This week’s episode is a breakdown of a key chapter from the book that Justin Jones has coming out around the first of the year. Contrepreneur (Contractor Entrepreneurs)
If you are ready to find out more right now, check out Justin’s book, Every Contractor’s Selling Handbook : How to Round Up Prospects, Build Value and Get Referrals on Amazon today!
How To Set Up Your Own Contracting Machine
Justin started his business in 2006 but it really took off in 2010, bringing in 1.6 million dollars a year. He had a pretty big operation including office space, an office manager, a secretary and 21 employees. Having all these employees was like juggling plates, if you weren’t super aware, everything could all come crashing down.
Justin’s reality was that his company’s operations were in chaos. He had 3-4 good people and everyone else was off on their own. He didn’t have any way to hire, employee checklists or manuals. He was kind of limping along and then found out that he was not profitable. Ack.
Justin jumped into getting systems in place, talking with mentors and doing a SWOT analysis. (strengths, weaknesses, threats, of company). Bing, bing…after completing the SWOT, Justin began to see where the company was sales strong but operations sucked. Because operations was not Justin’s strong suit, he was putting out fires all the time with no good operational flow.
What Are Your Weaknesses?
It is hard to see this from inside, but your weaknesses are the companies weaknesses until you can afford to bring someone in who has those skills that you lack. Make sure to “hire to your weakness”. Justin’s weakness was operations and finance. Like a typical male…he was going forward with sales and hoping the finances catch up. But when you do that, your sales are exponential and if you are not profitable, your losses are exponential too.
Realizing that something had to change, Justin hired an office manager who was good at quickbooks. Justin also got training in operation and accountability. He hired out his weaknesses and learned everything else he needed to know!
Now there are people out there who will provide a part time operational support for when you don’t have the resources to pay a full time person. They have niched themselves into this.
Key points in operations, need process flow chart and checklists. Process flowchart for sales, projects..lead carpenter has it, supervisor has it. You can finagle around to find the key processes that you have to do to make a profit.
Hiring to your weakness does not mean to hire dumb people. If you are the smartest person in the room or your company, you are probably in trouble. Justin’s office manager was a small business owner who did training for other company’s Quickbooks.
Hiring talent often means that you will make less than that person. While this is scary, oftentimes they can get you to where you want to be. Justin’s office manager was watching the money and accountable at the weekly meetings. Having her meant that Justin could see where he have outstanding receivables (sometimes in excess of $100,000!)
Employee management can be overwhelming with a large team. First off you have to incentive them right and give them strong guidelines for the their duties and expectations. You need to have a handbook of what is expected. If you don’t have your expectations in writing, they have nothing to live up to and you can’t blame them if they don’t do what you want.
As a business owner with 20+ employees, each week Justin was having to hire between 1-2 new employees, taking up 10-15 hours a week. This time included placing ads, following up, and backfilling positions. Don’t forget, until you have an HR department you ARE the HR department.
How Big Should You Get?
At the highest level of company, Justin needed to bring in 40K a week to pay vendors, employees, and himself.
That said, growing a company doesn’t all happen at once. Planned growth helps to make sure that you don’t get out ahead of yourself. Everything goes back to goals and the plan for your business.
In 2012 Justin stepped back from a portion of his business and only needed half the amount of employees. He found niches that were profitable and focused on them. Next he found super niches that were even more profitable.
Success is not having the biggest company with the highest revenues. Success is being what you want to be …. whether that means having 2 or 100 employees.
Systems For Success
Most contractors buy a job, and the only way they can get a raise is to just work more. In order to succeed you have to have systems to be able to pass it off someday.
1. Have systems and process forms. A standard operating procedure means that everyone is treated the same. Can pass off your manual to a key member of your team.
2. Once standardized, keep it simple stupid! Especially for the next generation coming up, the work ethic isn’t there so you have to have clear rules and expectations. It is important to not be hiring out of crisis. Must have an interview process and training program set up in your business.
3. Set up customer expectations for selling. If customer holds up payment you can be in a real problem financially.