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Getting Signed Construction Proposals, What’s the Best Number for You?

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How to Know What Your Number Is and What You Should Do with It

I have been reading Simon Sinek’s book Start with Why this past week. In it, he discusses how customers will do business with companies and not even really know why. He says that it often has more to do with trust than price.

This is where word of mouth marketing comes in. If someone you trust shares about the great experience that they had with a company, you’re more likely to do business with that company.

This got me to thinking about the closing ratio of our proposals. Our closing rate has almost always been higher than industry standards. This is in large part due to many of our projects either being

repeat customers or someone that has been referred to us by one of our past satisfied customers. It does not seem to be this way for most construction companies.

With the hit and miss way of doing business in the construction industry, it’s amazing to me that there are any construction companies out there at all.

Another thing to be aware of and something that is often overlooked is when our closing ratio gets too high. Selling a lot of jobs is a good thing, but when this number gets too high, it’s a good indication that your pricing is too low.

Is your bid-hit ratio ok?

When asked the questions… “Do you know what your bid-hit ratio is? Do you keep track of it? How do you use it?” Most contractors have no idea. Well over 50 percent don’t have a clue what their ratio is. Less than 25 percent know and track theirs.

This is like driving a car blindfolded — trying to go somewhere without a clue where you are headed!

In order to determine how many jobs to bid on and what type of jobs to bid on, you must know your bid-hit ratio. Track it regularly. Track it for all projects you bid on. Track it by customer.

Having a system will help you determine which jobs to bid on and which jobs not to bid on. It will also help you determine when to eliminate a project type or customer from your plate and seek out better opportunities to invest your estimating dollars.

Knowing the percentage of proposals that get signed can be a critical piece of information and may determine whether your company will stay in business or not.

Most small to medium sized construction companies run their businesses by just throwing a dart and hoping it hits a dart board. They have no real idea of what they’re doing.

I would bet my annual salary that most construction companies have no idea of what percentage of their proposals turn in to actual construction projects. This is vital information to have for building a profitable business.

This is why we have a Job List tool for tracking this information in our construction business. This tool will do a lot more than just tracking the percentage of signed proposals.

You can find out more about this tool here –

I realize that the whole business thing can be daunting and overwhelming, but it doesn’t have to be.

The Job List tool, as well as, the Proposal, Contract, Change Order, Payment Application, and Saving Account Transfer tools are some of the tools that will be coming soon in our Business Building Toolbox.

If you have questions about the Business Building Tools and if they would be a good fit for your construction company, you can schedule a free 30-minute construction company consultation here.

Poor Communication is the Number One Reason for Disagreements, Part 2

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Written Communication is Really the Only Way to Avoid This Problem

I have written multiple times about communication and the problems that come from the lack of communication. Most of the time this has been focused on communication between construction contractors and customers. This is certainly a problem, but can also be a problem between general contractors and subs.

Whether it’s subcontractors or customers, the communication responsibility lies with the general contractor.

Verbal communication leaves too many things open to interpretation.

Several years ago, a partner and I were meeting with a customer early in the process of building a new home. The customer pointed out that the distance from the electric meter to the house was more than the 50’ allowance, as per the written proposal.

He asked if this was a problem. My partner told him that it wasn’t a problem. Guess what…

It was a problem.

The problem didn’t surface until later when the customer was billed for the additional 100’. After some “digging”, the communication breakdown was uncovered.

The customer asked, “if it was a problem”. What he really was asking was…”is it going to cost more?”. 

My partner’s response in reality was, “we can dig the additional 100’, but it will cost you three times as much as the 50’ allowance in the proposal”. But this isn’t what was said.

Neither of them intended nor expected this to be a problem. It was a simple matter of misunderstanding…a lack of communication.

Communication is, …the exchange of information and the expression of feelings that result in understanding.

Understanding is the tricky part.

Over the past few weeks, I’ve been reminded of the importance of communication with subcontractors as well as customers. When I had a situation where I hired a sub to do a bathroom remodel that I had never used.

He came with a couple of positive recommendations.

After talking with him on the phone, I sent him a scope of work and before and after drawings. He gave me a verbal price range over the phone. The high end of his price was in line with my budget.

I asked him if he would get me something in writing.

We met at the job site later that week on Friday and physically looked at the project. It so happened that he had a crew that could start the following Monday and have the job done ahead of schedule. This was important because the bathroom that was getting remodeled was the only one they had. Again, I asked for something in writing. Again, he assured me that his price was still good.

He showed up on time and things progressed on schedule. They got the demo done quickly and got the customer a shower back within a few days. Things were going well.

There also was some moisture damage that was unknown when we started. This meant I needed to give the customer a change order for this additional work. I called the sub to get a price. He said the way things were going, it should still be close to the high-end price he had given me previously.

I prepared a change order for the customer based on the extra work and felt that should be sufficient to cover the subcontractor.

When it was all said and done the subcontractor’s bill was almost $4,000 more than he told me or what I had budgeted. On top of that he was unwilling to negotiate a settlement somewhere in the middle.

Surprise! I should have gotten something in writing.

Looking back, I should have pushed back more and gotten something in writing. But I was looking out for the customers and the subs availability. The speed with which they said they could do the work swayed me to move forward without anything written down.

I know that small and midsized contractors don’t like to spend the time and effort to do paperwork.

I understand, it takes time. The question we should ask is this…

Is it better to spend the time communicating before the project starts or wait until there’s a problem and everybody’s upset?

I understand that details and information take time, but I think it’s essential to good communication.

I knew better and can’t blame anyone but myself for being in this situation.

Even though I had the tools I needed to avoid this situation I didn’t use them. If you don’t open the toolbox and get the tools out, they can’t help you build your company.

Most construction contractors don’t have the tools they need for building a better business. That’s why we’re in the process of filling up a toolbox with tools to help you build the construction company of your dreams.

Whether it’s proposals, contracts, change orders, progress payments, or having money to pay your taxes, there’s a tool for it. We also plan to offer instructions, coaching, and consulting to help you learn to use these tools.

If you have questions and would like to find out if these tools would be a good fit for you, you can schedule a free consultation here.

Poor communication is the number one reason for disagreements. Avoid disagreements by taking the time to get the tools needed to avoid costly miscommunication.

What is it About TOOLS That Building Contractors Love So Much?

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Wielding a Power Tool Gives Us a Sense of Control and Respect

Last week we discussed how to build the construction company of your dreams with a plan and the right tools. We talked about how scary it is to step out of your comfort zone and try something new. We also discussed how this plodding back and forth can get us stuck in a rut.

You need some powerful business building tools to help you get out of your rut.

The feeling of that power in our hands is amazing. We are in control, but the machine can never be tamed. We have to respect it, or we will regret it. We pretend to be in charge of the “power tool beast”, but we know better.

Power and control –

  • Power tools have the power to create. When the power tools come out, we have no idea what is about to happen. Every time we connect with that much electricity, a child-like excitement oozes from our pores.
  • Power tools have an untamed spirit that screams: “Anything can happen.” Turning on a generator makes you feel like you are The Generator. For a few minutes, you’re off the grid and in-charge. You have the power and can decide who you will bestow it upon.
  • Power tools let us pretend that we can do anything. Don’t fool yourself, your power tool is in charge! Just look at the sticker on your SAWZALL: “Warning this device is powerful and is capable of doing serious harm to your home, your person, or your entire way of life.

Meditate on the raw power, the Amps and the Volts. Be in awe and imagine where your power tools may take you.

This fascination with tools is very similar to the reason most guys would take almost any ridiculous “man challenge” for the promise of a gold sticker on their forehead and “buddy cred”.

“Hey, I bet you can’t crush that can with your head!” Sound familiar?

Hopefully, most of us are smarter than this.

As builders we love the rush we get from building something. That sense of accomplishment that comes from creating a dream home out of that stack of boards. Tools give us the power and control to do this.

A tool that is even more powerful than the biggest, meanest chop saw is the Blueprint for Building a Better Proposal.

I know it doesn’t make as much noise or make your arm numb after using it all afternoon, but it’s a tool that will allow you to build your business into a skyscraper of success.

The hardest thing you will ever build is a business. The tools used for this kind of building are different than what we normally think of when thinking tools.

During my forty plus years of building my business, I’ve continually worked to achieve and maintain a sense of control over my profit and build the successful company of my dreams.

Just like any other building project, it’s important to have tools and know which ones to use in specific applications. You wouldn’t use a cordless screw gun to saw a board, or a reciprocating saw to nail down a shingle.

You can saw a board with a hand saw or you can use a circular saw. We both know which is faster, easier, and makes more sense.

The same thing is true when building a business…you need to have the right tools.

Why is it that we builders are so stubborn when it comes to trying something new and different. Business building power tools sound too good to be true.

You can use the old school “guesstimation” method or you could use the new and improved Building a Better Proposal power tool.

It’s important to have the right tools for the job.

Maybe you uncover some termite damage, or your customer decides after the project has started that they would like to do some additional work.

These kinds of things happen on construction projects quite often. This presents you with the option of moving forward without giving your customer a price or preparing a change order.

I know it’s another one of those uncomfortable “get out of the rut” kind of situations.

What if there was a power tool for preparing a change order…oh that’s right, there is! It’s called Building a Better Change Order.

These are just two of the power tools that will be available for you in the digital Business BUILDing Toolbox. We plan to have these tools and more available later this month.

If you or someone you know would like to feel the power of a tool that provides control for building a successful construction business, while respecting that power without regret…stay tuned for updates on when we open the lid on the Business BUILDing Toolbox.

If you have questions about how these business building power tools could help you build the business of your dreams, you can schedule a free 30-minute consultation here.

How to Build the Construction Company of Your Dreams

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It’s Like Building Anything…You Need a Plan and the Right Tools

Labor Day is coming up on Monday. It’s the only Monday holiday that I don’t work. Actually, there are only three holidays each year that I don’t work. Those being Christmas, New Years Day and Labor Day.

I celebrate Christmas because it is the day we honor our Savior’s birth. The other two are days that our family has celebrated together as far back as I can remember.

This sounds like I’m a workaholic. And yes, I’m a recovering workaholic, but…

It’s easy to be a workaholic when you love the work you do.

On the other hand, working a lot of long hours and not having anything to show for it can feel like drudgery. It’s like being stuck in a rut without a way out. I’ve heard it said that “A rut is just a grave with both ends kicked out.”

Owning and operating a construction company can feel this way. We get in a rut and don’t even realize where we are. Plodding back and forth going through the daily routines of operating the business, never looking up to see where we are or where we’re going. If we’re not careful the rut will get so deep that we’ll never get out.

Change can be scary; it might not work. We know our rut, and we like it. “We’ve always done it this way”, isn’t a very good plan for building a better business. Too many construction companies find themselves in ruts, and “rut thinking” doesn’t allow for building your dream business.

So how do you get out of that rut and build the business you always dreamed of?

When you started your construction business you had this vision of how things would be, and I’ll bet that it hasn’t turned out at all like what you expected. This is something that I’ve seen way too many construction companies struggle with.

I know what it feels like because I went through it too.

That’s why early on in my business when I became aware of these issues, I decided to do something about it. I wanted to get out of the rut.

I began researching the problems and studying alternatives. Then I began to understand what was needed to get out of the rut. This is when I started building and designing business building tools that I could use to build the business of my dreams.

If you’re like I was and started your construction company with a dream and no plan, you probably find yourself stuck in a rut. Building a business is like building anything…if you don’t have a plan, it probably won’t turn out well.

After I understood what was needed, I designed and built business tools to help me build that business that I had dreamed of.

If you would like to build the construction business of your dreams but don’t want to spend the time and energy making your own tools…I have good news. At Solution Building we’re going to be offering our Business BUILDing tools and training to help you get out of the rut quicker and easier.

If you’d like to get out of your rut, check out our tools and systems to help you build the business of your dreams. complete with the 5-step business BUILDing process for implementing and learning to use them.

Becoming aware of the rut you’re stuck in is the first step to building the construction company of your dreams.

How Do I Decide What’s Most Important on My “To Do List”?

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Knowing This Could Be the Difference of Life and Death for Your Business

I’ve written on this topic of time management and prioritizing things a lot. This is because it is a big problem that can determine whether your company will live or die.

There are so many things trying to get on the “to do” list and each one is competing for the top position. Deciding which one should get that spot is tough. There are so many great and important things that we need or want to do.

It’s easy to say that we have limited time but hard to actually spend it that way.

My computer’s battery is not lasting as long as it was when it was brand new. Recently while working out of the office without the power cord, I had 2-3 things that I wanted to get done before the computer shut down. This limited time forced me to sort and prioritize.

How do we decide what to say yes to?

Emergency situations often require triage. This is the process of prioritizing patients’ treatments based on the severity of their condition and the resources available. In these situations, victims are divided into three categories.

  • Those who are likely to live, regardless of what care they receive.
  • Those who are unlikely to live, regardless of what care they receive.
  • Those for whom immediate care might make a positive difference in outcome.

These choices aren’t easy and often require a quick “gut decision”. A pre-determined system, training, and experience aid in the process and provide for the greatest number of survivors.

Another life and death choice is deciding who gets a transplant when there are a limited number of organ donations available. Take for example a set of twins who both need a liver transplant and their father has one liver to give. Which little girl gets it? The early thoughts of a father would be to give half to each. The problem with this, half wouldn’t help either. The final decision will be determined by which one needs it most or which one is most likely to survive.

Most of the choices that we make in business aren’t this critical…or are they? The decisions we make can mean life or death for our business.

In medical life or death situations there is a system and plan in place before hand. This same type of system should be implemented in our business. We should predetermine how we are going to choose the most important thing to the life of our business. This is where things get hard.

What makes one thing more important than another?

What should be the highest priority? Should it be production or proposals, record keeping or customer service, marketing, or staff? We’re faced with tough decisions in business every day.

I can’t answer this question for you, but if you’re tired of struggling with this dilemma, having the right business building tools can help you shorten your “triage” list going forward.

Having the right tools will give your business the highest chance for survival.

Big Projects Are Made Up of Thousands of Small Pieces

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How Can I Sort Through All of Them and Get Them in the Right Order?

Over the past several weeks we’ve discussed the importance of having a plan when it comes to building anything successfully. This goes for construction projects or businesses. Part of that discussion was focused on having a clear and implementable business operating plan.

We looked at how a standard operating procedure can help you achieve consistent results, reduce costs, increase productivity, and create a higher level of standards. We broke down the things that should be in an SOP. Then we discussed the process of determining the design of your SOP.

It became pretty evident that designing, building, and implementing an SOP is a pretty big project. It’s a lot like building a big construction project, if you don’t start, it will never get built.

The same thing is true for your business…if you don’t start, it will never get built.

I have found myself in several different situations over the past several weeks that have aligned with this whole big overwhelming idea of the SOP. It reminded me of a previous post about being too busy.

Here is an excerpt from that post –

This morning as I was posting in my journal, I started thinking about all of the things that I didn’t get done yesterday. Then I began to think about how many times I have posted this same thing over and over. It sure seems that I spend way too much time feeling overwhelmed and behind. I really want to get more done!

Then I thought about all of the times that I’ve had this conversation with other people. “How is your day going? Man, I am so far behind I don’t think I will ever get caught up. I sure wish there were more hours in the day.” I have heard these or similar comments more times than I can count.

Our lives can feel like a 20,000-piece jigsaw puzzle was dumped out in front of us with no picture of what it is supposed to look like when it’s done.

So how can we get all of these pieces to fit…or can we? This is the big question. It would be nice to know what the finished puzzle is supposed to look like. This puzzle can be tough and frustrating. I think it is especially difficult for those of us who are ‘recovering perfectionists’. We want all the pieces to fit just right. To know ahead of time exactly where each piece is supposed to go. This particular puzzle, called life, doesn’t work like that.

Here are some reasons we struggle with our puzzle and some ideas to help us get our pieces to fit.

  • We pick up too many pieces by over scheduling. There are so many pieces…Start with the corner pieces. Put in the most important pieces first.
  • The puzzle isn’t going together as fast as we want. Sometimes (most times) things just take longer…do as much planning and preparation as we can before we start, but don’t over plan. Spread the pieces out, find the edge pieces and get started.
  • With so many pieces in front of us we lose our focus. After we have put the edge pieces in place…remember that we can only put one piece in at a time. Concentrate on that one. If it doesn’t fit, then pick up a different piece and focus on it.

Life is a puzzle. What really makes this puzzle fun and exciting is that while we are putting our puzzle together other people are doing the same thing and their puzzle connects to ours.

Ideas are great, but if you don’t take action, nothing will get done.

Whatever the project is that you’re working on, find the first next piece, pick it up and put it in place, then repeat. This is the only way you will get the business of your dreams built.

What Should be Included in Your Company’s Standard Operating Procedure?

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Like Everything Else in Your Business, the Answer to That Question is Up to You

Last week we talked about preparing an operating system for businesses and how it can help you build a successful construction company. I pointed out that a standard operating procedure is a set of detailed step-by-step instructions that describe how to carry out any given process.

I discussed that it would allow you to –

  • Achieve consistent results
  • Reduce costs and increase productivity
  • Create a higher level of standards

This all sounds great, but what does it really mean?

Let’s break standard – operation – procedure down as it applies to business.

Standard – Is a consistent basis of comparison, an approved model, as determined by you as the owner and/or your leadership team. It recognizes a level of acceptable excellency. It is the level that the bar is set and where you let everyone on your team know what is expected.

Operation – Is a highly organized activity involving many people doing different things that contribute to the outcome of the whole. It is the performance of practical work involving practical application of principles and processes.

Procedure – Refers to a comprehensive set of instructions that prescribes a certain way of performing a process, or part of a process, in relation to time. It states a chronological sequence for undertaking activities, to achieve the objectives. Procedures are meant for members of the organization, including directors, managers, and workers to be pursued. It states exactly what course of action is to be followed by an employee in a specific circumstance.

Like everything in your company, you get to decide what and how things are done. Your operating procedures are no different. You get to decide…

  • What your standards are going to be
  • How your operations are going to be organized
  • What procedures you are going to implement

Constructing your Standard Operating Procedure.

Here is a list of things that are typically used in a SOP –

  • A Title Page
    • Title
    • Names of people who created the document
    • Dates when the document was created
    • Departments, divisions or people who will use this document
  • Table of Contents
    • A table of contents allows team members to easily find sections and areas quickly.
  • Introduction
    • The purpose and scope of this document
    • Roles and responsibilities of team members who are involved in the process
    • Resources and materials that team members will need to complete procedures
    • Cautions and warnings related to the procedures used in the process
  • Procedures
    • This is the essence of your SOP. Here you describe what needs to be done, the order of the tasks, and methodology team members need to follow. You can list the different steps here and if the process is more complex, include sub-steps to describe all activities in detail. You can include diagrams, images, and/or illustrations when appropriate. Imagery can be an effective way of explaining how to get things done.
  • Quality Control
    • Team members can keep track of performance on a case-by-case basis or over a period of time by consulting with this section.
      • Best practices related to a specific procedure
      • Guidelines on how to measure their performance
      • Samples of previous results
  • References and Glossary
    • Here you can include all the terms, resources, and documents that might be in the procedure section. This is especially helpful if you’re onboarding a new hire, and they’re not familiar with your company and business concepts.

These are examples of things that should be included in your company’s Standard Operating Procedures. Like I said before, it’s your company so you can pick and choose what will be included in your business.

As we go forward on this topic I will continue to go deeper and provide more specific about how to prepare an SOP for your company. Keep in mind that this process is like every other part of building your dream business.

It takes a lot of bricks to build a successful business.

Like I said last week, your company’s SOP is an important part of the Blueprint for Building a Better Business. and is one of the tools that we plan to include in the Business Building Toolbox.

How Can I Prepare a Standard Operating System for My Company

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Why Building a Successful Construction Business Requires Having a Plan

Over the past few weeks, we’ve discussed how building your business is critical to the success of your business and the importance of keeping your business in balance. After more than forty years of construction experience, I tend to view most things from a “building perspective”. Today we’re going to compare once again building a business and a construction project.

One of the most important parts of the plan for building a good building has nothing to do with physical construction. It has to do with processes and systems.

I have written about how building and operating a business can be like standing in the shadow of an overwhelming mountain and not knowing how to get past it. When you find yourself facing a mountainous obstacle it helps to have a plan.

One of those mountains when running a construction company is being pulled in too many different directions. Trying to operate all the different pieces of a business can be a big mountain. Having a clear plan and being organized can help you manage your mountain.

In your business, you have a specific way of getting things done.

But things are constantly changing, employees come and go, customers come and go, and if your company is going to stay in business you need to keep delivering high-quality construction projects regardless of the obstacles. This chaos just makes the mountain bigger.

So how can you maintain steady consistency with your company’s end results?

In an online article Workflow Automation shares how having standard operating procedures (SOPs) can help your business eliminate confusion around processes that are performed daily. This will allow your employees to be more productive and minimize mistakes! These procedures help you break down even the most complex processes so even a novice can manage these tasks from start to finish.

So, what exactly is a standard operating procedure?

A standard operating procedure is a set of detailed step-by-step instructions that describe how to carry out any given process. Companies that are serious about process management use SOPs to manage their day-to-day activities.

Having Standard Operating Procedures allow you to:

  • Achieve consistent results. With standard operating procedures, you complete your processes in the same way and achieve the right results every time.
  • Reduce costs and increase productivity. When everyone does the same task in different ways, eventually your organization will run into inefficiencies that cost you time and money. With SOPs you can streamline the process and increase productivity.
  • Create a consistently higher level of standards. SOPs are very useful when it comes to getting everyone on the same page and provides a standard way of getting things done.

Organizational paperwork is critical to having a business that operates smoothly and successfully. Having an organizational plan can answer a lot of questions before they’re ever asked.

This whole operational procedures thing sounds like a great idea, but also sounds like a lot of paperwork.

And the problem is…most construction people don’t like paperwork.

In a future post we will dig deeper into what is included in an operating procedure and how to prepare and implement one in your business.

Having an operational procedure is an important part of the Blueprint for Building a Better Business and is one of the tools that we plan to include in the Business Building Toolbox.

Portions of this are from a previous post on 10/27/18

How Can I Determine Which Thing on the List Should Be Done First?

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It’s Amazing How Things Become Clear with a Limited Amount of Time

The discussion in our mastermind group this past week was around productivity and how to be more productive. It started with the question of, what does productivity mean and what does it look like to be productive?

What is productivity? Now there’s a question for you to answer. We have a limited amount of time in a day, a year, or a life.

Productivity generally refers to the ability of an individual, team, or organization to work efficiently within that time in order to maximize output.

High productivity results from a mix of factors: motivation, personality, natural talent, training or education, environment, support from others, time management, and things that happen that are outside of our control.

Output / Input = Productivity

So, what is output? This is one of the things that makes the question of productivity so hard to answer. But this is where we need to start with the productivity question. What is the most important thing to accomplish in this finite amount of time we’ve been given?

There are so many things trying to get on the “to do” list and each one competing for the top position. Deciding which one should get that spot is tough. There are so many great and important things that we need or want to do.

It’s easy to say that we have limited time, but hard to actually schedule things that way.

My computer’s battery is not lasting as long as it did when it was new. Recently while working out of the office, without the power cord, I had 2-3 things that I wanted to get done before the computer shut down. This limited time forced me to sort and prioritize them.

How do we decide what to say yes to?

Emergency situations often require triage. This is the process of prioritizing a patient’s treatments based on the severity of their condition and the resources available. In these situations, victims are divided into three categories.

  • Those who are likely to live, regardless of what care they receive;
  • Those who are unlikely to live, regardless of what care they receive;
  • Those for whom immediate care might make a positive difference in outcome.

These choices aren’t easy and often require a quick “gut decision”. A pre-determined system, training, and experience aid in the process and provide for the greatest number of survivors.

Another life and death choice is deciding who gets a transplant when there are a limited number of organ donations available. Take for example a set of twins who both need a liver transplant, and their father has one liver to give. Which little girl gets it? The early thoughts of a father would be to give half to each. The problem with this, half wouldn’t help either. The final decision will be determined by which one needs it most or which one is most likely to survive.

Most of the choices that we make in business aren’t this critical…or are they? The decisions we make can mean life or death for our business.

In medical life or death situations, there is a system and plan in place before hand. This same type of system should be implemented in our business. We should predetermine how we are going to choose the most important thing to the life of our business. This is where things get hard.

What makes one thing more important than another?

What should be the highest priority? Should it be production or proposals, record keeping or customer service, marketing or staff? We’re faced with tough decisions in business every day.

I can’t answer this question for you, but having a “business triage” system will give your business the highest chance for survival.

Our 5-step BUILD process helps us prioritize and manage all the hundreds of decisions we’re faced with every day in our business. You can find out if the business building tools are right for you here.

How a Business Plan Can Help You Keep Your Business from Crashing

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It’s Hard to Keep Your Business in Balance Without a Plan

Most of us who are self-employed spend way too much time feeling like our businesses are out of control. We started our businesses with grand ideas and dreams. Then one day we woke up and wondered what in the world we were thinking.

Last week I wrote about needing a plan for building your business and how many businesses fail because they don’t have one. We compared a plan for building a business to a blueprint for building a building.

I recently finished reading the E-Myth Revisited by Michael Gerber. This book does a great job of pointing out the misconceptions around starting your own business and shows how commonplace assumptions can get in the way of running a business.

Michael walks you through the steps in the life of a business, from entrepreneurial infancy, through adolescent growing pains, to the mature entrepreneurial perspective.

Gerber draws the vital, often overlooked distinction between working on your business and working in your business.

As I read through the book I was reminded and encouraged to review and improve our business and the operating procedures. If we don’t have a plan and aren’t intentional about implementing it, we are doomed to failure.

Business is like a three-legged table. If one leg is short, it gets kind of wobbly.

I know I have felt this way about my business and sometimes still do. This is why after reading the book I was reminded that I have not been giving each of the leg’s equal attention.

You have probably heard the saying ‘feast or famine’. This is used quite often in the building industry. It refers to the common problem of having way too many projects to do. Or not having enough and worrying about how you are going to pay the bills if you don’t get some work soon.

Sometimes this is caused by situations beyond our control. The economy, the weather, or some other external force. More often than not it is due to an ‘out of balance business’…like a table with a short leg.

As in Gerber’s book, we usually start a business knowing the trade but not having any experience in operating a business. We know what we know and don’t know what we don’t.

We started out by learning our trade as an apprentice, while working for someone else. I know this is how I got started. The problem with this is that while I learned how to build a building, I wasn’t taught how to build a company.

Like a three-legged table, when all the legs are the same length, it provides a level sturdy platform for my company to sit on. When any one or two of them is short the table starts leaning and begins to tip over. If it tips too far the company will slide off.

It’s never good when a company crashes onto the floor.

The three table legs of a construction company are:

1 – Sales/Marketing – Searching for and finding customers that you can help by providing your service and/or product through word of mouth, advertising, and awareness. Meeting with potential customers, determining what they want/need, and preparing estimates, proposals, and contracts.

2 – Production/Operations – Organizing, scheduling, and maintaining the projects. Determining who the right people are to perform specific tasks. Knowing the parts that are needed and making sure they fit. Maintaining communication between all parties involved. Ordering, delivery, storing and returning of building materials. Facility and equipment maintenance and repairs.

3 – Administration/Finance – The preparation of documents needed to communicate, track, and record all aspects of the business. The filling out and filing of income, expense, banking, and tax papers. This leg is one of the easiest for ‘tradespeople’ to neglect and can cause the table to lean quickly.

The top of the table – This is the big picture planning and organizing of the company. It’s what connects the three separate legs. It’s one of the hardest parts for the tradesman to understand and the most important. If there is no attention or work done on this part, you may just as well throw the legs in the fire and go to work for someone else.

It’s easy to give too much attention to one or two legs and forget the other parts. To get so focused on the production of a project and forget to follow up with a new customer. To get so into preparing proposals that we forget to invoice. To work so diligently on tracking expenses that we don’t leave enough time for working on the project.

There is no perfect solution to keep the table from ever leaning. The most important thing is to BE AWARE that it can happen, UNDERSTAND the problem, gather INFORMATION and get INSTRUCTIONS about the tools needed to keep the business from crashing and LEARN how to use these tools in your business.

Keep your business from crashing by intentionally working to keep the table balanced.

Portions from a previous post on 4/30/16