Читать книгу Construction and Contracting Business - Entrepreneur magazine - Страница 19
ОглавлениеWell, here we are at the final chapter, nearly ready to say goodbye. But instead of reaching an end, we hope this book will lead to a new beginning for you. While starting and running your own contracting business presents innumerable challenges and obstacles, the potential rewards, both personal and financial, far outweigh them. This chapter puts it all together, highlighting key points presented in the previous chapters.
Often the daily life of a contractor is chaotic and messy. Schedules are disrupted by weather and absent employees. Projects are delayed because supplies are not available as promised. Clients call with change orders and seemingly inane concerns. Vendors call asking when payment will be made for merchandise. An employee thinks that his paycheck is incorrect. The computer crashes. A truck has a flat tire. Two work crews need the same piece of equipment. And your children are home from school because they have the flu, and your spouse has to tend to an ailing parent.
While many people would cower in fear or become completely unglued with crises, ending up reclining on a psychiatrist’s couch, successful contractors and entrepreneurs thrive on activity, variety, and challenge. They are able to step back from daily chaos and view the big picture, understand where it is all leading, and forge ahead with the business of their business.
While successful contractors do not panic during challenging times, there are reasons why small-business owners should PANIC in order to be successful. While not inclusive or unique, the PANIC list gives the important factors required to become a thriving and happy contractor.
Astute readers will notice that we do not mention high intelligence or IQ, nor do we include advanced degrees. Intelligence and education are important, but they are not the most important aspect of becoming a successful contractor. Contractors are practical folks with unique talents that cannot be measured by university degrees and advanced-placement testing. Sure, they might have to pass competency tests in their home state, but these are usually practical exercises devised by politicians attempting to protect the public.
Of course, entrepreneurs should not actually panic when events take a wrong turn; just remember that failure is not an option. However, after reading the remainder of the chapter you’ll understand that the definition of PANIC cannot be found in any dictionary.
Successful contractors exhibit steady persistence in spite of the many obstacles that they meet each day. Running a business is a difficult, sometimes discouraging, undertaking. Entrepreneurs are able to look to the distant future, stick with their long-range plan, and not get sidetracked by temporary difficulties. Perseverance implies a great deal of optimism about the future and a strong passion for your work. If you really believe in the future and believe that your work is important to your community, you’ll be able to overcome adversity, win clients, and own a respected, profitable, and successful business. And having faith in yourself allows you to go further than others and rise to the top of your profession.
tip
Typically, a landscape contractor who works in the northern part of the country may have to lay off the majority of his employees for three months during the winter. Income drops to a trickle, but fixed costs need to be paid. Before any bonuses are paid to key executives, he ensures that enough cash is on hand to tide the company through the lean months. As one of the owners told us, “In the winter it often seems like we dig a big hole in the ground and throw money into it.” He also has a mathematical formula for distributing bonuses that ensures there are funds available to reinvest in the company as it grows. Not only is the company able to purchase new equipment, it keeps its interest expenses at a manageable level.
A good sense of financial management is critical to succeeding as an entrepreneur. Because cash flow is the lifeblood of most businesses, including those in the contracting industry, timely management of income and expenses often makes the difference between a successful business and one that ultimately fails.
In many parts of the country, contractors have to contend with seasonal fluctuations of income and expenses, which makes long-range financial planning essential for success. Successful contractors establish a reasonable budget, use it to implement a competitive system for establishing prices, and regularly monitor both income and expenses to ensure that their financial management plan is on track.
Starting your own contracting business involves a certain amount of risk because of the degree of competition in the industry and because many specialty contractors require a substantial financial investment just to get started. However, the risks can be greatly reduced by employing a sound and consistent financial plan.
In general, contractors are creative craftspeople who use their innate skills to develop their business. Creativity comes in many forms: Some have the power of visualization and can “see” how the many elements of a project fit together. Others are masters of scale and proportion who can place individual elements together. Yet others are true artists who can make perfect individual elements that fit into the whole. Many have an excellent aesthetic sense and make creations that have good taste and a sense of beauty. Finally, successful contractors understand that many times “form follows function,” and they use their skills to ensure that their creations not only look appropriate for their task but also “work.” Whatever form or forms of creativity these entrepreneurs display, they all have full confidence in their own natural abilities. This self-confidence allows them to forge ahead and take on the risks that are inherent in starting a new business.
Natural ability and creativity are not limited to merely the physical aspect of a contractor’s work. Creative accounting can save a contracting company thousands of dollars each year. Creative use of employee incentives can raise the level and quality of the work produced by the company. Every aspect of managing a contracting business can benefit from creative thought, and the most successful entrepreneurs tap into their own natural abilities. In addition, contractor-owners must be able to multitask, that is, understand, recognize, and react to all that is happening around them—not only the day-to-day events of running the business but also the consequences of many conflicting personalities working together for a common goal. On the other hand, owners must be able to focus on the immediate task at hand and avoid getting sidetracked on unimportant issues.
College Drop-Outs
While we applaud those who aspire to higher education and do not recommend dropping out of college, several famous entrepreneurs actually did drop out of college (or took a leave of absence) to pursue their dreams. Their natural abilities and creativity allowed them to succeed without completing their formal education. Here’s a short list of well-known names with the company they founded and the college they attended: Bill Gates, Microsoft, Harvard; Michael Dell, Dell Computer, University of Texas; Steve Jobs, Apple, Inc., Reed College; Paul Allen, Microsoft, Washington State University; and Mark Zuckerberg, Facebook, Harvard.
At the other end of the spectrum, Google, Inc.’s founders Larry Page and Sergey Bin both received master’s degrees from Stanford; in fact, seven of the top-ten CEOs of U.S. companies, including Warren Buffet, have college degrees. Several have master’s degrees, and one has a Ph.D.
Most of the skills required to operate a successful contracting business can be learned, either through formal training or from experience. However, instinct, which really means having a good feel for business, is something that cannot be taught. It is the intangible something that separates the most successful entrepreneurs from the average business owner. Those with good instincts really know themselves and, most importantly, understand their own strengths and weaknesses, turning this knowledge into an asset, and creating an efficient and profitable entity. These folks not only have the ability to talk a good game, they can also execute their plans to the benefit of the company.
Business owners who really understand themselves also understand their own shortcomings and take steps to balance their weaknesses by surrounding themselves with people who compensate for them. The best and most successful realize that their success is often a result of the people around them rather than themselves alone. Instinct, or good business sense, allows these entrepreneurs to get the most out of the people around them and build a true team with a common goal.
Confidence is an asset, arrogance a liability.
Excellent communication skills make up the final section of my definition of the word PANIC. Communicating is less about making stirring speeches than it is about the ability to convey enthusiasm and energy to both employees and clients. With the emergence of the internet, email, cellphones, and voicemail, we have become more impersonal than at any time in recent memory. Thus, in the modern world, possessing good people skills is of greater importance to the entrepreneur. Not only must the contractor be able to accurately share his or her corporate vision to fellow workers but he or she must also be able to convey enthusiasm, professionalism, and sincerity to clients.
Communicating with employees starts with hiring the right people for the job. Good hiring is a result of being able to put yourself in another person’s shoes and see what they see, feel what they feel, and have sensitivity to their expectations. Upon hiring the right people, good communication means having the ability to motivate the new employees to succeed beyond their dreams, pushing them to their creative limits, and then recognizing their achievements. It also means respecting and utilizing the knowledge, wisdom, and practical experiences of the seasoned employees.
Communicating with clients follows a similar path. The ability to sell your service or product requires that you be able to sit in their chairs, understand their problems, and focus on their dreams.
It’s imperative that you remember good communication is not only about what you have to say or how enthusiastic you are, it is very much about how well you listen.
Not every entrepreneur possesses all of the traits mentioned in PANIC. Not everyone is a good communicator, not all have excellent natural ability. But to succeed, you must recognize both your strengths and weaknesses. When you do this, you will have the ability to hire people who are strong in areas you are weak. The combination of talent within a company creates a stronger and more powerful entity.
With all due respect to professional baseball, professional basketball, and NASCAR fans, most polls indicate that professional football holds the top spot as America’s favorite sport. Football is a very complex business requiring the expertise of dozens of people in each organization. Gone are the days of Vince Lombardi and George Halas who controlled entire football operations with only a handful of assistants. Today, most teams separate the head coach and general manager positions, and it is not unusual to have 16 or 17 assistant coaches on the staff. The salary cap and player contracts are so complex that only a team of lawyers can understand them. Running a business is much like coaching a football team. The head football coach oversees both the offense and the defense; assistants manage the details of each. In order to win, both offense and defense have to play extremely well.
The offensive squad of a business includes the marketing department, sales force, and the bidding and estimating departments. Depending on the size of the company, landing a $40,000 or $200,000 job can be compared to a quarterback throwing a long touchdown pass; but the business “offense” still needs to book $500 and $5,000 jobs, just like the offense needs to gain a few yards at a time to get a first down. For the business, the “defense” is made up of those who manage the finances of the company. If they are not successful, the game gets out of hand, and success (victory) is impossible. A football team may have an excellent offense, but if its defense is weak, it will likely lose more games than it wins. Likewise, you may have many jobs and plenty of income, but you may not be playing defense and protecting that income. A team may score 35 points, but if they give up 40 points, they lose. If you bring in $1.2 million and spend $1.8 million, you will also lose.
Just as teams may have a few losing season, so will you, but you can only last so long in businesses without winning. That’s why you need to have both offense and defense, making money and protecting enough money that you show a profit.
If you are not sure how this works then go back and read Chapter 7, study contribution margin, and understand what the offense must do if the defense overspends the budget.
Just consider recent winners of the Super Bowl, football’s world championship contest. They have almost always had the better defense. Look at many of the great teams of their day—the Packers, Steelers, 49ers, and more recently the Denver Broncos; even though they had great quarterbacks like Brett Favre, Ben Rothlisberger, and Payton Manning, they featured exceptional defensive teams. And they all won lots of games—and Super Bowls.
Release all your creativity and passion with your offensive plan, but be stubborn and watchful with your defensive scheme. Teamwork wins when players on both sides of the ball do their part.
As this book concludes, your new life begins.
“The important thing is not being afraid to take a chance. Remember, the greatest failure is to not try. Once you find something you love to do, be the best doing it.”
—DEBBI FIELDS, FOUNDER OF MRS. FIELDS COOKIES
