Articles written by guest contributors

Monroe Porter

Smart things contractors do

By Monroe Porter

Last issue, I wrote an article about what dumb things contractors do so I find it only fair to write an article about smart things contractors do.

1. Know the minimum wage in your area

I am not talking about the federal or some other government wage regulation. I am talking about what is the minimum wage required to hire a worker who will show up every day, has a driver’s license and some work ethic. The current minimum wage is $7.25 an hour but very few if any people will show up for that. For most areas of the country, it tends to take at least double that amount to hire entry level people.

So how do you determine pay? Research what fast food, warehouses and other physical labor pays. If you pay below a living wage, employees cannot afford to buy a new tire, pay a ticket and other things required to make it to work. Websites can give you this number for your area.

For your local wage survey, simply ask or call. Everyone is hiring. Entry level wages have dramatically increased and advertising below that threshold will yield no applicants.

2. Google your business name

Google your business name on a computer other than the one in your office. See how your search comes up. Make sure whatever the name on your truck matches what the search engine finds. Everything is going digital, make sure you are up to date. Hire someone to help you as the formats constantly change.

3. Hire a computer geek

No disrespect intended. I’m an old guy who is easily frustrated with technology. There are lots of young people who can help you. Some are students, some are friends’ kids, and some have small businesses. Thirty years ago, I had a broken computer in my office. I was going to throw it away, but my secretary’s 12-year-old son was there, and he wanted to take a shot at fixing it. When I came back from lunch it was in 50 pieces on the office floor but 2 hours later it was fixed. He did my computer work part time for years. Hire someone who can help you.

4. Have pay integrity

This could be explained in a long rambling article but here is the simplest way to evaluate your pay system. List employees in the order of who you would layoff first, second, etc. Next, write each person’s pay by his or her name. See if the 2 lists match.

This is a good way to evaluate someone who has learned rapidly and deserves a raise. If the only way your up-and-coming employees can get a raise is to quit, something is wrong and you need to fix it. You can also evaluate that list by grading who has the ability to become a foreman or lead person. Study the list as a whole and constantly look to improve it.

5. Have realistic family employment policies

Hiring too many family members or putting them in jobs that are a poor fit for their skills is not fair to the family member or company. Family communication styles can carry over into family business communication. Family communication tends to be emotional with some families being hot and heavy communicators and others who simply ignore things. Do your best to manage family members like you would manage anyone else. Try to avoid mixing family and business discussions at family gatherings. Do your best to separate family and business.

6. Build around key people

Contractor startups are always challenged with hiring as there is little or no employment reputation. It takes time to develop an organization. Do your best to grow or hire several key people you can build around. If you feel like there is no one in your organization you can build around, think hard about why that is. Are you hiring the wrong people? Do good people leave? You are only as good as the people around you.

7. Know your numbers

Make sure your financials are in a format you understand. Also try to record expenses with the same logic used for estimating. For example, if a superintendent is estimated as part of overhead, the cost should be recorded as overhead. If you add field hours to the estimate to cover superintendent costs, the expense should be recorded as part of field labor.

Job cost each and every job. Track closing ratios by sales or by estimator, foreman, project manager and type of work. Know where you make and lose money. It’s difficult to argue with math. Using math as a management guideline takes much of the emotion out of management. Business is pretty simple. You have to take in more than you spend, or you will go out of business.

8. Build your brand

Branding is built thru repetition. Use the same-colored trucks, job signs, stationary, company attire, etc. throughout your organization. Remember, you want people to see your name and then search you on the web and call. Few people actually write down a phone number. Residential contractors should be visible in community events. Commercial contractors should participate in target industry functions. Remember, a value branded contractor can always discount to get work but an unbranded contractor struggles to get premium pricing.

I hope these ideas are helpful. Stick to the basics.

Monroe Porter and PROOF Management offer business consulting through industry networking groups and he can be reached at (804) 267-1688.