How Construction Contractors Get Rich

How Construction Contractors Get Rich

The perfect business is one that generates money while its owner sleeps. That?s not literally possible for most businesses, but it perfectly demonstrates the two primary goals of most business owners: (1) maximize wealth and (2) break free from their

business.

Businesses do not create wealth and freedom by accident. They happen because its owner creates systems that turned the business into a well-oiled machine. Have you systematized the six primary functions your business needs to succeed?

? Marketing
? Selling
? Staffing
? Planning
? Tracking
? Financial Control

After looking at the six, you may think you have systematized your construction business, but a better test is to look at the subsystems that make up the six systems. To help you develop a clearer picture of the activities your company should be performing, here?s a look under the hood of these six essential business systems at the subsystems that make them go.

MARKETING

The purpose of your marketing system is to produce a flood of qualified sales leads. You need systems for:

-Generating leads from new customers.
-Generating leads from existing customers.

-Prodding referrals from existing customers.
-Collecting testimonials.
-Staying in touch with your customers.
-Publicizing your business.
-Developing new advertising pieces.

SELLING

The purpose of your selling system (and you need to think of selling as a system) is to get commitments from buyers to hire you. The selling subsystems are a combination of sales tasks, motivation, and development. You need systems for:

-Assigning and prioritizing leads.
-Qualifying leads.
-Following up with prospects.
-Creating proposals and presentations.
-Processing orders.
-Following up with customers after their project is finished.
-Motivating the pursuit and procurement of profitable sales.
-Improving selling skills.
-Networking.
-Strengthening your customer relationships.

STAFFING

The purpose of your staffing system is to get the right people in your company and get them placed in the right jobs so that they are successful individually and as a group. You need systems for:

-Advertising openings.
-Interviewing.
-Creating and updating job descriptions.
-Communicating performance expectations.
-Monitoring market wage rates.
-Dismissing non-performers.
-Developing employees? skills.
-Rewarding good performance.
-Selecting the right people for promotion.

PLANNING

The purpose of your planning systems is to eliminate negative surprises by solving problems before they arise. You need systems for:

-Determining which markets you are going to pursue.
-Creating your annual budget.
-Creating a cash flow budget.
-Increasing your bonding capacity.
-Planning project completion.
-Scheduling your work crews.
-Determining when to buy equipment.

TRACKING

The purpose of tracking systems is to make sure your business is performing as you need it to. Your tracking system should be monitoring the following items:

-Expenses vs. budget (job and company).
-Revenue vs. budget.
-Gross profit vs. budget (job and company).
-Labor productivity (job and company).
-Advertising effectiveness.
-Selling effectiveness.
-On-time completion.
-Employee performance.
-Equipment costs.
-Labor time by primary tasks.
-Receivables outstanding.
-Sales backlog.
-Safety efforts and lost time injuries.
-Estimating accuracy.
-Mark-up success.
-Re-work.

FINANCIAL CONTROL

The purpose of financial control systems is to make sure that your business is on solid financial ground. You need systems for:

-Developing relationships with bankers.
-Developing relationships with bond and insurance agents.
-Qualifying and evaluating your CPA.
-Getting the proper business licenses.
-Processing payroll.
-Making scheduled federal and state tax payments.
-Managing your cash.
-Verifying money is not being improperly removed from the company.
-Verifying suppliers? bills are legitimate.
-Collecting late receivables.
-Paying bills are on time.
-Paying employees properly.
-Filing liens and claims.
-Collecting employee information.
-Sending out 1099s.
-Getting proper insurance coverage.
-Verifying lease terms and payments are proper.
-Building and managing your credit line.

Until you get all of these subsystems in place and your people trained on how to perform them properly, you will be a slave to your business and your personal wealth will be severely limited.
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Ron Roberts runs a coaching practice that shows contractors how to build strong, profitable businesses. Pick up his free report, The 10 Biggest Mistakes Contractors Make, and sign up for his weekly Contractor Best Practices Newsletter at www.filthyrichcontractor.com.

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