8 Steps to a Better Contracting Business.

February 04, 2020

By Mike Draper, President, Renovantage Inc.

STEP 1: Adopt a strategic focus, not a day-to-day one

Face reality! If you are working too hard in your contracting business and you are still not making enough money, you must first admit to yourself that something is broken in the way you are running your firm.

As a business owner, you need to be more strategic, long-term focused and less technical and day-to-day focused. I call this: “Getting a CEO mindset.” If you don’t focus on the big picture, nobody else in your company will.

Now there are only three main ways to compete as a residential contractor: differentiation, service excellence and price. You must be good at all three but excel in one. Select your target market and put all of your energies, systems, people and resources into giving that specific market what it wants. If you try to be all things to all customers, you will end up being just average to everybody. Is that what you really want?

STEP 2: Work on the foundations of your business

Building a business is like building any structure. The higher you’re planning on building, the deeper and stronger you need to build your foundations. If you want your business to provide you with abundant wealth, a great lifestyle and freedom of choice, then you need to work on the foundations of your business.

The biggest part of any business’s foundation is its financial controls. You need strict cost accounting and cash flow controls. You need to monitor your key financial ratios. Your client fulfillment strategy needs to deliver your products or services consistently and reliably.

STEP 3: Learn to lead

A company without a leader is like a sports team without a head coach. Leadership, more than anything else, will determine the success or failure of your business. Great leaders share a common trait – they make others want to follow them and their vision. You can’t do everything yourself, so you need people that will trust you, believe in you and implement the vision you articulate.

Everyone has a “Natural Ability.” These are the things that people are naturally good at and just love doing. However, you may spend more time working in areas of the business that you don’t like very much and in which you are not an expert. How frustrating and energy-zapping is that? Spend your time working in your Natural Ability zones and your productivity will soar. Hire employees who have a Natural Ability to do those things you are not good at.

STEP 4: Develop a marketing machine

Imagine for a moment that you could own a powerful client generation system that you can turn on and off at will. A system that supplies your business with an abundant number of clients that come back to purchase from your business time and time again, and they spend more each time they come back. What would that system be worth to your business? It would be priceless, wouldn’t it? Well, the good news is that you can build such a system yourself.

Create your Unique Selling Proposition that distinguishes you from the competition. Identify your target market and define your ideal customer. Apply the “5 Ps” of marketing to your niche so that you no longer compete on price. Learn the marketing equation and how to design ads that work. Develop a high touch and high-performance sales process.

STEP 5: Build systems that will work without you

At Renovantage, our definition of a successful contracting business is “A profitable enterprise that can work without you.” I cannot emphasize this enough. Owning a business should allow you to get more out of life. You shouldn’t be a slave to the business, hitched to it 7 days a week, 24 hours a day. In order to create a business that works without you, you need to systemize all the repeatable operations in your firm.

Start by develop a “how to” operations manual so that every employee knows exactly how to do every task for which they are responsible – correctly, the first time, every time. Document your accounting, marketing, sales, customer service, operations and delivery processes so that you eliminate extra steps, reduce errors and maximize efficiency. Implement computer systems that automate all routine functions.

STEP 6: Build your team

Employees can be the biggest headache any business owner faces. Yet, it does not have to be that way. You can create a business where your employees work longer and more productively than you ever dreamed. Your employees can become dedicated team members, striving to create a business for you that not only produces outstanding results but leaves you with more time and energy to take holidays, pursue family activities – or launch even more businesses that can produce even higher levels of wealth, freedom and excitement.

It all depends how you build your team. Learn how to recruit, interview, hire and train high-performance contributors. Create job descriptions and set goals for each team member. Set your company’s rules of the game and learn how to delegate and make employees accountable. Get the monkeys off your back! Become the coach of your team and win the game of business.

STEP 7: Get positioned for dynamic growth

Now you have a strategic focus, a solid foundation, good leadership skills, a marketing system that attracts and converts customers, systems that deliver on the promises made the first time, every time, and motivated employees who are keen to give you what you want. The synergistic effect of all of these things working together at the same time has you positioned for dynamic growth.

Create raving fans for your business that keep coming back and buying more. Not just satisfied customers, but advocates that give you referrals and do your selling for you.

Improve your negotiation, decision making, problem-solving and presentation skills. Build career planning for your employees. Set big goals. Create and communicate your vision. Create a succession plan. It’s time to appoint or hire a general manager to run the business for you.

STEP 8: Enjoy your freedom

Now you have the freedom to work on your business when and as much as you want. Or you can decide to just enjoy the passive income from a successful business that works without you. Now that you are truly a successful entrepreneur, maybe it’s time to start another business. Or perhaps it’s time to think and plan for a life beyond your business? If you have followed the 8 Steps above, you will have learned the difference between working “in” your business (the way you were doing it before) and working “on” your business. It’s your choice!

Mike Draper is President of Renovantage inc., Canada’s leading peer group and one-on-one coaching firm for renovation contractors and custom homebuilders. Mike.draper@renovantage.com.