As construction companies grow from $1 million to $5 million to $25 million to $50 million or higher in annual sales, the owner’s or president’s role grows right along with the increasing number of employees, projects, bids, contracts, customers, fires and issues to handle. As a contractor business coach, company owners typically call me for help when they have grown past their ability to effectively manage all the challenges themselves as the leader of their expanding business. The overloaded owner is at a point where he/she has too many responsibilities, tasks, roles and accountabilities to keep all the balls in the air and his/her company working like a well-oiled machine. In fact, these owners often get out of control trying to do too much themselves and trying to supervise and schedule too many projects, process, systems, crews, estimates and commitments.
To make matters worse at this stage of business growth, most employees think the owner is their boss. Most customers, subcontractors and suppliers want to have direct access and will talk only to the owner about important matters, contracts, pricing or other issues, small and large. The owner is still pricing most of the estimates, scheduling crews and making sure jobs stay on budget. I often see where a company has grown 50 percent but the overhead, management team and number of field supervisors has remained at the same level. This is causing even more stress on the owner as everything can’t get done as it should.
When companies grow faster than their staff, structure, systems and ability, the next thing that happens is finances can spiral out of control. The owner doesn’t know the job costs or have a clue if they’re making any money. They run in circles faster and faster and work twice as hard for less and less money, going nowhere. The challenges of business ownership continue to mount.
Being busy is a bad sign. There are so many details and so much to handle being a growing contractor. The more you do, the further behind you are. You get bogged down, stuck, inefficient and ineffective. Things take longer to finish. Ever-increasing paperwork and demands get in the way of doing things right. And you only have enough time to fix field problems and put out fires that are always flaring up. You have to make all the decisions for everyone and try to do all the important tasks yourself. And you still won’t delegate important responsibilities to your team. To make matters worse, you don’t have time to hire help and don’t want to pay top dollar to find professional managers who can run your field, mange your projects, price your bids or implement an integrated job cost and accounting system.
When you’re busy, you don’t have time to find higher-margin work, make good decisions, improve customer relationships or offer more than your competitors. So you continue to run faster on the treadmill doing what you always done—selling low prices to compete while knowing you’ll suffer the consequences later. Everyone likes you when you’re operating at overload capacity. You buy materials from the same suppliers without getting additional quotes, hire the same subcontractors over and over instead of getting more bids, and you keep field employees working overtime instead of hiring more workers. You’re totally stressed, frustrated, and you don’t know what to do to fix it. Your life is out of balance, your business is out of control, your company consumes your every waking moment, and you aren’t making enough money to make it worthwhile. Even your spouse or family keeps telling you to do something different.
What should the owner’s role be to get to the next level? When your company was smaller, it was easy to act as the ring leader, schedule crews, supervise workers, order materials, meet with inspectors, and work with customers to keep them happy. But now it isn’t happening and customers demand more meetings, faster service, better prices, more paperwork and more of your time.
What should you do to take charge of your company and get it to become efficient, effective and profitable as it grows?
People tend to do what they’re most comfortable doing. People know what they should do to achieve the results they want, but they tend to do what they like to do rather than what they should do. The bottom-line results your business achieves are the number-one indicator of your effectiveness and how you spend your time and your ability to build a profitable company. Your priorities determine the importance you actually give to on-time schedules, safety, quality workmanship, finances, operational systems, motivating employees, sales, taking customers to lunch and your leadership. If you’re not getting the results you want, there’s something wrong. And chances are, it’s not your people, subcontractors, suppliers, competition, customers or the economy. It’s you!
Decide what the owner’s role should be.
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What owner’s job description, position or role will bring the highest return? -
What is the owner best at? What does the owner want to do going forward? -
What does the owner want to stop doing and doesn’t enjoy? -
What does the owner never want to do again? -
What roles, accountabilities, responsibilities and tasks should the owner focus on as their priority?
Most construction business owners/presidents are best at the following:
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Managing the overall company leadership and management team to ensure they are accountable for meeting company and project goals. -
Meeting with customers and convincing them to hire their company versus supervising, running and doing the work. -
Taking the “get and win work” role and being accountable for business development, customer relationships, marketing and sales. -
Providing overall financial leadership and managing/overseeing the accounting manager and finance department. -
Providing leadership, motivation, vision, wisdom, coaching and troubleshooting. -
Making the managers accountable and responsible for achieving results. -
Being involved with the hiring and people process.
Based on the company size, the owner can also manage the “price work” role by supervising the estimator and reviewing cost estimates, but not being the full-time estimator doing bids.
Most construction business owners/presidents should not do the following:
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Manage or run construction operations or projects from start to finish. -
Project manage any jobs including scheduling, ordering, coordinating, negotiating subcontracts, approving project invoices, dealing with project issues, dealing with customer issues or getting involved with subcontractors or supplier. -
Supervise field and crews including scheduling, ordering materials, managing equipment, logistics, firing, pay raises or dealing with personnel issues.
The answer is up to you. After exploring all the factors outlined above, remember that the bottom-line results are the number-one indicator of your abilities as the leader of your company, and that includes your ability to delegate and let go. As your company grows, you will reach your personal limits and realize you can’t handle much more work than you already have going. Your calendar is full, your day is packed, you’re working 12 or more hours seven days a week, and it gets more stressful every day. You’re unable to keep up with all the tasks, orders, contracts, inspections, meetings, demands, employee questions, paperwork and problems you have to take care of. Your to-do list is too big, and you have reached the level of what you control can and do yourself.
Most companies stop growing when business owners reach their maximum level of what they can do themselves, micromanage, supervise and control. Another bad thing happens at the “stuck” level: All you have time for is work, and you don’t have time to go out and get enough work to keep your company growing. This downward cycle eventually destroys a potentially great company. Obviously, you can’t do more work yourself. You have to free yourself from day-to-day supervisory activities that bog you down and hold your company back.
Put your personal priority plan into action. Now is the time to make some decisions to solve your personal priority problem. Decide what roles and responsibilities you should focus on exclusively. Decide what activities and assignments you need to let go of and stop doing. Decide what new positions you need to create to allow your company to grow, profit and reach your goals. And decide what people you can hire or promote now to move your company to the next level.
To help with your decision, email [email protected] to get your copy of “Org Chart & Job Descriptions.”
George Hedley is a contractor business coach and columnist for several publications, newsletters and trade magazines. He writes articles for entrepreneurs, construction business owners, managers, leaders, distributors, franchisees, service business to business companies and associations on subjects such as business growth, entrepreneurship, leadership, managing people, marketing, sales, customer relationships, profitability, construction management, getting paid, field supervision, construction estimating, project management and setting goals.
