How to Boost Contracting Business Profits?

Focus on Reality, Process, and Accountability

In my over a decade of working with contractors to startup and improve their businesses, contrary to what some may say, profit has always been the primary goal. Yes, providing good jobs to employees and quality services to customers is how you get there, but profit has always been the ultimate measure of success. As it should be- you can’t deliver on the former if profit doesn’t exist. For this reason, many business owners prioritize the analysis of material and labor costs, expenses, current sales numbers and the next check coming in the door, over everything else.

While these are critical points to be aware of and certainly deserve to be high on the list, these are outcomes of running an effective operation. Profit is the indicator of success, it isn’t what leads to it. In fact, I’ve routinely observed owners who put watching outcomes as their number one priority suffer from never ending problems in their businesses. This may be an obvious statement; what works in creating profit is giving the majority of attention to the work that leads to it! Do you know what you need to give attention to that will lead to increasing profit? My free self-assessment can help you find out, check it out at the bottom of the page.

Now, that doesn’t mean micromanaging employees’ every move, we have to let them do their work. Instead, we must recognize what we truly have control over as leaders and focus there. The big idea is this: you have control over facilitating an environment where work is done to meet your expectations. Your job is to have the right expectations, those that align with business success, and build them into the way your business operates.

Here are three strategies to facilitating the right environment that I have found are very impactful and within most owner’s direct control that should be prioritized.

Reality Checks: The Power of Numbers

Call them scorecards, dashboards, or record boards – these numerical representations of your business performance are essential. While your scorecards (or whatever you choose to call them) should have outcome based metrics like sales, job profit, etc., the majority of the metrics should be leading indicators that can be impacted immediately. Examples of these would be leads, number of reviews, number of jobs in queue, and number of safety briefings held. A good way to tell a leading indicator from an outcome is to simply ask, “What metric does this number lead to?” and if you can’t come up with another metric, it’s probably an outcome. Here are some other guidelines for metrics.

• Visible: Everyone in the organization should have access to relevant metrics, especially sales figures. Real-time visibility fosters transparency and accountability.
• Focused: Not all numbers matter equally. Determine which metrics align with your business goals and prioritize them accordingly. Looking at too many metrics results in the important ones getting lost in the fray.
• Conversation Starters: Numbers should ignite discussions, not silence them. Use them to identify trends, opportunities, and challenges.

Processes: The Backbone of Your Business

Effective processes are the biggest value of any organization, whether that be to potential buyers, employees, or owners wanting to maintain their sanity. A company’s ability to efficiently train new employees, identify the root cause of problems, improve operational efficiency, and a myriad of other things, hinge on how clear the processes are and how well the team follows them. The great part is, this is within your control as an owner, in fact it is one of your greatest responsibilities to your business! However, owner’s don’t have to build them out all alone. The team wants to be involved, just be careful about knowing where the line is drawn between asking how it should be done and having your team build your business for you. To maximize the impact of processes, they should be:

• Documented: Clearly defined processes reduce errors, improve efficiency, and facilitate knowledge sharing.
• Accessible: Place process documentation where it’s used in the process in a format that is easy for the user. For example, link a video of an inspection process being completed directly on an inspection checklist that is housed where the inspection results are collected.
• Simplified: Complicated processes lead to confusion and delays. Strive for clarity and efficiency. If you need complex instructions for steps in a process, have that accessible but not where you would expect someone to glance to follow the major steps of a process. By doing this, there is a higher probability the process steps will be followed consistently and referenced when required. Having the general process hidden in pages of detailed instructions causes overwhelm and will undermine your efforts to get consistency in following the general process order.

Accountability: Driving Results Through Regular Meetings

Regular meetings can be the cornerstone of accountability or an amplifier of problems and wasted time. Every team needs a regular meeting that has a structured agenda and is kept on track with a predetermined purpose. Meetings should be driven by your metrics and discussions should focus on what’s working and issues that impact the entire business. So often I see meetings go off the rails and down rabbit holes, focusing on exceptional circumstances that do not lead to anything actionable. Typical attention thieves are problem customers and employee errors. We all have customers we shouldn’t have sold and everyone makes mistakes. Best to acknowledge those things and move on until it becomes a trend. It’s crucial to avoid public reprimands of employees during meetings. Employee issues are to be handled privately between them and who they report to. To make the most of your time, adhere to these principles:

• Tiered Meetings: Implement meetings at different levels and/or departments of the organization to help keep the discussion relevant to the participants. Employees may disengage if they are required to sit through meetings that aren’t relevant to them, time is the most valuable resource in the world and we need to remember that. One tactic I picked up from a mentor and have used that worked effectively when having company wide meetings, front load the agenda with topics applicable to all, and then dismiss people as topics with not relevance to them are come to on the agenda.
  • One more thing: one way to keep your meetings efficient is to think of the amount each person in the room costs per hour and total that up- you might raise your eyebrows when you see disengaged employees twiddling their thumbs and checking their phones as they wait for the meeting to apply to them!
• Structured Agenda: A clear agenda keeps meetings focused and productive.
• Consistent Timing: Regular meetings establish a predictable rhythm that helps everyone stay on track.

As an owner, recognize and take responsibility for these three things. Focus on them and you’ll make your team happy, and they’ll deliver the profit results your business needs. Ready to dive deeper and assess your business’s strengths and areas for improvement? Download our free self-assessment tool now!

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