A few weeks ago a swarm of potential new clients landed, all asking nearly the same question: “How do I stop the madness and grow to the next level?”
It’s great when a company is growing, but uncontrolled growth is often fatal. Anything over 20% growth from last year threatens company survival. So let’s stand back a bit and look at your problems from the 30,000-foot level to clarify those which most threaten your success as you grow.
First, ask the big question: “Where do you want your company to be in five years?” Follow that with: “Where are you now?”
Spend some time answering the first question. Just as architects create cloud diagrams to rough out the flow of a house, so should you create big pictures of the company you’re working hard to create. Write a paragraph or two describing your company for the “remodeler of the year" award you hope to accept in 2020. Then break down that paragraph into discreet components and define each to the best of your ability.
Here are some starter ideas to get you thinking.
FIRST, the owner:
- Alpha Baker Charley is 50 years old and lives with his wife of 25 years and their three children: two boys and a girl ages 17,14, and 6.
- Their house, which has been remodeled extensively to keep up with the growing family, is nearly paid off.
- They have saved sufficiently to support all three children through college.
- Their retirement funds are on track to allow them to work minimally after age 65.
- They enjoy three family adventures a year, and often Mr. Charley is gone with his family and unavailable to the office for two weeks at a time.
- They are charitable contributors to their community, which looks forward to their Fourth of July floats and annual Thanksgiving football game.
THEN, the company:
- ABC Remodeling is located in XXX.
- Its offices consist of 1,000 feet of showroom and office space recently designed and remodeled by Alpha Baker Charley,the owner.
- The company is a full service design/build firm working with high end clients in the metro region and is known for the outstanding systems used to produce its great designs on schedule/on budget;
- ABC has a 98% Guild Quality rating and relies on a combination of return clients/referrals and an expanded network of new clients brought to it by marketing opportunities, including three home shows, remodeled house tours and Green Building events;
- There are 14 people in the field, five in the office.
- Volume ranges between $3 million and $3.8 million per year, with average job size of $175,000. The average gross profit margin over the past three years averaged 32%. Company bonuses were given at New Year’s and the owner enjoyed an annual salary close to $300,000.
Sounds pretty good, right? Although the company described is fictitious, it is an amalgamation of many companies I’ve known. Building such a company requires years of work, mistakes made, and lessons learned. Although it might take you 10 years to grow a company such as this the best time to start is NOW!
So you’re ready to answer the question “where are you now?” Do it by focusing on the seven primary functions every company -- regardless of size or product or market -- has to effectively manage to be successful. Once you’ve completed that focus, you can pinpoint your greatest opportunities for improvement this year.
These seven functions are:
- Marketing: A system that brings the right clients to your company.
- Estimating: A system that develops accurate and complete pricing.
- Sales: A system that converts the right client to construction at the right price which produces sufficient profits for the company.
- Production: A system that produces the job on time/on budget with satisfied clients and NO accidents.
- Finance / administration: Two interrelated systems, each of which manages the flow of accurate and complete information throughout the organization. Finance manages job cost and accounting information; administration manages the rest.
- Resource management: A system that controls and protects company assets.
- Leadership: A system to develop and maintain company culture that attracts the right employees and the right clients and increases the value of the company to the community.
Each of the seven functions requires effective systems to be successful. A system consists of a set of processes that, when followed by the right employee, produce predictable and consistent desired results over time. Systems allow new employees to be brought into the company at each stage of its growth and efficiently learn how to succeed in a position new to them. Without effective tested systems, company growth often ends in chaos, confusion, loss of employee morale, declining customer satisfaction and corresponding gross margin.
Don’t let this happen to you. Identify the areas where you need to focus your attention for the next three months by rating your company’s ability to produce predictable and consistent desired results in each of the seven areas. Use a five-point scale. Anything under a 3 requires IMMEDIATE attention, but because you shouldn’t throw too much change at your company at once, focus on just one at a time.
Stepping stones to growth start with a clear understanding of your goals, both personal and professional. Combine that with systems designed to control the most obvious voids in current company operation, and establish metrics by which to measure. Then track progress against your goals and rework as necessary. Good luck.