Asking the Right Questions
Running a business is tough. Whether you’re the owner, GM or superintendent, you need to get the job done and you need to make money to run a successful operation.
Unfortunately a lot of business owners don’t have a firm grasp on the key indicators of success. With a lot happening day-to-day it can be easy to lose track of things and you end up wondering where all the money went. It looked like a great deal when you got the contract, but months later it seems like you’re barely covering costs.
Here is a list of five questions successful contractors ask themselves when evaluating their business:
Am I On Schedule?
Time is money in this business, and falling behind schedule is a sure way to lose money on your job. That’s not to mention making your customer angry and other problems that compound when you’re behind. It’s much easier – and less expensive – to prepare a schedule in advance that you’re going to be able to stick to.
This all starts with preplanning your project with a realistic timeline. The key here is setting benchmarks – daily, weekly and monthly, where your daily benchmarks are most important. If you don’t know where you are on a daily basis, by the end of the week it might be too late to catch up.
With your timeline and benchmarks in place, make sure everyone knows the schedule. You, your foreman and anyone else with responsibility on the project should know it and review it daily, which is where your corrections come in. At the end of each day, look at your benchmarks. Why are we behind? What corrections need to be made? What has to happen for us to stay on track?
Most importantly, staying on schedule comes down to a mindset: it’s not about finding excuses why your’e behind schedule; it’s about finding solutions for staying on schedule.
Am I Controlling My Costs?
On any construction job there is money coming in and money going out. Keeping close track of your cash flow can be the difference between a successful, profitable job and just barely making it without much to show.
Again this starts in the preplanning process with accurately forecasting your costs and factoring them into your contract. Of course accuracy in your forecasting improves with experience, but there is no substitute for a well thought-out preplanned project with accurate estimates for your three biggest costs: typically labor, materials and equipment.
Is My Labor Performing?
Labor is one your biggest expenses, and also an area where you are most dependent. Your employees have to get the job done, but you have to put them in position to do that.
Do I have the right number of workers? Are they properly trained? Do they fully understand what’s expected of them and are they capable of meeting those expectations? Ultimately, am I getting the most out of my employees?
Efficiency comes in part with the right number of the right people in the right place doing the right job. If you’re not getting the most out of your labor, it’s often because the answer to one of these questions is no. You have too many or too few workers on a particular job; the workers you do have aren’t properly trained for the job they’re performing; they don’t fully understand what is expected of them; or they’re not capable (or willing) to meet those expectations.
Successful contractors know the answer to these questions, and if they don’t, they get them answered fast. The following is a proven model used by successful contractors for managing their labor:
7:00 AM: work starts
9:30 AM: 10-minute break
12:00 PM: lunch
2:30 PM: 10-minute break
Just before start time, the entire crew with the foreman has a five – seven minute meeting. Here you review the benchmarks you need to hit before the 9:30 break. This could be measured in square feet, volume of material or some other clearly measurable unit. You also review specifically what each individual’s job and responsibilities are for the work period. This ensures that every single person knows exactly what they’re doing over the next two and a half hours.
After the 9:30 break you have a two-minute meeting to review your progress. You’re behind, you’re on pace or you’re ahead of schedule. Here’s what you need to do now, here are your benchmarks for the lunch break, and here is each person’s job until then.
This repeats after each break through the end of the day, creating clear and measurable benchmarks for each work period. This keeps the entire crew on pace and ensures everyone knows what is expected of them at all times. At the end of the day you’ll spend 10–15 minutes in meetings, a valuable and worthwhile trade-off for keeping the job – and your labor – on schedule.
Do I Have the Right Materials?
Much like labor, materials are an area where you can lose control of your costs. You need to have the right materials, but also the right quantity.
On most jobs you want to have as close to the right quantity of materials you need without going over. Not enough means you’ll be making additional orders from your supplier, incurring additional shipping or transportation costs and potentially missing out on bulk discounts. Even worse, with a second order of materials you might get a different batch that doesn’t match properly with the materials you’ve already started using. Big problem.
If you end up with too much you’ve spent money on materials that you may never use. In some cases you might be able to return your unused product, but even that incurs additional shipping or transportation expenses. And if you made a special order for your materials you probably won’t be able to return them at all.
In any case you’re losing money, so you want to get as close as possible. Again, this all happens in the preplanning process, weeks before the job even starts.
Do I Have the Right Equipment?
Finally, equipment is an area that can cost your business a great deal of money – both the cost of the equipment itself, and the cost of operating it. The root question is, “do I have the right tools and equipment, when I need them, to get the job done most efficiently?”
If you have two forklifts on a job when you only need one, you’re losing money. If you find yourself without a tool you need and you have to stop working to get it, you’re losing time.
And it’s not just having tools that can do the job; it’s having the right tools to get the job done most efficiently. Many contractors don’t even realize they’re using inefficient tools that are costing them money to operate every day.
For example, we’ve calculated the average masonry or hardscape contractor spends between 1 – 1.5 hours every day cleaning up dust or slurry from using a conventional saw. That may not seem like much, but if you’re paying your workers $15/hour that’s up to $22.50/day, or $450/month. Those numbers add up quickly and cost your business over time (use our Cutting Costs worksheet to calculate your monthly cost of cutting).
Of course, the alternative to this example is using iQ Power Tools, which eliminate the cost of dust and slurry with integrated dust control systems. In the bigger picture though, whether it’s cutting materials or other critical operations, successful contractors do a good job of preplanning their equipment needs and investing in tools that will save their business money.
Running a Successful Business
As a contractor you have a great responsibility to make sure your business is successful and profitable. Asking these key questions will help you keep a finger on the pulse of your business. The five areas we talked about were:
Being a successful contractor is tough business. It’s up to you to make sure you’re earning enough to make the effort worth it. With a firm grasp on these five areas, you won’t find yourself asking why the numbers aren’t adding up when the job is done.
iQ Power Tools was founded by 3rd generation masons and successful contractors for over 30 years. We design and manufacture dust control power tools that eliminate dust and wet-cutting problems.