Most construction business owners strive for their companies to do better, grow, be organized, and make more money. The top contractors tend to have the same strategies, systems, and characteristics which take them to the highest level of performance and results. So, what will it take to move your company to the top level? As a construction business coach, I have closely observed what the top companies do to make the highest margins, stay in the top 5% of producers, and remain successful year after year. I’ve observed the common traits and characteristics that set them apart as the best in their markets with top profits, loyal customers, talented employees, and continual revenue growth, wealth, and equity. I call this elite level of contractors the "Best in Class."
Most construction business owners and managers want to operate at the highest level, make high-profit margins, generate significant working capital, not have to bid against lots of competitors, maintain a level of production excellence and quality, manage a winning team of accountable talent, and not continuously feel stressed-out or out of control. After years of working hard, owning, and running their construction businesses, many owners finally realize what they’re doing doesn’t work or deliver the results they want. Working harder isn’t the solution and doing the same things over and over expecting better results doesn’t work either. Many owners eventually reach a level of frustration and want more than they’re currently achieving. Their businesses have been stuck at the same level for years, not providing the results they want. What do you want? Take this true/false test:
True Or False: Do You Want To?
- Scale, grow, and move your business to a higher level
- Generate high profits and cash flow
- Stop running in place, hoping it gets better
- Get off the low-bid treadmill
- Work less, stop being overworked or spread too thin, and eliminate stress
- Get organized and in control - let go and delegate
- Build an accountable management team to run your business
- Develop a steady flow of accountable talent
- Generate investments and passive income
- Have a life and enjoy the benefits and freedom of a business that works
Common Traits of “Best in Class” Contractors
"Best in class" contractors continually move their businesses to a higher level and achieve their business plan initiatives, visions, targets, and goals. These top companies work well without the owner’s hands-on involvement in making everyday decisions and supervising work. These companies are managed by strong take-charge and accountable management teams who handle day-to-day operations including estimating, project management, scheduling, ordering, and field supervision. They make high-profit margins with steady growth, attract and retain great people, operate with standard enforced systems, hold regular meetings, have a clear organizational chart and written job descriptions, manage their business development and sales to deliver a continuous flow of loyal customers and profitable contracts, and their investments provide a high return.
8 Traits of "Best in Class" Contractors
Based on my study and observation of the top 5% of "best in class" contractors, they have these common results, achievements, strategies, structure, systems, and characteristics of how they operate.
1. Maintain an Updated Strategic Business Plan
- Written business plan including a 5-year vision, mission, and core values.
- Clearly tracked targets and goals including growth, revenue, gross profit, net profit, mark-up, margin, job size, equity, and return.
- Specific action plans for improvement including systems, talent, recruiting, hiring, organizational structure, meetings, customer development, sales, estimating, project management, field operations, production, job cost tracking, equipment, customers, and marketing.
- Winning game plan with "must-do" systems and processes to ensure success and achieve consistent results.
- Regular management team strategic planning sessions to develop updated business plans and strategies to improve, monitor results, and achieve goals.
2. Achieve "Best In Class" Results
- Financial results are in the top 5% of all contractors in their specialty, company size, and market. These include revenue growth, gross profit, overhead, net profit, return on equity, and return on overhead.
- They maintain high-margin sales, and job profits without margin fade.
- They generate and grow their equity which allows them to acquire long-term investments and develop passive income for the future.
- Achieve field crew production goals with updated job cost scorecards.
- Produce accurate ESTIMATES with no missed items utilizing fully integrated estimating and job cost tracking software with updated estimating templates and a cost history library of completed projects.
- They maintain a high bid-hit-win ratio sorted by job type, size, customers, locations, and competitors to determine the right jobs to bid.
3. Develop & Maintain High Margin Work & Loyal Customers
- Focus, attack, track, maintain, and win high-margin customers and contracts.
- Seek projects with a high barrier to entry, high qualifications, niche expertise, and low competition.
- Develop strong customer relationships to generate ongoing work.
- Implement a proactive business development, marketing, and sales plan to maintain loyal and repeat customers who provide a steady flow of high-profit work.
4. Know & Track Their Numbers
- They know, track, and review their financials, income statements, revenue, overhead, payables, receivables, backlog, margins, cash flow, etc. on a regular basis.
- They implement sound financial management for revenue, equity, work in progress, completed contracts, overhead, profit, markup, crew production, job cost tracking scorecards, and equipment.
- They maintain strong financial management, bonding capacity, and a line of credit.
5. Maintain & Enforce Systems, Organizational Structure & Meetings
- They continually implement, update, maintain, monitor, track, train, and enforce companywide systems, policies, standards, procedures, and processes to deliver expected results on a consistent basis.
- Update and review their organizational chart for all functions and positions with a clear chain of command, and written job descriptions for all employees with clear accountabilities, responsibilities, tasks, activities, levels of authority, and deadlines.
- Hold and maintain effective regular meetings to hold people accountable, monitor results, communicate, and encourage teams to reach their goals.
- Maintain a proactive safety program with training, inspection, review, and enforcement.
6. Strong Take-Charge Accountable Management Team
- Strong accountable management team accountable and responsible for achieving overall expected results.
- The company owner’s role is to provide leadership and vision, develop and mentor talent, develop systems and structure, sell and maintain customer relationships, and hold the management team accountable to achieve results.
7. Recruit, Coach, Mentor, Train, Promote & Retain Top Talent
- Maintain an effective employee talent development program to attract, recruit, develop, mentor, train, promote, and retain great people.
- Develop and maintain the company culture and core values.
8. Leading-Edge Technology, Equipment & Innovation
- Keep moving the company to a higher level with continuous improvement, innovation, change, and disruption of the status quo.
- Continually challenge management and employees to improve, learn, make decisions, achieve results, grow, seek new ideas, and change.
- Maintain the latest cutting-edge technology, construction methods, management systems, techniques, strategies, and initiatives to be a leader in their market.
The results you’re currently achieving are a direct reflection of how you currently do business. If you’re happy, continue doing what you’ve always done. If you want to improve and achieve better results, you’ll have to do business differently!
