I am a huge fan of Michael E. Porter because of his grasp and understanding of how business works and his ability to convert complex business strategies that anyone can easily understand.
During the time when we owned and operated construction contracting companies Michael E. Porter's five forces model opened my eyes and provided a great deal of insight regarding how and why things changed in the construction market. To learn more and see the graphic representations download the free E-Book below:
Seven Unique Shocks Every Contractor Experiences
And What You Can Do About Them
Shock #01 - You Can't Run Your Construction Contracting Company
Between the external demands of customers, clients, bankers, payroll tax returns, sales tax returns (if that applies to you), vendors, suppliers and everybody and everything outside your construction company you do not have time to run your own construction company.
When you started your contracting company all you needed to worry about was finding that first customer, make a proposal, do the work and get paid. Everything seemed so simple, the sun was shining, and birds were singing, you had work to do and money was coming in, life was good!
After a short while you got a few more customers and had less time to get everything done and when those pesky warranty issues or call-backs came from the first few jobs came rolling in that meant doing work for FREE instead of focusing all of your time and energy on new work that was going to pay new money.
When You Hired Construction Workers And The Bookkeeper Things Got Real Interesting!
You will not be briefed on everything because the first few times your staff tried to tell you something you were already overloaded with information and decisions and the last thing you needed was to hear was the restroom is out of toilet paper! So you growled at them and from that point forward they decided to not tell you anything unless they absolutely had too.
Your Project Manager and Bookkeeper know everything that is going on but they will not tell you until just before or just after disaster strikes. That is why it is so vitally important to choose the right Project Manager and Bookkeeper or Contractors Bookkeeping Service for your executive team.
Shock #02 - Passing Out Orders Because Think You Are The Boss Is Very Costly
O.K. you are the boss, the owner of the construction firm and it is your name on the sign. You can be:
- "Super Star With Helpers" and struggle financially and emotionally with your contracting company your entire life.
- "Leader With Vision" building a contracting company everyone will want to be a part of and do it like you are going after Moby Dick, in a row boat, with tartar sauce!
We have all worked for contractors who are a "Super Star With Helpers". They are the ones who put down everything and make sure everyone who works for them feels like an idiot.
A "Leader With Vision" gets the right people on board, delegates tasks, offers guidance, support in the form of Scope+Time+Resources and holds people accountable for the outcome. If you are clear on what type of construction work your company does and the clients you want then everybody will pull together in the same direction.
Shock #03 - You Will Not Know What Is Going On Unless You Do Some Detective Work
No matter what you think as the owner you are viewed by your employees as the "enemy" "management" "greedy business person" and more choice words that I will not mention and therefore to varying degrees they will withhold information from you in an attempt to get even or exert control.
The Root Cause is from birth to emancipation every one of us were told "No" by our parents and guardians while we were growing up and as a result we developed a paradigm in varying degrees that if people with authority don't give us everything we want they are mean and therefore the "enemy" and worse.
This is as it should be, because it is human nature and you need to understand it. One popular phrase our outsourced contractor bookkeeping services clients like: "We Live In A World Of What Is...Not What should Be" - Randalism.
Ask open ended, gentle, non-threatening questions of your staff and expect they will be as open and honest as their past psychological conditioning and current Paradigm will allow them. No matter what they say do not condemn them or react badly. Either respond positively or maintain a neutral expression. To do otherwise will kill any chance of them ever sharing anything with you again. Then do whatever you deem appropriate after having taken time to cool off.
Next ask your vendors, suppliers, banker, tax preparer and most importantly your Construction Accounting Service what they see and know about your construction company and ask about local, national and international trends that may affect the performance of you company in the coming months.
Shock #04 - You Are Always On Stage Giving A Performance And Being Judged
- Everything you say and do as well as what you don't say and do is being watched, interpreted, filtered, judged and spread like wildfire.
- The way you dress, eat, your wristwatch, smart phone, rings, chains, bracelets, hairstyle and thousands more things about you are constantly being observed and mentally cataloged, observed, interpreted, filtered, judged and spreads like wildfire.
- Take a lesson from the great leaders of history who remained calm under fire and never let them see you sweat.
- As a contractor you take over where your employees parents left off. - Randalism
Shock #05 - Don't Over Socialize With Your Employees
According to Aesop "Familiarity Breeds Contempt". Your employees look up to you and if they get to know you too well they will begin to see your faults and notice things about you that will diminish your authority in their eyes.
Just think about the final scenes in film classic "The Wizard of Oz" when the off camera booming voice says: "PAY NO ATTENTION TO THE MAN BEHIND THE CURTAIN!"
Shock #06 - You Are Only Human
You need to take care of yourself, get plenty of rest, drink lots of healthy fluids, exercise regularly and don't let anything keep you awake at night. Read good books and get as much "Bread for the Head" as possible. There will be times when you do not feel like going to work, times when you are depressed, grouchy, irritable and much more. During those times take the Nike's advice and "Just Do It".
Shock #07 - You Need The Truth About Owning And Operating A Construction Company
To get to the truth about your construction company you must go on a journey which is Four Levels Deep and like most successful strategies in life it is simple but not easy.
The Four Levels Of Truth In Construction
#1 - What contractors want to hear
#2 - What contractors want to believe
#3 - Everything else
#4 - Truth
A Story To Illustrate The Four Levels Of Truth In Construction
What Contractors Want To Hear - One evening after work, a group of contractors met at the Contractor Business Round Table which is the neighborhood tavern with a round table, pitcher of beer and four contractors. They talked about how tough it is to get profitable jobs no matter what the economy is like. When times are good it is hard to find employees, when times are tough the phone doesn't ring. Everyone agreed there was nothing anyone could do about it.
What Contractors Want To Believe - A short while later they talked about making money and agreed that really big contractors make most of the money and little contractors were doomed to struggle.
Everything Else - One of the contractors suggested maybe they could ask one of the larger more profitable contractors and find out what they did that made the difference. This of course made the other contractors a bit uncomfortable. Then it happened and they all heard and felt the dreaded Snap-Crackle-Pop! The contractor who suggested asking for help experienced a paradigm shift and broke through to the other side. This contractor began leveling up! Suddenly they all remembered what that The Contractors Accountant, Randal DeHart, had said about leveling up. "As you develop your Business Strategy your income is likely to increase. The impact on your friends will not be pleasant as you will be proving that good people can win in the construction game by playing it with high moral and ethical standards and the willingness to try something different."
Truth - Is whatever you believe and you will look for evidence to support your truth. Part of my truth comes from some of the writings of Og Mandino:
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A Salesman’s Prayer - By Og Mandino
Oh creator of all things help me for this day I go into the world naked and alone, and without your hand to guide me I will wander far from the path which leads to success and happiness.
I ask not for garments or gold or even opportunities equal to my ability; instead guide me that I may acquire ability equal to my opportunities. You have taught the lion and eagle to hunt and prosper with teeth and claw. Teach me how to hunt with words and prosper with love so that I may be a lion among men and an eagle in the marketplace.
Help me to remain humble through obstacles and failures yet hide not from mine eyes the prize that will come with victory. Assign me tasks to which other have failed, yet guide me to pluck the seeds of success from their failures. Confront me with fears that will temper my Spirit yet endow me with courage to laugh at my misgivings.
Spare me sufficient days to reach my goals; yet help me to live this day as though it be my last.
Guide me in my words that they may bear fruit; yet silence me from gossip that none be maligned. Discipline me in the habit of trying and trying again yet show me the way to make use of the Law of Averages. Favor me with alertness to recognize opportunity, yet endow me with patience which will concentrate my strength.
Bathe me in good habits that the bad ones may drown; yet grant me compassion for weakness in others. Suffer me to know that all things shall pass; yet help me to count my blessings of today.
Expose me to hate so it not be a stranger; yet fill my cup with love to turn strangers into friends.
But all these things be only if thy will; I am a small and lonely grape clutching the vine, yet thou hast made me different from all others.
Verily there must be a special place for me. Guide me, help me, show me the way to become all you planned for me when my seed was planted and selected by you to sprout in the vineyard of the world.
Help this humble salesman, guide me God.
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If you suspect that I care deeply about all Contractors and their families you are absolutely right!
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About The Author:
Randal DeHart, PMP, QPA is the co-founder of Business Consulting And Accounting in Lynnwood Washington. He is the leading expert in outsourced construction bookkeeping and accounting services for small construction companies across the USA. He is experienced as a Contractor, Project Management Professional, Construction Accountant, Intuit ProAdvisor, QuickBooks For Contractors Expert and Xero Accounting Specialist. This combination of experience and skill sets provides a unique perspective which allows him to see the world through the eyes of a contractor, Project Manager, Accountant and construction accountant. This quadruple understanding is what sets him apart from other Intuit ProAdvisors and Xero accountants to the benefit of all of the construction contractors he serves across the USA. Visit http://www.fasteasyaccounting.com/randal-dehart/ to learn more.
Our Co-Founder Randal DeHart - Is a Certified PMP (Project Management Professional) with several years of construction project management experience. His expertise is construction accounting systems engineering and process development. His exhaustive study of several leading experts including the work of Dr. W. Edward Deming, Michael Gerber, Walter A. Shewhart, James Lewis and dozens of others was the foundation upon which our Construction Bookkeeping System is based and continues to evolve and improve. Check out our Contractor Success Map Podcast on iTunes and Follow Randal on Google+
