What Separates Wealthy Contractors From Poor Contractors
- It's not lack of opportunities to bid jobs or get leads because getting leads is easy
- It's not lack of ambition because every contractor I know is strong and ready to get busy
- It's not lack of intelligence or the ability to develop a production method and follow it to the end
- It's not lack of money because if you follow my method you know how to overcome that, just use O.P.M.
The Answers Are Simple, But Not Easy
- Wealthy Contractors begin with the end in mind and knowing what to do
- Wealthy Contractors know who they are and what they believe to be true
- Wealthy Contractors know what type of Contracting they are good at doing
- Wealthy Contractors know how to generate more leads than they can handle
Do You Want To Know How They Found The Answers?
Step #1 Begin With The End In Mind "The Seven Habits of Highly Effective People"
Everything is created twice. First in our minds, and when we do the work to bring them into physical existence. Take your power and take control of your ability to Be-Do-Have. You can re-write your own scripts and take control and responsibility for the outcome of your Construction Company by using your imagination and conscience.
Three major aspects of personal and business management of your contracting company:
- Leadership - what do you want to accomplish?
- Management - how can you accomplish it?
- Productivity - just decide to do it.
Have a vision of what your Construction Company Money Machine will be when you are finished building it. It will be like a deep, wide river running smooth and calm moving millions of gallons of water through lush green valleys where farmers and ranchers pump the fresh water into their crops and fields to feed their families for a lifetime and beyond.
Your Construction Company Money Machine will be moving millions of dollars from customers and clients through lush green valleys where you will pump cash flow into your bank and investment accounts to feed your family for a lifetime and beyond.
Step #2 Know Who You Are And What Your Believe To Be True
To get to the truth about your construction company, you must go on a journey. It is four levels deep and like most successes in life, it is simple but not easy.
Level One - What contractors want to hear
Level Two - What contractors want to believe
Level Three - Everything else
Level Four - Truth
A Story To Illustrate The Four Levels
What Contractors Want To Hear - One evening after work a group of contractors met at the Contractor Business Round Table, which is the neighborhood tavern with a round table, pitcher of beer and four contractors. They talked about how tough it is to get profitable jobs no matter what the economy is like. When times are good, it is hard to find employees, when times are tough the phone doesn't ring. Everyone agreed there was nothing anyone could do about it.
What Contractors Want To Believe - A short while later they talked about making money, and agreed that really big contractors make most of the money and little contractors were doomed to struggle.
Everything Else - One of the contractors suggested maybe they could ask one of the larger more profitable contractors and find out what they did that made the difference. This made the other contractors a bit uncomfortable. Then it happened, and they all heard and felt the dreaded Snap-Crackle-Pop! The contractor who suggested asking for help experienced a paradigm shift and broke through to the other side. This contractor began leveling up! Suddenly they all remembered what that The Contractors Accountant, Randal DeHart, had said about leveling up. "As you develop your Business Strategy your income is likely to increase. The impact on your friends will not be pleasant as you will be proving that good people can win in the construction game by playing it with high moral and ethical standards and the willingness to try something different."
Truth - Is whatever you believe, and you will look for evidence to support your truth. Part of my truth comes from some of the writings of Og Mandino:
The Salesman’s Prayer
Oh creator of all things help me for this day I go into the world naked and alone, and without your hand to guide me I will wander far from the path which leads to success and happiness.
I ask not for garments or gold or even opportunities equal to my ability; instead guide me that I may acquire ability equal to my opportunities. You have taught the lion and eagle to hunt and prosper with teeth and claw. Teach me how to hunt with words and prosper with love so that I may be a lion among men and an eagle in the marketplace.
Help me to remain humble through obstacles and failures yet hide not from mine eyes the prize that will come with victory. Assign me tasks to which other have failed, yet guide me to pluck the seeds of success from their failures. Confront me with fears that will temper my Spirit yet endow me with courage to laugh at my misgivings.
Spare me sufficient days to reach my goals; yet help me to live this day as though it be my last.
Guide me in my words that they may bear fruit; yet silence me from gossip that none be maligned. Discipline me in the habit of trying and trying again yet show me the way to make use of the Law of Averages. Favor me with alertness to recognize opportunity, yet endow me with patience which will concentrate my strength.
Bathe me in good habits that the bad ones may drown; yet grant me compassion for weakness in others. Suffer me to know that all things shall pass; yet help me to count my blessings of today.
Expose me to hate so it not be a stranger; yet fill my cup with love to turn strangers into friends.
But all these things be only if thy will; I am a small and lonely grape clutching the vine, yet thou hast made me different from all others.
Verily there must be a special place for me. Guide me, help me, show me the way to become all you planned for me when my seed was planted and selected by you to sprout in the vineyard of the world.
Help this humble salesman, guide me God.
Step #3 Know What Type Of Contracting You Are Good At
Strengths, Weakness, Opportunities And Threats (S.W.O.T.)
SWOT - Is one of the tools we use in strategic planning for construction companies to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in determining the particular target market.
Strengths - Are construction projects that your construction company does extremely well at and earns a greater than average gross margin than give it an advantage over other contractors. What are they and how can your construction contracting company expand on them?
Weaknesses - Are construction projects that your construction company does poorly at and breaks even or loses money. What are they and how can your construction contracting company turn them into strengths?
Opportunities - Are construction projects and markets not currently being served where it is possible for your construction company to enter and turn them into strengths?
Threats - Elements outside your construction company that could cause trouble for you or your construction projects. What are they and how can your construction contracting company turn them into opportunities?
"So it is said that if you know your enemies and know yourself, you can win a hundred battles without a single loss. If you only know yourself, but not your opponent, you may win or may lose. If you know neither yourself nor your enemy, you will always endanger yourself." The Art of War by Sun Tzu
There Is A Lot More that I would like to share with you about using SWOT to help your construction company increase sales, profit, and cash flow by redirecting the time, money, energy and resources from the bottom 80% of your current customer's clients and jobs to the top 20%. Please feel free to contact Sharie for more information.
Step #4 How To Generate More Leads Than You Can Handle
You can easily generate more leads than you can handle because in the previous three steps you laid the foundation by having a vision for what your Construction Company will be when you finish building it, you know who you are, and you know who is your Prime Client.
Marketing Is A Science Not An Art
A lot of Contractors are having trouble adapting to the new economy. I Have Made More Mistakes – than ten of the average contractors put together. I’ve learned a great deal of hard, hard lessons and worked my way through a number of “Character Building Moments.” So what I am about to ask you to do is something I have done for many years during my contracting days, and it still works.
Let’s Run The Numbers Starting With The Cost To Acquire A Customer
Step #1 – Generate a Profit & Loss Report from the previous two years and isolate total income. (Note: All companies are only two years old regardless how long they have been in business because what happened more than two years ago doesn’t matter when developing a financial forecast.
Step #2 – How Much Money Did You Invest In Marketing? Not investing money in marketing is like winking at a pretty girl or guy in the dark, you know you are doing it, but they don’t. Relying on word of mouth means being in a race for the championship of low price leaders!
Step #3 – How many new customers or clients did you acquire during the past two years?
Step #4 – Divide Total Income from step #1 by the number of customers or clients in step #3 and you will have a rough idea of your sales per customer.
Step #5 – Divide The Amount Of Money You Invested In Marketing by the number of customers or clients in step #3. Just know that 80% of marketing is done to keep current customers and only 20% is designed to attract new ones. I have studied marketing extensively and will offer this one hint. Why do you suppose the car manufacturers invest so much money advertising their products when most people continue to purchase similar makes and models over and over?
Step #6 – Multiply The Net Profit Percentage shown on your Profit & Loss by the sales per customer in step #4 to generate a rough idea of the net worth of a customer to your Contracting Company. This is one of the numbers that becomes very important if you ever want to sell your Contracting Company.
Step #7 – Customer Gross Profit in step #6 minus marketing cost in step #5 = Customer Net Profit.
Step #8 – Where MR > MC When the Marginal Revenue greater than the Marginal Cost and risk is manageable do the deal. MR>MC is a long discussion for more on it click here
Step #9 – Where is Break-Even or how far can I go before it is time to quit doing it?
Step #10 – When You Know How Much A Client Is Worth you will know how much you can invest to acquire a new one and as many new ones as you want.Step #11 – Keep Your Existing Clients Happy and and continue offering new products and services to them. The number one profit maximizer is Service Agreements, click here for more.
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This Is One More Example of how Fast Easy Accounting is helping construction company owners all across the USA including Alaska and Hawaii put more money in the bank to operate and grow your construction company. Construction accounting is not rocket science; it is a lot harder than that and a lot more valuable to people like you so stop missing out! Call Sharie 206-361-3950 or email@example.com and schedule your no charge one-hour consultation.
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About The Author:
Randal DeHart, PMP, QPA is the co-founder of Business Consulting And Accounting in Lynnwood Washington. He is the leading expert in outsourced construction bookkeeping and accounting services for small construction companies across the USA. He is experienced as a Contractor, Project Management Professional, Construction Accountant, Intuit ProAdvisor, QuickBooks For Contractors Expert and Xero Accounting Specialist. This combination of experience and skill sets provides a unique perspective which allows him to see the world through the eyes of a contractor, Project Manager, Accountant, and construction accountant. This quadruple understanding is what sets him apart from other Intuit ProAdvisors and Xero accountants to the benefit of all of the construction contractors he serves across the USA. Visit http://www.fasteasyaccounting.com/randal-dehart/ to learn more.
Our Co-Founder Randal DeHart - Is a Certified PMP (Project Management Professional) with several years of construction project management experience. His expertise is construction accounting systems engineering and process development. His exhaustive study of several leading experts including the work of Dr. W. Edward Deming, Michael Gerber, Walter A. Shewhart, James Lewis and dozens of others was the foundation upon which our Construction Bookkeeping System is based and continues to evolve and improve. Check out our Contractor Success Map Podcast on iTunes and Follow Randal on Google+