Category Archives: Strategic Planning

Planning is For Winners

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I’ve just completed a two day visit with an incredible contractor.  They are not very large in revenue this past year; they did a little more than five million dollars in sales.  However, what they made would easily be envied by many contractors, no matter the size.

Looking deeper at the reasons for their prosperity it was glaringly obvious.  They control their expenses!  How?  The answer is even more simple…and obvious.  They PLAN!

seminarEach Monday morning they hold an employee wide meeting that reviews and reminds each crew as to their work schedule for the week.  In front of everyone each crew provides their strategy to get the week’s scheduled work completed.  Normally this type of meeting is attended for crew leaders, estimators, schedulers, and owners.  Not at this company, everyone is there.  In fact, members of each crew actually provide the strategy and execution plans for the week.

The second obvious aspect of planning is what is completed for each project completed.  Each morning each crew meets to discuss what is needed for that day.  No truck leaves the yard until every truck and worker has exactly what they need to complete that day’s work.  At the conclusion of each day the crew then reconvenes to discuss what happened during that day of work and then discussion about what will be needed the following day.  The crew leader takes notes, if needed, on each meeting.

Now, many contractors hold meetings such as described in the previous paragraph.  What then makes this contractor’s effort unique?  Quite honestly, it is the amount of detailed thinking and planning that takes place.  Let me briefly share some of the critical components of successful planning that is embraced by my contractor friend. [pullquote]Now, many contractors hold meetings such as described in the previous paragraph.  What then makes this contractor’s effort unique?  Quite honestly, it is the amount of detailed thinking and planning that takes place. [/pullquote]

First, the plan for the day’s project(s) is documented.  Each day the crew leader documents specifically what the particulars for that day are, including:

  • Material need
  • Labor need
  • Equipment/tools need

This is merely the beginning.  Next, the crew discusses:

  • What preparation is needed?
  • Who will complete the preparation?
  • What is the method or process that will be followed to execute the project?
  • Confirmation of understanding of the prints or drawings?

For many contractors, the previous questions may appear to be overly simple and assumed.  My experience with contractors however leads me to believe that the leaders may in fact raise these same questions however they are most often raised inside the leader’s head.  Most crew leaders do not discuss this information with their crews.  This is a tactical mistake that leads to misunderstanding and a waste of worker’s time on the job site.

Another final effort that is practiced by contractors really on their “A-game” is the allowance of questions to be raised by the crew workers, the very people who will be executing the plan.  Engaging your crew in the planning phase of any project, no matter what the size of the project is, will breed greater attention to details, more focused energy on getting the needed results, and actually reduce wasteful costs due to workers lack of knowledge or understanding about the project needs.

In review then let me outline what you need to do to make planning more of a positive and effective tool and technique:

  1. Document your plans for each project. (Don’t assume anything by anyone!)
  2. Engage the actual workers who will be completing the scheduled work in the planning discussion.
  3. Ask the same questions for each project, such as:
    1. What are the Material, Equipment/Tools, & Labor Needs?
    2. What preparation must be accomplished prior to starting project?
    3. How can I best position my crew to complete the work in the most cost effective and quality manner?
    4. What contact(s) must be made with the client, other contractors, suppliers, etc.?
    5. Are our copies of drawings/prints complete?  Any changes needed?
  4. Conduct a “Post Mortem” on each Project.  Discuss lessons learned, needed adjustments for the next project.

[pullquote]Planning is more than simply scheduling future work.  It is the methodical breakdown of everything that will be executed to complete the project that moves a contractor from average to superior.[/pullquote]

There really isn’t anything unusual or extraordinary about the four point outline.  What is unusual and extraordinary are the contractors who are disciplined to practice their planning efforts consistently, no matter the size of the project.  Contractors cost themselves greatly when they pay little to no attention for planning on smaller jobs.  It is often the smaller jobs that can cost you the most!

Planning is more than simply scheduling future work.  It is the methodical breakdown of everything that will be executed to complete the project that moves a contractor from average to superior.  For my money, focus more on planning and you will see greater return for every dollar spent!

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Getting Repeat Business

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Nothing sells better than previous work that was done correctly, on time, and that made the customer satisfied.  Every contractor looks to increase their sales each year yet many continue to miss out on the easiest sell there is in the business…selling to a satisfied customer!

As a contractor, if you are having trouble getting repeat business with customers there is all likelihood that they may notconcretepour have been as satisfied as you thought.  The secret in repeat business isn’t selling what you’re “going to do” for the customer but what you have proven that you “can do.”  Customers don’t buy bad memories.

So, let’s look at how you can get repeat business.

#1 Get it Right…the 1st Time

Most customers will not give a contractor a second chance; so you better get your first job with a new customer right the first time.  This requires you to perform quality work in a quality manner.  Remember, quality isn’t necessarily what you think it is but what your customer thinks.  Therefore, it is very critical that you clearly understand what your customer’s needs and expectations are and do everything possible to conform to the customer’s definition of quality.

#2 Meet with Customer at Job Completion

I’m simply amazed how many contractors who are not even at the job when it is completed.  They may be off getting another job started, measuring a parking lot to be sealed, or selling another new prospect.  If you are an owner you should do everything possible to be at the job when it is actually completed.  Rain or shine, problems or no problems, the senior person needs to be at the project to be able to make the first impression and sales effort toward the next project.

#3 Don’t Survey…Go Face to Face with the Customer

A good many contractors still attach a customer satisfaction survey with their final billing statement.  This sales/marketing technique has been taught for many years, I ought to know as I’ve shared this same sales tip in many conferences.  However, this effort isn’t good enough and, more importantly, rarely gets the results that was initially thought and taught.  What’s the best action to take?  Make it a personal visit with the customer, at the conclusion of their job, to walk the job site and discuss what they like and what they want to be improved, corrected, reworked.  Going this extra step will gain you a personal audience with the customer and award you with lots of “brownie points” toward landing the next project with this customer.

#4 Inform the Customer that You Want Their Next Project

Think about this: you’ve just completed a project that the customer verbally confirms that they like what they experienced.  This same customer tells you that they have another parking lot to pave or seal and stripe.  You should, at that moment, not be shy about telling the customer of your interest in doing their next job.  Have some fun with the customer by insisting that you want to extend their positive experience.  Don’t be shy and just wait until the customer calls you later about that new work…because they just might not call!

#5 Maintain Follow-Up Points of Contact with Customers

This truly takes some discipline but it is really more of a scheduling issue than anything else.  Set up a process in your scheduling for the year that allows you to be reminded of three to five follow-up contacts with each customer.  The future contacts might include seasonal reminders to take care of their pavement, birthday cards, congratulations on the birth of a new child or a child’s graduation, or just dropping a note to say hi.[pullquote]The future contacts might include seasonal reminders to take care of their pavement, birthday cards, congratulations on the birth of a new child or a child’s graduation, or just dropping a note to say hi[/pullquote]  If out of sight leads to out of mind then repeat follow-up will lead to repeat work.

#6 “Sell” Warranty on Your Completed Work

You may actually give a large portion of this away but selling your customers on allowing you to extend a warranty on your firms work will assist the effort to keep the customer leaning your way.  Actually, you may find that it opens the door to more strategic planning and budgeting on your customer’s part to taking greater care of their pavement maintenance needs.

#7 Induce Repeat Customers with Discounted Pricing

Now before you think I’m just referring to lowering your prices for the sake of it, consider that you have little to know marketing costs associated with landing repeat business.  In some cases you may not even be required to make another formal presentation but just amending the prior contract.  This is worth something of a discount to the customer.  Trust me, most customers do expect something in the form of a discount if they have worked with you before.  And if you have completed more than one job for the same customer in the past I can almost guarantee you that the customer expects some kind of a discount.

#8 Work the Customer for Referrals

This effort is all consultant sales!  If your customer is happy with you and your crew’s effort they will most likely be more than happy to give you the names of other friends and relatives that need your work.  Don’t be shy about asking for such names.  And don’t be shy about following up with your customer periodically over the next year to get additional names.  Satisfied customers are never “put out” to help a hard working business person who is honest, does quality work, and is a pleasure to work with on top of everything else.

It has been my experience that many contractors often can build up to 40% – 60% of their annual revenues directly tied to repeat business.  These same contractors never take such repeat business for granted as they expend a lot of energy to insure that they get every future project that their customers will be completing.

As you move to grow your company, don’t take any job lightly.  Even if the job has gone badly, work hard to be visible and work diligently to solve the customer’s problems.  Don’t avoid uncomfortable situations, especially if your crews have screwed up a job royally.  It is often the “2nd shot” out of the rough that gets you and your company back in the middle of the fairway and set up for a great finish!

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8 Tips to Finish Your Year Profitably

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For many contractors the “4th Quarter” of the year is here and contractors need to be primed and ready to exert all that they can to end their year on a positive and profitable note.

Let’s look at eight “4th Quarter Tips” that just might add a bit more profits to your bottom line THIS year.

1. Refocus & re-energize your staff and crews

As you approach the final months of the year begin reminding and challenging your leaders to “reload” for a strong year-end push. This should include:

  • Each field leader should review jobsite plans and instructions prior to starting
  • Estimators should review their efforts and sharpen their pencils for more accurate bid work
  • Spend a few extra lunches on your troops to personally engage them with words of encouragement
  • Speak to performance goals that need to be achieved — even set new goals for the final quarter

2. Commit 2 to 3 weekends for equipment maintenance

Have you ever noticed that equipment rarely breaks down when you have time to fix it but always breaks down when you don’t? Early in the fourth quarter commit several weekends (however many you need) to assess, maintain or repair each piece of equipment, vehicle and all hand and power tools. Don’t take any chances!

While good contractors maintain their equipment and vehicles throughout the year it is not uncommon to have workers drive their equipment just a bit harder. As the year extends in the fall your workers are tired, and tired workers tend to be less aware (or less sensitive) to maintenance issues or to handling the equipment and vehicles with the same quality, safety and care that was practiced earlier in the year.

Remember, you want and need to finish the fourth quarter strong. Anything less than good working equipment will cost you additional dollars in emergency maintenance work, equipment rental costs or both!

3. Create incentives for all pending bids/proposals

This will require some discipline and strategy from you and your estimators. With work coming down to the final quarter many contractors tend to let their aggressive efforts fade a bit, instead focusing on finishing the work they do have under contract and scheduled. While this is needed an equal effort and focus needs to be exerted on every bid or proposal not yet signed and closed.

Creating incentives can include giving them another 2%, 3% even 5% discount on your submitted estimate to “act now.” Tie this incentive to your prospect making a decision by the end of the year — or earlier. If you are truly a seasonal contractor you might also offer the same discounts for signing the bid now for a commitment to begin work early the next year, thus building up some needed backlog.

Other incentive options include creating a situation where the customer buys the needed materials himself paying only your labor and equipment costs; or some contractors create or extend a warranty for the work proposed if signed prior to the end of the year.

Look, giving something away might not always be the answer, but you need to push every “open” bid to create some incentive to get your prospect to move now. Don’t be shy, timid or bashful about pushing this lever. Customers realize that you are in your business to make a living. Many customers might be a bit surprised if you don’t come back with an incentive. Don’t let them down!

4. Look to expand your services

Often, customers can be swayed if they feel like they are getting a bit more for their money spent. So consider another need that the customer might have and offer to include that service when you complete the original bid work. For example, a concrete or pavement contractor might offer to power wash a particular area of the existing parking lot or sidewalks for little or no increase in fee. Another example might be for the same contractor to offer to refresh existing landscaping.

Interestingly enough, I’ve personally observed contractors who actually developed new divisions of service that all started with this type of end-of-the-year effort. You certainly want to be careful what you add since you don’t want to perform less-than-satisfactory work on the new service (and thus cut into the profits you were scheduled to make on your prime work). However, don’t be blind to what might be a real need for service by the customer.

5. Practice a “Two-Minute Drill” to capture referrals and references

This should be part of your normal sales and estimating process anyway but way too many contractors fade away from this practice — especially late in the year when they are just trying to complete all the work on the schedule. Have someone in your office pull every completed project for the year, then go back and ask each of those satisfied customers for names of others who you might call on and inquire about work.

I would recommend starting with those customers who like you and who have already provided you with good leads. “Go back to the well” one more time. In fact, let them know that you will give them a “bonus” or some additional service if a referral turns into a sale. Many satisfied customers are only too happy to help those contractors who have provided quality work. Most customers like to have some bragging rights with their friends, and what better bragging right can a satisfied customer have then telling their friends, “See, I told you they were the best contractor!” [pullquote]Most customers like to have some bragging rights with their friends, and what better bragging right can a satisfied customer have then telling their friends, “See, I told you they were the best contractor!”[/pullquote]

6. Create a “Weekend Warrior” crew

While overtime hours tend to creep up late in the year it is also a time when quality tends to drop off and safety incidents become a greater possibility. So consider bringing on some part-timers who can work the weekends, giving your crews some much needed rest.

I realize that this is a hard call and finding the right “Weekend Warriors” might be difficult, but you might be able to tap into some local companies that do not work weekends: hire a few of their maintenance guys, drivers or mechanics, and pay them good weekend wages to work 10 to 30 hours over the weekend.

You will need to keep at least one or two of your key workers, perhaps a foreman, too, to keep your company’s processes and commitment to quality in practice. If you have more than a few crews you might be able to rotate easily with your better workers, allowing them to only work one or two weekends a month for the fourth quarter.

7. Call on larger contractors for additional work

Ok, before you think I’ve sold my soul, give me a quick read. Many of the larger specialty contractors and general contractors also have end-of-the-year closeout needs. Beginning in August and pushing into late October many of these same companies begin to realize, “We might not make it at our current pace or with our work crews.” When they recognize this they often are quite open to subcontracting some work to those who can provide additional firepower.

Working for a larger specialty contractor or GC has its own challenges, but when you catch them in this year-end crisis it is amazing how willing they are to negotiate. In fact, in many cases they can use you as leverage with their client to cough up more money to finish the project on time or to hit some important milestone before the winter months. No matter, it’s a real possibility for you and your company to pick up some more work and add to your profits.

8. Cut-out all wasted expenses

The previous seven tips have been offensive. I couldn’t leave this without one defensive tip that actually has a little offense in it.

Near the end of the year we begin to see what has helped us and what has not: What equipment we used a lot and what equipment we seldom used, for example. Even what services, advertising or marketing we used but didn’t get an ounce of benefit.

Make a list of such items and determine to reduce their financial impact or get rid of them altogether. I’m amazed how many contractors continue to carry insurance on equipment they rarely use or continue to subscribe to services that they haven’t used in years.

Get rid of your waste and do it NOW! Such things become obstacles to your performance and thinking. Clean house as this will assist you in preparing for next year.

Obviously there are countless other ways to finish your year strong financially. There is no room for the contractor who is too shy or proud to go on the offensive.

Remember, it is during the fourth quarter that companies, like football teams, really find out what they are made of! Go for it!

TCBF

This article originally appeared on ForConstructionPros.com

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