thousand words,” is really apropos at this point.  Most people relate well to stories and visuals when understanding a vision.  They also retain more of the intended message with such subtle resources if used properly.
  1. Check on the understanding of your vision casting by following up with personal conversations with your team members. Simply ask a few of your people, “What did you understand about the vision I shared?” This effort will reinforce your intent for the vision to be understood, retained, and pursued.  You may receive feedback that suggests you to go back and edit or modify your vision, as there are some components that may be difficult for some members to understand.
  1. Take advantage of little opportunities to remind others of the vision. Some of the simpler ways to do this is just through daily conversations, emails, and texts. Often, someone will veer off the vision a bit, thus presenting an opportunity for you to simply ask how the diversion is supporting the vision.  For example, let’s say that one of your people has some information that should be passed on to others but they are running late for a scheduled meeting.  They are tempted to not pass on the needed info until after their meeting is concluded.  But two to three hours in a meeting may be too late for the information to have saved the other workers quite a bit of frustration.  As the leader who shared the vision to keep each other updated to the most recent of developments, you have an opportunity to reinforce your vision by simply encouraging the worker to take the extra ninety seconds and e-mail the needed information to his or her co-workers.
  1. Refresh the vision by making it a brief update at each staff or team meeting. If part of your vision was to insure that we maintain, “1st class relations” with the client, you might simply ask for examples or testimonies of such efforts. Re-stress the importance of living the vision as it relates to a particular effort.
  1. Practice and embrace the vision personally. This may sound too simple but I have found that leaders can be just as guilty in not living their own vision as anyone. If, for example, part of your vision was for each member to treat others with respect and to work to maintain transparency among the team, then you must live the same.  So, the next time one of your team members comes up with an off-the-wall idea that’s never been done before in the history of construction, maintain a respectful presence with them, choosing to thank them for the idea or to ask them to expand on why they believe in their idea.  Why would any other team member maintain their focus to fulfill the vision if their own leader breaks the perceived spirit of the vision?
  1. Celebrate the little victories that the vision is being embraced. Often a contractor might celebrate hitting milestones of work such as “topping out barbeques” when a building has been finally enclosed. But how often does a project team or department celebrate when they clearly experience a “W” for the vision?  Hardly ever!  Let me share another example that I think brings this effort to light.

A client of mine has a Project Manager and Superintendent who are one of the best leadership teams for a project that I’ve known.  Part of the vision that they cast to their team, and to the sub-trade leaders participating on the project, was that they wanted to see their weekly meetings conducted with professionalism.  They also wanted a project culture where no question asked would go unanswered and that the person asking the question would not be ridiculed or embarrassed.

After conducting a particularly challenging meeting, one that had high stress and stakes for all involved, the PM and Superintendent noticed that at no time during this very difficult meeting was there anything other than a culture of openness, direct but respectful disagreement, and finally, a real coming together of all parties toward a solution that would not be easy on all of the contractors.  This leadership team was so impressed with this embracing of the vision that they arranged a special dinner for the people involved and their significant others.  While the dinner did cost about $1,200.00, it sent a clear message of affirmation to those involved and the project continued to maintain the same along this same to completion.

  1. Finally, develop some goals based on the vision itself. Every project has some level of goals or objectives that are created. “We need to be completed with the footings in 90 days.” Or,  “We will have all of the windows in by April 12.”  Such goals are normal but more important, they are important to project teams serious about getting things accomplished.  The same effort should be applied when trying to achieve a vision.  Let me show you how this might apply with a vision.

Consider the follow vision for a project that a PM and Superintendent cast to their project members and sub-trade specialist.

Our vision for this project is to embrace teamwork based on mutual respect for every project member, working to communicate in a direct and friendly manner, to go to others directly when there is a misunderstanding or mistake made, and to always share information and opinions in full confidence that such information and opinions will be welcomed and appreciated.

Now, for this casted vision, here are the goals that the team developed to help measure some very hard to measure human activity.

Goal #1 – There will be a weekly “paper plate” award presented to project members for exemplifying the spirit of the vision.  Such “plates” will be attached to the “Wall of Honor” for others to read and be inspired to emulate.

Goal #2 – The number of “positive interactions” each member experiences will be individually tallied and provided to the Asst. PM weekly, who will post the collective results every Monday.

Goal #3 – The incidents of information sharing that leads to a better solution, a correction of a mistake, or to the improvement of quality, safety, or customer satisfaction will be collected by each individual and submitted to our APM, who will post the results on the first Monday of each month.

Now, you may think this effort a bit cumbersome.  In reality, it was one of the most energetic and profitable projects I have ever witnessed.  Sure, there were countless “incidents” that went uncounted but the point is, more right behavior activity was being generated.  This particular project was about twenty months in length and in their post-job reviews, the comments from project members, including the sub-trade leaders who may only have been on the site for a few months, were all very positive about the experience.

Casting your vision is serious business and can open up so many doors to new ideas, better innovation of old ideas, and unleash an incredible amount of energy and excitement.  Don’t underestimate what the power of your vision is for your next project or within your current department…just be sure to cast it clearly and then follow-up in executing the eight techniques shared in this article.

Here’s to casting your vision and to catching a whale of a result!

Brad Humphrey

The Contractor’s Best Friend ™