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How Deep Can a Rut Get?

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Pretty Deep When the Bottom is Mud

It’s been a few months since Tony pulled his stunt leaving Gene high and dry without any notice. Gene moved on…what else could he do?

Gene replaced Tony with Darin. Darin is less experienced, but at least he has shown up so far. Of course, this may be because Darin doesn’t have anything to drive, so Gene picks him up and takes him home every day.

Gene has been very busy. He’s had a lot of construction projects to do, not to mention trying to keep up with the paperwork. Things seem to be getting busier and busier. Maybe things are going to turn around for his business.

As Gene was on his way to pick Darin up this morning, the truck began to make a grinding noise and it was hard to shift the truck into second gear. It didn’t get any better after picking Darin up and going to the job site.

Then it happened…the transmission went out.

When Gene got to the job site, he couldn’t get the truck out of second gear.

This wasn’t part of Gene’s plan. After getting Darin started framing the walls for the garage addition, Gene went to check out the truck. After messing with it for a while it became clear that it was going to need to go to the shop.

Gene calls for a tow truck and has the truck taken to the mechanic.

Gene goes to work getting the walls of the garage stood. This needs to be done if the garage project is going to be ready for the trusses tomorrow as scheduled.

Midway through the afternoon, Gene gets a call from the mechanic. The transmission needs to be replaced. This is going to cost $3,800, and Gene doesn’t have enough for that.

Now Gene needs to figure out how to pay for the transmission. This means he’s not going to be able to set trusses tomorrow.

Gene calls his wife to see if he could get a ride home. So much for things turning around.

While Gene’s wife is taking him home, he explains the situation. He informs her that he needs to use her car so that he can go to the bank tomorrow. He needs to see if he can borrow the money to fix the truck.

The next day, after Gene drops his wife off at work, he goes to see the banker.

Gene’s credit score isn’t great. After a little pleading with the banker, he gets approved for a loan to get the truck fixed. Gene calls the mechanic from the bank and gives him the go ahead to get the transmission ordered.

The mechanic says it will take a couple of days to get the transmission and then a couple more to get it changed. This means Gene needs to find a vehicle, preferably a pickup, so he can continue working on the garage project.

Gene calls his dad to see if there would be a chance to use his pickup for a few days. His dad lets him borrow the pickup so he can go ahead and work on getting the garage project finished.

—

It’s been a couple of weeks. Gene got his truck back and the garage project is finished. He’s on his way to meet with the customer and collect the final payment…and he needs this payment. Maybe now things will turn around.

As Gene gives the final invoice to the customer, he can tell that something’s wrong.

“What’s the matter?” Gene asks.

The customer looks up and says, “This is more than I expected. Based on the bid you gave me and what I’ve already paid you. The balance should be $7,500. Why is this bill $9,100?”

“The bid didn’t include windows,” replies Gene. “But after we got started, you told me that you wanted a window on each side wall of the garage. The additional $1,600 is for installing those two new windows.”

“Yes, but I had no idea two windows would be that much,” says the customer. “The price I saw for windows at Lowes was $100. I was expecting to pay an extra $250 or maybe $300 for those two windows, not $1,600.”

“Those $100 windows are nowhere near the quality of the ones I installed,” Gene says. “It cost me more than $300 for each window.”

After discussing this situation at length…the customer agrees to pay $600 for the windows if Gene wants a check today. Otherwise, the customer would let his attorney handle it.

Gene feels like the customer knows that with the truck transmission situation, Gene would settle for what he offered. Gene could take the $8,100 today or get nothing today and fight for the full $9,100.

Gene takes the $1,000 hit and leaves.

When it rains it pours and now the bottom of the rut is muddy.

The Hits Just Keep on Coming

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And the Rut Just Keeps Getting Deeper

It’s Sunday afternoon and after getting home from church, Gene is back at his desk (the dining table) working on the third construction bid. He would rather be watching the NASCAR race, but there’s just not enough time for both.

Some people would say that getting three of the four bids done is pretty good. There are a lot of people in construction that wouldn’t sweat this, but it bothers Gene to not follow through on what he said he would do.

It’s getting late and the family has already gone to bed as he starts the next bid.

At 1:15 AM Monday morning, Gene decides to go to bed even though the bid isn’t done yet. He needs to get up in a few hours and do some actual construction work.

It’s Monday morning and Gene is on his way to one of the two projects that he has going. It’s 7:00 AM and he’s supposed to meet Tony at the first project at 7:30.

Tony works for Gene. He’s been working for him now for almost a year. He does good work and knows construction. This allows Gene the flexibility to split up and work on more projects.

Gene starts unloading the tools and getting the things ready that Tony’s going to need. This project is setting some new interior doors.

It’s 8:00 AM and Tony hasn’t shown up yet…Gene calls him, but there’s no answer. Where is he?

This job needs to be done this week.

Tony was supposed to pick up the new doors on his way to the job this morning. Gene calls the lumber yard, and they haven’t seen anything of Tony yet. Gene goes to work, removing the first door that’s going to be replaced, as he waits on Tony.

Still, no Tony, and Gene has three doors out. He calls the lumber yard and it’s going to be a couple of hours before they will be able to get them delivered. He doesn’t want to take out any more until the new ones are installed in these openings. It looks like Gene needs to go get some doors.

Gene heads to the lumber yard to go get the doors.

Gene’s hurrying down the highway in route to the lumber yard when he hears a siren. He looks in his mirror and right behind him are flashing red and blue lights. He looks down at the speedometer and wouldn’t you know it….70 in a 55.

He pulls over and starts getting his driver’s license and insurance information ready. The Highway Patrol Officer comes up and says, “Do you know why I pulled you over?”

“Yes officer, I was in a hurry to get to the lumber yard and get some doors for a job,” Gene replies.

The officer takes the license and insurance card back to his car and Gene waits. While he’s waiting, he tries to call Tony again…still no answer.

The officer comes back and gives Gene a speeding ticket for $150.00.

The day is not getting any better.

Gene makes his way to the lumber yard, gets the doors, goes back to the job site, and gets to work setting doors.

It’s lunch time, still no Tony and he’s still not answering his phone. He must be sick, Gene thinks. It looks like Gene is going to need to stay and work on this job today. He’s already called the customer of the second job to let them know that he’s not going to make it today.

It’s 6:00 PM and Gene got four of the seven doors changed. He’s loading up tools and picking up the job site. He never heard back from Tony, so he’s going to drive by his house on the way home.

As Gene pulls up, he sees Tony’s truck in his drive, so he must be home. He goes up and knocks on the door. As the door opens, Tony is standing there and he doesn’t look sick at all. He does look a little guilty though.

“So, what happened today?” Gene asks, “You were supposed to work on setting doors today.”

Tony looks down at the ground and says, “Ya, I know. I should have called you and let you know I wasn’t going to be there.”

“What happened? Why didn’t you show up or at least call me?” Gene asked.

“Well,” Tony said, “You know that big construction company that’s doing that big project out on the edge of town? I saw the production manager at the hardware store on Saturday and he offered me a job making two dollars an hour more than you’re paying me…and I started today.”

Gene looked him in the eye and said, “So, you took it and started today without even letting me know! I can’t believe you would do that. You knew I was depending on you.”

And the rut just keeps getting deeper and deeper.

A Blueprint for Building a Better Business

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You Need a Plan if You’re Going to Build a Successful Business.

STUCK IN A RUT 

It was late on a Saturday night and Gene was sitting at his desk in his home office (otherwise known as a dining table). This was the office of his construction company.  

He was working to get at least one more construction proposal done before going to bed. He had promised four different customers proposals this week. If all goes well, he’ll have this second one finished before midnight. As Gene crunched numbers, he worried that he might have forgotten something. This had happened before.  

He asked himself, “Why am I doing this? I could make more money and work less hours working for someone else. Heck, I’d be better off flipping burgers. This sure isn’t how I pictured my construction business five years ago when I started.” 

“I had no idea that running my own business would be this hard!” 

Gene rubbed his eyes and stretched his back and thought, “I must be doing something wrong.”   

It’s Saturday, and Gene was working like crazy all week, trying to keep up. With production crews not showing up, materials not delivered on time, cost overruns… There’s not enough time to do everything. This means not enough time to get the proposals done. Even if he works tomorrow, he’s not going to get all these proposals done in time. This means he’s going to disappoint at least one of the customers waiting on a proposal. 

This is not a very good way to run a business! “How am I ever going to turn things around?” 

When Gene finishes the second proposal and looks at the clock, it’s 12:40. It’s already Sunday and he still needs to proofread it, print it, and sign it.  

Something has got to change!  

“I’ve been leaving home early and getting home late all week. I’ve hardly spoken with my wife or kids for days. I can’t keep going like this!”  

“I’m tired of trudging back and forth in this rut with no clear way out.” 

Why Is Change So Hard?

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This Seems Especially True for Construction

Change is the biggest issue that the construction industry faces. Why are people in construction so bullheaded? They are some of the most stubborn and headstrong people. 

This starts at a young age. As children, we have fewer external experiences to draw from. This restricted resource limits our view. This is why young people think they already know everything. 

This narrow perspective then becomes our standard and we see no reason to change. 

I think this is why resistance to change is so prevalent in construction.  

We’re like little kids that started out working for someone. We learned how they did things by watching them. This is why when we start our own construction business, we think we already know everything. 

I was a dreamer at an early age. I had big ideas and plans for my life. A part of this dream was to have a big, successful construction company. I was going to build great things. 

So, I worked for a few different self-employed contractors and then started my own construction company… 

Because I already knew everything.  

As I grew up and those dreams weren’t happening as I had envisioned…I became disillusioned. I gave up on those dreams and accepted that they were just that…dreams. This is when the grind of life sets in. It was disappointing to accept that this is all there is.  

It was frustrating, just plodding along day after day feeling stuck with no way out. 

Then, one day I was smacked upside the head and had a life changing wake-up call.

In December of 2012, I was literally hit upside the head with a board among other things. We were installing wafer board boxing on the wall of a second-floor addition. I was standing on a plank approximately 8’ above the ground when…it broke. 

Fortunately, I don’t remember any of this ordeal from the time I was measuring until I woke up in the hospital three days later.  

Based on what I was told by the guys that were there when I fell, I hit my head on one of the ladders, then on the concrete slab, and then the board hit me on the head. It sure is good that I have a hard head. Seriously, I was fortunate that I came away from this accident with only a concussion. 

The point of telling you this is that it caused me to reevaluate what I was doing and how I was doing it. 

This incident made me aware that something was wrong and if things were going to change…I needed to change it. As I was looking to understand what was going on, I began to read. The more information I gathered, the more I learned about what needed to change. 

One of the first books I read was The Traveler’s Gift by Andy Andrews. This book teaches seven fundamental decisions for creating a successful life. It gives you a front-row seat for a man’s journey that changes his life.  

In the book, David Ponder lost his job and his will to live. He supernaturally travels throughout time visiting historical figures such as Abraham Lincoln, King Solomon, Anne Frank, and more.  

Each visit yields a Decision for Success that will change his life if he implements them. 

This book showed me that I, like David Ponder, had a choice.  

Was I going to keep doing things the way I had been…or was I going to do something different? 

I decided to change and do something different.  

When we’re young we think we have all the time we need. There’s no need to think about the future…we’ll get around to that someday. Then, one day we wake up and realize life has flown by and we haven’t done the things we wanted to.  

You don’t have to wait until you’re smacked in the head to make changes. 

I made changes to my life and my business. People who knew me before and after can see the improvement.  

Change is a choice, and you can choose to change. 

If you’re in construction and would like to learn more about some of the changes I made and how you can make those same changes, check out solutions for building a better construction business. You can also check out our business building tools and trainings or schedule a free 30-minute construction company consultation to learn more.

What Made You Start Your Construction Company?

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If You’re Like Most People in Construction, You Don’t Know…

Last week we discussed how 96% of construction companies go out of business within the first 10 years. This is a problem if you’re in construction.

As I was discussing last week’s post with a friend, he asked me why I do construction. Why would anyone want to start a construction company with odds like this? This question started me thinking about it.

Why is anyone doing construction if the chance of staying in business is so stacked against them? This question prompted me to reach out to some people in construction and ask them.

Why am I doing construction and how did I get here?

When I was growing up, I knew exactly what I was going to do. I was going to farm with my dad, just like he was farming with his. This was going well until those plans got changed.

When I was in my early thirties my dad died of cancer at fifty. This wasn’t a part of the plan.

At that point we were farming together, he owned some of the equipment and I owned some. The problem was, I couldn’t afford to buy his part so…I got out of farming.

In addition to farming, I had been doing some construction in the winter. I liked doing it, was good at it, so this seemed like the logical thing to do.

The problem was I knew construction…not business.

So, why are others doing construction and how did they get here?

To answer this question, I reached out to some people I know that are in construction and asked them the question…Why are you in construction?

I’ve known Doug Wright, with Wright Floor Leveling, for years and have used their company for a variety of projects over the years. They do foundation repair/replacement, crawl space repair, basement repair, masonry repair, new masonry, and more.

Here’s Doug’s story: he did not plan to go into construction…he planned to play football. Then he was injured in college, and it ended his football plans.

His dad was a stone mason and Doug needed a job, so he went to work for him. As things progressed, he became more entrenched in the business, and the prospects for change became harder and harder.

Not to mention that he wasn’t a fan of change.

So, Doug is doing the construction that he knows and is good at.

Chris Schovan is a painter that hasn’t been in business too long but is great at what he does.

Chris learned to paint as a young man from his grandpa who was a professional painter. His grandfather told him that knowing a trade would always give you something to fall back on.

He was working for a pole barn company and/or in manufacturing when the pandemic hit, and he got laid off. Then someone at church needed some painting done and asked him if he knew any painters. He ended up doing this project which led to other projects and he’s now as busy as he’s ever been.

He likes the freedom of schedule because he doesn’t have to punch a clock.

I use Chris because he provides great customer service and does quality work.

I’ve known Josh Dobbs of Flint Ridge Service and his family for a long time. Josh was a firefighter and planned to be fire chief someday until smalltown politics derailed that dream.

While considering what to do next, he was talking with some guys in real estate and the glass business who told him there was a need for someone to do handyman-type things. So, he started doing some odd jobs. As the demand grew, so did his business. Now he does a variety of construction, excavation, and fencing.

He had never done construction before he started doing odd jobs.

Josh uses the leadership skills he learned in the fire department and the ability to see a need and then figures out how to do it.

Leonard Mumford, of Mumford Contracting, is the owner of a full-service construction company. Leonard and I work together in a variety of different ways.

Leonard was in construction years ago and after going out of business, he swore he would never do construction again. He worked in oil field and sales but was miserable. Then he had the opportunity to do some construction work on the side and was making more money part time.

Then his son convinced him to go back into construction…which he swore he never would.

Now Leonard is doing more construction than ever.

The common thread in all these stories is that none of them grew up dreaming about going into construction…playing football or being a fireman, yes, but not construction.

Not everybody knows what their vocation is going to be. Things happen and we have to shift and make changes. These changes, some big and some small, lead us down paths that we didn’t plan for.

This lack of preparation and planning is why 96% of construction companies don’t make it past the 10-year mark.

Three of these five examples here have made it past that point, but trust me, this doesn’t mean that everything is smooth sailing.

All of them have expressed concerns about the business side of things.

This concern is common and why at Solution Building, we’re working to help construction companies with business tools and training to alleviate some of those concerns.

If you would like some help with your construction company’s struggles schedule a free 30-minute consultation.

Chances Are Your Construction Company is Going to Fail

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How Can You Change the Odds in Your Favor?

According to the US Department of Commerce, 96% of construction companies fail within the first 10 years. This is a higher failure rate than any other kind of business.

If you’re in construction…this is a problem.

Having been in construction for more than 40 years, I understand how hard it can be to build a successful business. It takes a lot more than just knowing construction to be successful. Knowing business is as important as knowing construction.

Over those 40 years, I became aware of the problems and began to understand them. I gathered information and learned how to implement it into my business.

That’s why I beat the odds.

I’ve learned a lot over those forty-plus years and here are 7 reasons that construction companies fail:

  1. Insufficient Cash Flow – Without a positive cash flow, it is hard for construction companies to keep their doors open. A lack of cash flow makes it hard to pay for materials, make payroll, maintain tools, etc.

When cash flow is negative, companies often make hasty decisions or take on jobs that aren’t a good fit for their company. This can result in further profit loss and more cash flow problems.

  1. Unprofitable Projects – A lot of construction companies fail simply because their projects are unprofitable. Guessing at what a project is going to cost to do is not a very good plan. This is why having a proposal system that is consistent and accurate is essential to staying in business.

At Timber Creek Construction using our Proposal system, we consistently come in 25% under budget. This is in before overhead and profit.

  1. Doing Estimates Rather than Proposals – It’s essential to establish clear communication with construction customers. Creating a detailed proposal, rather than just estimating, gives both the construction company and the customer a clear understanding of what will be provided and what they can expect. Following up with a contract is another step to achieving this goal.

There are as many bad customers out there as there are bad contractors. Some of those customers simply want to get the work done for free. They will argue about things that, they claim, were promised. A signed proposal and contract will help to prevent this from happening. 

  1. No Production Payment Plan – Having an accurate and understandable payment schedule with construction customers will set your construction company on the road to success. Not having a payment schedule requires your company to finance the project and consumes your cash flow. You are not a bank.

In my experience, you need to get some money prior to starting a project. This amount will depend on the size and type of project. Then invoice the customer with weekly progress payments that coincide with the percentage of completed work as outlined in the proposal. Customers appreciate a well-documented payment schedule that communicates clearly.

  1. Not Using Change Orders – Unforeseen issues and changes creep into most construction projects of any size. Changes orders are needed when changes are made to the project’s scope of work. When a job change occurs, the construction company should submit a change order to the customer for approval. Waiting until the end of the job to bill for additional costs will be problematic. It will often result in customers being upset, giving bad reviews, and resisting paying.

Customers get excited about the work that is being done until the final bill comes. Then they find themselves over extended and unable to pay.

  1. Poor Customer Service – Most construction companies don’t listen to their customers very well. These companies just focus on completing the work according to the contract. If they get paid, they assume all is good. But remember, construction companies are in the business of serving customers, this includes communicating clearly and consistently.

Most customers will only do a handful of sizable construction projects in their lifetime. Construction companies should remember this and help them build their dream.

  1. Lack of Organization and Processes – Building a sustainable construction business is impossible when the bulk of the business is operating without being organized. To stay in business, you need processes and systems that can be efficiently managed by the people you hire to help you.

For companies that use sticky notes and boxes full of folders, you have a problem. 

Job leads and customer management, project details, task management, communications, schedules, progress tracking, equipment management, the list goes on and on. Each of these elements is extremely time-consuming, error prone, and can negatively affect profitability and cash flow.

You can avoid making the same mistakes most construction companies make by being aware of and understanding these problems. Then implementing and learning processes and systems to ensure that your company succeeds.

This will help you to be in the top 4% of businesses in the construction industry.

Successful construction companies use business tools to build, increase profits, and manage their businesses. Now that you have a clear understanding why construction companies fail, it’s time to make some course corrections.

To help you with this we have a Business Building Toolbox with tools that can help you change the odds in your favor. We also offer training and implementation of these tools into your business if that would be helpful. If you have questions, schedule a free 30-minute construction company consultation.

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.

How Does the Production Tracker Help Us See the Future?

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Trust Me, It Doesn’t Take Any Magic

Last week we talked about what the Production Tracker is and what makes it an important tool to have in your business building toolbox. I also pointed out how most people operating construction companies hate paperwork, but how important paperwork is to build a successful business.

It’s amazing how people in construction will use all sorts of power tools and equipment but not paperwork.

We began breaking down the Production Tracker…a business building power tool, and how important it is to know what it can tell you…

  • Which types of work were consistently the most profitable
  • How you were doing at meeting your financial goals for the year
  • When you should have the signed projects finished to stay on track
  • How well you’re doing at getting proposals signed
  • What the average price of your projects are

We began with how the Production Tracker can help with creating and recording project numbers, tracking proposed project amounts, and tracking dollars of signed proposals.

Now let’s look at how the Production Tracker can help us plan for the future.

When we look at the total proposed amount and the total signed amount, we can see where we are in relation to our financial goals for the year. (See the previous post for more details on this).

Next is…

Tracking dollars collected from projects – This collected amount (column K) is exactly what it says it is. It is where we weekly enter the amounts collected from each project. This total gives us a comparison to our signed amount (column J), and lets us see if our projects have increased or decreased after signing.

Percentage of jobs signed – This percentage, 60% (cell I24), is the percentage of proposals that have been signed. This is cell B22 (15) divided by cell C22 (9). This information lets us know how we’re doing with our pricing. If the number is below 15%, we’re not selling well. If our number gets too high, above 50%, we may not be charging enough.

Percentage of dollars signed per dollars bid – This percentage, 53.11% (cell J26), is the percentage of dollars proposed that were signed. Knowing this percentage helps us as we’re looking forward, knowing how we’re doing in relation to reaching our financial goal for the year. Based on the percentage of 53% (cell J-26), knowing that if our goal for the year is $400,000.00, we need to have done twice that many dollars of proposals.

Percentage of dollars collected per signed – Just like tracking the amount of dollars collected is pretty straight forward, this percentage of 93% (cell K-28), is the same. This simply lets us know if we’ve collected everything that was bid. If not, there may be some outstanding receivables, or we may have made changes during production that reduced our receivables. It’s also possible for this number to be more than 100% which means that there were changes made during production that increased our receivables.

There are still five more areas of information that the Production Tracker provides, but to keep this post from getting too long today, I’m going to stop here. I know that this feels like a lot but it’s not nearly as overwhelming as it seems.

Just like there’s a lot to constructing a building, the same is true for building a successful business.

The five remaining areas are –

  • Average dollar amount of projects bid
  • Average dollar amount of projects signed
  • Average dollar amount of projects collected
  • Projected timeframe for doing signed projects
  • Projected date work should be done

Of these next five areas I think the last two are the most revealing to the future.

Now I will predict the future, and next week we’ll finish explaining the Production Tracker.

You can learn more about the Production Tracker by joining us for the Production Tracker Workshop at 10:30 AM CST on 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.

What Makes the Production Tracker Such an Important Tool?

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Because it Helps Keep Your Business Balanced

Recently we discussed the importance of keeping your construction business from getting out of balance. Achieving a balanced business requires paperwork and we know how construction contractors feel about paperwork.

I know, I know, paperwork is not a very exciting topic, but neither is concrete. And we all know how important concrete is in supporting a building. The same is true for paperwork and your business.

One of the three foundational piers in business is administration and finance. One of the building blocks in that pier is a Production Tracker. This tool provides valuable information for forecasting the company’s financial needs and production plans.

Wouldn’t it be helpful if you knew:

  • Which types of work were consistently the most profitable
  • How you were doing at meeting your financial goals for the year
  • When you should have the signed projects finished to stay on track
  • How well you’re doing at getting proposals signed
  • What the average price of your projects are

The Production Tracker is an Excel spreadsheet that lets you gather and track information. It has preset formulas that determine and sort the information you need to make your business more profitable.

This document provides information for:

  • Creating and recording project numbers
  • Tracking project bid amounts
  • Tracking dollars of signed proposals
  • Tracking dollars collected from projects
  • Percentage of jobs signed
  • Percentage of dollars signed per dollars bid
  • Percentage of dollars collected per signed
  • Average dollar amount of projects bid
  • Average dollar amount of projects signed
  • Average dollar amount of projects collected
  • Projected timeframe for doing signed projects
  • Projected date work should be done

This list can seem overwhelming but it’s really not.

Here is an example of what the Job List spreadsheet looks like.

Let’s go through the document and break it down into smaller brick size pieces.

Creating and recording project numbers – Having a numbering system can help you sort projects so that you can review which types and size of projects are the most profitable and what you do the most of. It may be that your most profitable ones are not the ones you do the most often. Having this type of information can help you to focus more of your attention on the right kinds of projects for you.

This Production Tracker is a place to list project numbers in conjunction with the size and types of the projects, as well as their chronological order. This document provides the numerical part of the project number specific to each project. The other portion of the project number is determined by job specific parameters that are not included on this document.

Tracking project bid amounts – Our Blueprint for Building a Better Proposal system provides the dollar amount for each project. Once a proposal has finished, the specific information to that project is entered into the appropriate cells on the spreadsheet. This information includes Job Number (column E), the Customer Name (column F), Description (column G), Bid Date (column H) and the Project Amount (column I). Regardless of the system you use for preparing proposals, you should have a dollar amount that could be entered into this document.

As each new project amount is added in the project amount column, the total project amount at the bottom will update, giving you a total dollar amount of the proposals you have done this year. Based on your company’s history, this dollar amount should give you a clear picture of where you are in relation to meeting your financial goals for the year. We will explain this further with the tracking dollars of signed projects.

Tracking dollars of signed proposals – Once a proposal has been accepted, the accepted dollar amount should be entered in the signed amount column. Initially, this amount should be the same as the amount in the project amount column. Sometimes the dollar amounts of projects are changed due to change orders. This can be either an increase or decrease depending on the change order(s).

As each new proposal gets signed the dollar amount of the signed proposal should be entered into the correlating cell in the signed amount column. Just like in the project amount column, as each new amount is entered in the signed amount column, the total dollar amount at the bottom automatically updates giving you a total of work you must currently do.

With the total of the signed amount column and the total of the project amount columns, you should be able to get a clear picture of where you are financially in relation to where you want to be at year end.

Let’s say your goal for the year was to generate a gross revenue of $400,000.00. Using the example, you can see that as of December 12th you were at $352,877.66. This is close, but not quite there. If you compare the signed amount to the project amount ($664,381.27) you will see that the signed amount is 53.11% of the project amount. Based on this percentage, to get the signed amount to $400,000.00, the project amount would need to be $754,000.00.

This information is critical to the survival of your construction business.

Your business needs to be built on a solid foundation.

We’ve covered a lot here today. In our next post we’ll pick up at tracking dollars collected from projects.

Check out this and additional business building tools and training here. If you have questions, feel free to schedule a free 30-minute business coaching call.

Portions from a previous post 1/7/23 

The “Job List” Is One of the Foundational Building Blocks of a Successful Construction Company 

It’s Up to You to Get Unstuck

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You Have the Power of Choice

There’s a saying, “A rut is a grave with both ends kicked out.” Too often we get in a rut and don’t even realize we’re there.

This is how operating a construction company can be.

Plodding back and forth, doing all those things that need to be done, 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.

This feeling of being stuck can be overwhelming. If we wait too long to do something, that’s when it becomes a grave, and we give up and go out of business. It’s just not worth it.

I could make more money and work less hours flipping burgers.

Last week, we discussed the difference between being self-employed and being an entrepreneur. The question you have to ask yourself is: do I want a job, or do I want to build a business? It’s up to you to decide which you want to be.

Building a business can be scary; it might not work. We know our rut well and it’s comfortable. Doing business because “we’ve always done it this way” isn’t a very good plan.

This kind of rut thinking doesn’t allow for building dreams.

Changing things just for the sake of change isn’t a good strategy either. Growing and changing is good, but there needs to be a plan.

Building without a plan isn’t a good plan, whether it’s a construction project or a business.

Things that need to be changed and are ignored have consequences, i.e., diapers, your car’s engine oil, furnace filters, toothbrushes, and bad habits.

Change costs time and money…the question is: is the change worth it?

Not changing is also costly. It’s up to you to decide which is more expensive.

You have the power to change if you want to. Change is up to you.

It amazes me how many times I’ve talked with people who do construction from their ruts. They tell me all about how frustrated they are with their business. Yet, even when we offer them a ladder to help them out of their rut…they won’t use it.

I understand. I’ve been there. Change can be scary.

I remember when I’d had enough of the rut. Doing things the way I was, wasn’t working.

It was after my partner, at a previous construction company, hired a consulting firm that things changed for me. They came in to help us with the business part of our construction company. It was expensive, but what I learned was worth every penny and it cost a lot of pennies (2 million to be exact).

The sad part is this is…I’m the only one that used the business tools that they gave us.

I’m still in business and they aren’t.

Just talking about doing something or buying tools isn’t the same as doing it…action is required.

If you or someone you know is tired of trudging back and forth in a construction business rut, then let us give you a ladder to help you get out.

You have the power to do this. It is a choice that only you can make.

If you would like some help getting out of your construction business rut, check out our tools and training, or schedule a free 30-minute construction company coaching call.

Portions from a previous post 4/27/19 

Being Careful to Not Get Stuck in a Rut