Articles written by guest contributors
How contractors get sloppyBy Monroe Porter
“What goes up must come down” is a musty old adage that is still true today. The contracting market is hot. High volume can create sloppy practices that will haunt you particularly when the market slows. Growing gross profit should be your number one priority rather than growing sales without margin.
Job overload creates a run-run environment rather than a profit-profit focus. Avoid these sloppy business practices that typically accompany a heavy workload.
- Poor material handling practices. When busy, it is easy to get away from preplanning and ordering material deliveries. Having field employees pick up material is expensive. It probably costs a $100 every time an employee goes to pick up material.
If you are already behind in the field it does not make sense to take an employee, who is producing, out of the field. Using Uber or a taxi would be much cheaper. Not only that, competitors who need employees can recruit your folks. Keep them working.
- Sloppy purchasing. The market is hot and material prices are rising. With that in mind it is important to keep your suppliers’ pencils sharp. Failure to audit supplier invoices can result in overpayment.
- Crisis scheduling. Being busy and having trouble meeting demands can create a firehouse scheduling mentality. Salesman and estimators over promising and fighting for crews is not uncommon. Schedule when it makes sense, not for the people who scream the loudest.
Schedules must always be modified due to weather, other trades and customer readiness. Develop a realistic strategy for dealing with it. Over promising and under delivering is a great way to kill your name brand. Be creative and realistic. First come, first serve probably isn’t the best strategy. If you are running behind and your backlog is high, make sure you let customers know you haven’t forgotten them.
You may also need to manage your job mix. New construction schedules are hard to manage and when they want you, they need you. You may have to cut back on that part of your business.
- Infrequent job visits. If field people do not see management, they assume everything is going fine. At times employees are a little like kids: ignore them and things go sideways. Busy and productive are 2 different things. Field workers equate a high volume of business to the boss getting rich.
Lack of skilled field people has also put a heavy stress burden on your good workers. They want to see the boss and not feel neglected. Overtime can also create a less productive work environment. Inspect what you expect. Leadership is about influencing those around you and it’s hard to influence people you never see.
- Being too tolerant of under achieving employees. The labor market is critically short. If you fire someone, everyone knows it can be difficult to find someone else. However, bad apples reach a certain point where they begin to spoil the whole barrel. Don’t let the extremely bad employees pull down the producers.
After a really bad employee is terminated, you almost always find out that other employees are grateful, and you realize that the termination was long overdue. Good employees and achievers do not like to work with people who are not carrying their share of the workload. Don’t run the good people off by catering to the underperforming bad apples.
- Desperate hiring. The labor market is tough and trying to hire people can seem like an impossible task. Sometimes it is better to do less volume than to throw warm bodies at the problem.
Remember, your sales capacity is limited by your foreman or job supervision abilities. Also, some foremen are better trainers than others. You may find it a better strategy to recruit unskilled but stable workers from other industries and then train them. You can teach a good worker a skill but you can’t teach a poor worker how to work.
- Not staying on top of hiring. In a hot job market, turnover happens more quickly. If you do not have an on-going hiring process, you may find yourself without enough production to breakeven. Few companies look for employees as aggressively as they seek work. Don’t get caught in this trap. Set up a system to constantly hire and recruit. To make matters worse, failure to respond within 24-hours with a new recruit means that someone else will probably snatch them up.
- Failure to stay on top of the finances. When you are busy, things can change quickly. Failure to run monthly financial meetings with accurate information can lead to disaster. High sales volume does not solve all problems. In fact, most contractors go broke when they are busy. A big job going south can hurt you no matter how busy your business is. Business can be unforgiving.
Monroe Porter is an industry business consultant for hardscape/landscape contractors and can be reached at (804) 267-1688. He offers up to 1 hour of free consulting for readers of Hardscape Magazine.