Every single top construction firm started off as a one-person show, with one customer. The difference between those who make it big and those who don’t is simple: the owner makes the decision to work on the business versus in it – they move from manager/owner to CEO.
I’ve seen this not only in my family business but countless times with my clients – the growth plateau is inevitable. Every owner needs to decide if they want to stay a sole proprietor where they do all the work from estimating to lifting a hammer or if they want to be a larger business that requires them to first be a manager and eventually be a visionary CEO.
Where most construction companies get stuck is in the “Two Men and a Truck” stage – unless of course, you are the highly successful company Two Men and a Truck that has become quite the household name. It’s an exciting time for the owner – they hire their first employees, perhaps add some more equipment allowing them to take on more work. All is well until it isn’t. The once sole proprietor now finds him/herself in the role of manager – juggling not only all the work they used to do but now adding on HR, Training & Safety manager to the mix.
This is a critical stage for any business owner as most head into this phase of their business without a business, sales, and marketing plan and without any solid policies, processes and procedures in place.
Without vision and structure, the business will suffer quickly. It’s time for the owner to move from worker to CEO. It’s time to work ON the business versus IN it. A hard transition and one that often takes a lot of hard work on the part of the owner. Most don’t do it – and it’s the #1 reason construction firms fail to move past the growth plateau.
How to Grow: Moving Past the Plateau
- Mindset. The owner needs to 100% commit to moving out of the day to day operations and move into the role of visionary. This is the true definition of CEO. Working ON the business versus in it. The owner needs to hire people to do the work he/she used to do – their role on the job site is minimal. Their job now is to lead.
- Set up Systems: Policies, Processes & Procedures. A new employee from front line worker to middle management to c-suite need to be able to come into your business and know exactly how things work, what’s expected of them and how to interact with your customers. This goes beyond the employee handbook (although critical) – it’s about having a procedure for everything you do and then managing to those procedures.
- The Right Clients. Taking on ONLY the clients that fit your Target Client Profile will help eliminate customer dissatisfaction. The rule of three needs to apply: They need to be able to afford you, you need to be able to deliver value and most important you need to like them. Each client needs to have all three check boxes marked – every single time.
- The Right Employees. Hire the best talent you can. This doesn’t necessarily mean you have to be the top payor. (see Construction – The Secrets to Attracting Top Talent) What it means is that you need to hire employees that fit your culture, that understand and will work within your systems. Much like the trifecta for the right clients, you need to do this for your employees. Vet them deeply – just because they thrived at a competitor doesn’t mean they will thrive with you. Every business is different.
- Be a Mentor and Lead. It all begins at the top. As a business transitions from small to mid-size to large the CEO needs to ensure his/her vision is understood and lived by the team. This will require the owner to be a mentor and encourage middle management to mentor. One should always be training their replacement.
It takes time.
The transition from two men and a truck to the top 5% doesn’t happen overnight. Once you hit the plateau you’ll need a good 1-4 years to set up processes, build a solid team, create systems, get rid of clients that no longer serve you and transition the owner from the day to day to the visionary. It takes grit, resilience and persistence. Ones that survive the turmoil of those middle years will have the highest profit margins, attract top talent and will be in demand by the most desired clients.
Regardless of where you are in your business, you have the ability to step back and make the decision of staying or growing.
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