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How Having a Plan Can Help You Build a Successful Business

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A Plan is Only Good if You Use it

The past couple of weeks we’ve discussed how important the Production Tracker tool is and how it can help you see the future of your business.

Building a construction business is no different than building a building. If you don’t have a plan, you won’t know what to do. You will just be guessing.

If you don’t have the right tools and know how to use them, it will be a lot harder to build anything.

The Production Tracker is one of those business building tools.

So far, we’ve discussed how…

  • Creating and recording project numbers can help you focus your attention on the right kinds of projects.
  • Tracking project bid amounts will give you a clear picture of where you are in relationship to meeting your financial goals for the year.
  • Tracking dollar amounts of signed proposals will give you the rest of the picture of where you are financially in relation to where you want to be by the end of the year.
  • Tracking dollars collected from projects will give you a clear comparison of your signed amounts with your collected amounts.
  • Percentage of jobs signed will let you know if your pricing is too high or too low.
  • Percentage of dollars signed per dollars bid will let you know how you’re doing in relation to reaching your financial goal for the year.
  • Percentage of dollars collected per signed simply lets you know if you’ve collected everything that was bid.

Now, let’s look at the final five areas of this tool and how they can help you build a successful construction business.

Average dollar amount of projects bid – This number (cell I-30) is just what it sounds like. It’s the average dollar amount of all the projects you have done proposals for. It can be helpful to know what this information is. It can help you determine if you should make changes to the sizes of proposals that you should be doing.

Average dollar amount of projects signed – This price (cell J-32) lets you see what the average dollar amount of your projects are and how it compares with the proposed amounts. Like the average bid amount, this number tells you the size of projects you normally do. You can then make changes to what proposals you should focus on.

Average dollar amount of projects collected – Like the percentage of dollars collected, this number (cell K-34) lets you know if you’re increasing or decreasing the dollars you collect after proposals are signed. This gives you a critical piece of information: knowing how accurate your proposals are.

These next two areas are instructive when it comes to production planning as it relates to achieving your revenue goals.

Projected timeframe for doing signed projects – This information (cells I-23 and J-23) tell you how long it should take you to do the work of the proposals that you currently have signed. This is determined by dividing what your gross revenue goal for the year is by 52 weeks. Then dividing the current total signed amount (cell J-22) by that weekly revenue target will give you the number of weeks needed to do that work.

Projected date work should be done – This information (cell K-23) converts the projected time needed to do the work of the currently signed proposals (cell I-23) to a calendar date. This is achieved by adding the number of weeks (cell I-23) to the starting date (cell H-23). This then gives you a target date on the calendar that the work should be done to stay on task and achieve your dollar goal for the year.

I find these last two pieces of information to be the most revealing and helpful when it comes to staying on target.

This information can increase a sense of urgency and focus. This information is critical to building a successful construction business.

I hope you’ve found this series on the Production Tracker, as a tool for building a successful construction business, helpful.

You can learn more about the Production Tracker by joining us for the Production Tracker Workshop at 10:30 AM CDT this coming Saturday, May 11th.

If you would like to know about some of the other business building tools we offer, take a peek in the Business Building Toolbox.

If you would like some help building your construction business check out the 5 steps here, or schedule a free 30-minute coaching call.

What’s it Take to Build a Successful Construction Company?

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Gene’s Excited About His Meeting with John

As usual, Gene had been on the go, nonstop, trying to keep construction projects moving forward, collecting money, paying bills, and meeting with new potential customers when he realized he still had six projects needing proposals. As he thought about this, he realized it had been more than two weeks since he had talked with John about how he did construction proposals.

It’s so easy in business to get caught up in fighting daily fires.

Gene picked up the phone and dialed John’s number. “Hey John, this is Gene, have you got a few minutes?” “Sure,” John said, “What can I do for you?” “I just realized that I’ve got six projects that need priced, this reminded me of our conversation a few weeks back, when you offered to go through your bidding process with me. Does that offer still stand?”

“Sure,” said John, “when would you like to meet?” Gene thought for a minute, realizing he wasn’t sure when he would have time to squeeze in anything else. “I don’t know John, as usual, I’m booked pretty full.” John waited for a minute and then said, “I understand. Think back to what you said in our previous conversation. Do you remember how frustrated you were?”

“Your situation isn’t going to change until YOU decide to change it.”

Gene rubbed his forehead. He knew John was right. “Okay”, Gene said, “I can probably squeeze in an hour or maybe two Saturday. Would that work?” John shook his head and smiled, remembering what it was like to be where Gene is.

Then he said, “Gene, I appreciate where you are, but the process of getting from where you are, to where I am, isn’t going to happen in an hour or two. I’ve been doing it for forty years. If you can commit to four hours Saturday, I will be glad to meet with you and we can start the process.”

“YOU are the only one that has the power to make this change.”

Gene sat there with all the things that needed to be done, bouncing around in his head. Then he thought about how tired he was of feeling out of control. Once again, he knew his mentor was right. John had taught him so much about construction and how to build things.

Now it was time to learn about the business part of construction.

“Okay,” said Gene, “How about we meet at noon on Saturday, and I’ll bring the pizza.” John said, “That sounds great, and we can get started, but that’s all this meeting will be…getting started. Like I said before I’ve being doing this for years. It takes work, it takes commitment, but the end result is worth it.”

“It’s more than just learning. It’s a lifestyle change.”

“Gene, most people in construction never learn the business side of operating a company. This is where they struggle until they get to a point where they give up. Bring an open mind and an open heart and be ready to have them both filled.”

“Nothing is going to change until something gets done”

Now Gene was getting excited and looking forward to meeting with his friend and mentor and making some changes in his business and his life. He was beginning to realize that a construction project started out right, begins long before any actual construction takes place.

It takes the right tools, training, and action to build a successful construction business. It requires you to do more than just talk about it.

If you or someone you know is feeling out of control like Gene, there are tools and training available to help get control of the business. The Business BUILDing Toolbox is filled with construction business tools.

If you would like to dive into the Blueprint for Building a Better Proposal, we’re hosting a free 90-minute workshop for Building a Better Proposal on Saturday, January 6, 2024, at 10:30 CST. Register for the workshop here.

If you have questions about the workshop or business systems, you can schedule a free 30-minute construction company consultation here.

How Using the Payment Application Tool Communicates Clearly with Construction Customers

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Learning About Business Tools Isn’t Necessarily Fun, but it is Necessary for Business Success

I know that the topic of the Payment Application over the past couple of weeks hasn’t been one of the most exciting topics. Learning about any tool, how it works, and how to use it isn’t one of those things that scores high on our “fun meter”.

This is true for most men. Just think about Christmas time and how most of us guys just want to dive in and put that new toy together without bothering with the instructions. We don’t need any stinking instructions!

This, “get ‘er done” attitude gets amped up even more for those of us in construction. Afterall…building things is what we do.

However, you know as well as I do that, more times than not, this doesn’t turn out so well.

That’s why years ago as I struggled trying to put my business together, I decided I needed to read the instructions. The problem was…I couldn’t find the tools or the instructions. So that’s why I decided to make my own Business BUILDing Tools, complete with instructions. 😊

One of those tools is the Payment Application.

Last week we went through the process of getting started with a blank Payment Application and getting it filled out so that it is ready for the customer’s first payment. Now let’s look at preparing the Payment Application for recurring progress payments.

Preparing for the next progress payment –

Step 1 – Updating the application information – In the application information box, change the application number to the next sequential number i.e., from 1 to 2. Change the date from the previous date to the date through which this application includes. This consists of the material provided or ordered and work done by this date.

Step 2 – Moving dollar amounts from work completed to previously billed – On the previous Payment Application you have dollar amounts in one or both columns D (materials presently stored or ordered) and E (work completed this period). The numbers in these columns need to be added together and added to the number, if any, already in column F (previously billed).

Step 3 – Clear dollar amounts from Work Completed columns – After completing the previous step you need to clear the dollar amounts from both columns D and E.

Step 4 – Confirm the dollar amounts – After clearing the dollar amounts from columns D and E you need to check the dollar amounts in columns F (previously billed) and G (total completed and stored to date). These numbers should be the same. Also compare these numbers to column G on the previous Payment Application to confirm that these numbers are correct.

Step 5 – Entering dollar amounts – Now you can start entering new dollar amounts for Material Presently Stored or Ordered (column D) and Work Completed this Period (column E). These numbers will be determined by the material provided and the work done since the last application.

Step 6 – Figure and enter sales tax – Depending on the jurisdiction and the state in which you are doing the work, determine what your tax rate is and whether it is on material only or both material and labor. We use a bookkeeping program on our computer to provide the sales tax based on the jurisdiction. Then, depending on whether it is material only or both material and labor, enter the sales tax amount(s) in the row marked Sales Tax and in the appropriate columns D, E, or both.

Now you have the next Payment Application ready to be given to the customer, in conjunction with the invoice.

Miscommunication happens too often when dollar amounts are left floating around in the customer’s head due to making multiple payments strung out over the duration a large project.

Most customers don’t bother to write invoice amounts down and/or keep a running total. They’re just writing checks periodically with at vague running balance and then are surprised that the final invoice is more than they expected.

The Payment Application lets the customer see –

  • What the original contract amount was
  • What is included in this current invoice
  • What they have paid for previously
  • The total of what they have paid for previously and the current invoice
  • The percentage of the job that they have been invoiced for at this point
  • The balance of what they have left to pay

They get this updated information with each invoice and can easily see where they started, where they are, and what is left to pay.

This is how the Payment Application provides clear communication for the construction customer.

Having this business tool and learning to use it will not only make your customers happy…it will also help you to BUILD a successful construction business.