Ever Wonder Why Some Competitors Seem To Have More Cash Flow And Profit Than You?

You may not like what I have to say; just know I am sharing what works, not what should work. From our own experiences owning and operating construction companies and from working with other contractors for well over thirty years one of the simplest ways to acquire wealth and riches in construction is to start with these four principles.

#1 Find something you enjoy doing and never work another day in your life

#2 Develop a system to produce predictable results with ordinary people

#3 Innovate and improve continuously everything in your construction company

#4 Stay with it until you retire, sell your company or pass it on to your heirs

Earning enormous amounts of cash and profits in any business is simple, not easy, but simple if you know what to do. In other words: "If You Know The Answers The Questions Will Not Bother You" - Randalism

#1 Find Something You Enjoy

Joe The Plumber's Story:

I met a plumbing contractor in the mid 1970's who was very profitable. He was a large man, gruff, no-nonsense and a stare that could bore a hole through 1/4" plate steel. He needed help with his bookkeeping.

After a brief review of his manual bookkeeping system, it appeared his financial reports were wrong because his Plumbing Company's net profit was in excess of 20%! 

It appeared his Plumbing Company was earning over five times the normal profit. According to the Construction Financial Management Association, (www.cfma.org) the average pre-tax net profit for general contractors is between 1.4 and 2.4 percent and for subcontractors between 2.2 to 3.5 percent.

I reviewed his bookkeeping system and found a number of minor data entry errors and after fixing them his Plumbing Company net profit did go down slightly and yet it was still over 20%. 

His Plumbing Company had been in operation for a number of years and it started by serving the new construction market. Very soon afterwards, Joe found he could not make a living at it since he is a bit of a perfectionist so he switched to service and repair.

He loved the new approach to Plumbing because the pace was slower and his customers loved that he understood their needs and gave them exactly what they want.

#2 Develop A System

A system is a collections of repeatable processes that any ordinary person can follow. That is exactly what you want, ordinary people, no superstars, studs or drama Kings and Queens. Good solid ordinary people who want a career and to be part of a team that feels like a family.

In order to attract and maintain a workforce of those folks you may need to hire a few superstars, studs and drama Kings and Queens to help you get the processes in place. The reason is these people thrive in chaos and a constantly changing environment.

Document, document, document everything that works. Whoever does this task needs to be someone with an understanding of Project Management and lots of patience. Their job title is Process Development Engineer.

As soon as a process is documented, it will need to be beta tested by someone who can follow directions. It is imperative the Process Development Engineer keeps his or her mouth shut, observes the beta tester, and makes notes of where the document was not clear and fixes the document afterwards.

Every process is iterative which means it will need to be re-written, reformatted and reorganized dozens of times before it will work. When three ordinary people can follow the process by reading the directions version 1.0 of that process is ready to be integrated into the system.

Developing processes will drive the Process Development Engineer crazy. If he or she gives you grief or is not making progress, re-assign them and put someone new in the position. This is a tedious nerve racking job and once someone is tired of it there is no turning back and no reason to keep them in the position. Find something else for them to do and keep on keeping on because the results are a money machine that produces a cash crop repeatedly as long as you want it!

#3 Innovate And Improve Continuously

Always be on the lookout for new and better ways to serve your existing customers and continually find ways to innovate and do more with less.

In the early 1990's cell phones were thought to be an expensive toy at $1.75 a minute plus $99.00 a month base fee. I purchased one for one of our service and repair company and it saved us thousands of dollars more than what it cost.

We were the first contractors in Seattle Washington to accept credit cards in a mobile environment. We used a specially designed RJ-11 phone jack linked to the dash-mounted cell phone. At the time:

• The equipment installation cost $1,500.00

• The credit card machine cost $3,500.00

• Visa and MasterCard charged 4% plus $.025 per transaction

• American Express Charged 5% plus $.025 per transaction

• The bank charged $29.00 a month for their part

We made enough money in the first month with add on sales because we accepted credit cards, which meant our customers, and clients could get everything done without having to write a check that within ninety days all of our trucks were outfitted with credit card terminals. 

When I tried to share these and other proven principles with my friendly competitors they said I was nuts, so I shut up and laughed all the way to the bank...no wait...my electronic armored car (credit card terminals) delivered my money to the bank.

#4 Stay With It

Shiny toys and the sweet song of get rich quick schemes with little or no effort will continually try to get your attention. The more successful you become the more distractions will come to you. Ignore them all and "Mind Your Business".

You will miss a few great opportunities but in the end, it will not matter. If you follow this outline and everything I am sharing with you here and on our Contractor Success Map Podcast on iTunes, you are likely to wake up one day and discover you are independently wealthy. Which means you really don't need to go to work every day because your construction company runs better, smoother and makes more money for you when you don't interfere with it.

You will have plenty of work watching your Key Performance Indicator Reports, monitoring progress against the projections in your Business Plan and develop new strategies. Life is good!

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Profitable Contractors and Construction Company owners have known about the value of outsourced bookkeeping services and contractor coaching services like ours for a long time and now you know about it too!

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