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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.

Disruptions To My Routine Can Really Upset the Apple Cart

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After This Past Week…I’m Trying to Get the Apples Gathered Back Up

Something happened this past week that has never happened before.

Since I started writing weekly blog posts in October of 2015…I’ve never missed a week.

When I started, I committed to myself that I would write and post weekly.

The question is…should I still be committed to this?

Commitment is a good thing. We just need to be careful what we’re committed to. Why did I make this commitment? Is it still a valid commitment? Is it worth the time it takes? All questions that need to be answered.

This past week was spent moving some furniture from Salem, Missouri to Spearfish South Dakota for my mother-in-law. This was done to help my wife and her family, who are dealing with a difficult situation.

Life is full of difficult decisions. The question is…what is the highest priority?

This past week it was helping family over posting.

Being a routine motivated person, disruption to my routines spilled apples everywhere. Routine gives me a since of control and I don’t like it when things are out of control. I like things organized.

As I’m gathering the apples back up, I’m asking myself how I can better deal with disruptions in the future? Because I know who I am and how I operate, it’s up to me to decide.

I may need to replace some bad apples with some new ones.

We need to be careful that routines don’t become the reason that we’re doing things. It’s important to periodically step back, review what we’re doing and why we’re doing it.

A cart full of organized apples is no good if we don’t enjoy an apple pie once and a while.

There’s Enough Time to Do Everything You Should

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You Can Do Anything You Want, You Just Can’t Do Everything

There are so many things to do and never enough time to do them all. This a common battle. The problem isn’t time it’s the long list of things we’re attempting to do.

We’ve been given enough time to do everything we are supposed to. God built the world and everything in it in six days. We’ve been given those same six days. Granted, building the world is a lot…we just need to remember that we’re not God.

The key is getting clarity about what we are and aren’t supposed to do.

Deciding what things we’re supposed do is the real fight. Especially for people with a servant’s heart. There are so many important and valuable things that need to be done and we want to do them all.

It’s not our responsibility to do everything.

I struggle with knowing what I should do and what to say no to, but I continually improve. My system for planning and scheduling is huge for helping me with this. Over the past six weeks I’ve written about how I schedule and plan what I will do.

  • How to Get Control of Your Life – There’s no simple, one size fits all, magic app for tracking things and budgeting time. You need to find or design a system that works for you.
  • Writing it Down Makes it More Real – It is easy to find ourselves drifting. We need a clear path to a target. When it is written down, I’m more accountable to myself.
  • How I Use Outlook to be Better Organized – Allotting time to things that are on the list gives a time parameter each task will need. It increases the focus for completing them and gives a visual of the progress.
  • Putting the Right Pieces in the Right Places – Even though multi-tasking has been a popular idea; I would argue that we can’t do focused work on more than one thing at a time. Pick one piece and focus on putting it in place.

The real struggle with scheduling and planning is in prioritizing.

This is the tricky part. What is the most important thing I should do and when? The way I’ve been able to determine this is to ask my CEO (God) and board of directors (the people close to me that I trust). If you will ask, you will get clarity. Satan loves keeping us confused.

The more unclear we are about our direction the less we accomplish.

Clarity is a process, not the magic snap of fingers. Opening our mind to the right directions and taking action moves us toward achieving the things that we were put here for. This is not an easy process, but one that’s worth all the effort required.

You have plenty of time to do everything you’re supposed to do. Not everything you want to do. Having a system for planning and scheduling will make the process easier and relieve some of the pressure.

How I Use Outlook to Be Better Organized

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It’s All About Being Intentional

Getting organized and staying that way can be a real challenge. There are so many important things we need to do. Not to mention all the amazing things we want to do. It’s easy for the list to get so long we don’t even want to look at it.

A long list makes it hard to even know where to start.

But if we don’t write things down they’re less real and more easily forgotten. I use OneNote for keeping track of the things I need or want to do. A list is a great way to track and prioritize things.

The problem with a list is that it doesn’t block out allotted time.

This is where a calendar comes in. Whether digital or written a calendar allows you to block out a period of time for the things you’re going to do. This provides a visual restraint to an otherwise uncontrolled list.

The advantage to digital calendars is the reminders…written ones don’t do this very well. With most everyone having a smart phone in today’s world it’s much harder to forget things that need done. Digital calendars sync across a variety of devices which makes it much more difficult to forget something that’s scheduled.

This is where organization starts to get fun.

Let’s say you have a short list of 50 things to do. It’s up to you to prioritize them in the order that is relative to you and your situation. You know which ones you need or want to do first.

What if the most important thing on the list doesn’t need to be finished until the end of the day. But some of the less important things are connected to someone else’s list and they need them done first thing this morning. Or what if you are a member of a mastermind group that meets at the same time every week and that happens to be today at 11:00 AM.

How do you know what you’re going to do when?

 This is why I find my calendar to be such an important tool. I use my various lists in OneNote to prioritize. Then I look at my calendar. What things are already on there, scheduled appointments, recurring meetings, etc. With the open time left I plug in the most important things from my list. I fill the remainder of my day from beginning to end with things that I need or want to do.

This can seem overwhelming, but it doesn’t have to be. Fun and free time can be scheduled as easily as work.

Benefits of calendaring are:

  • It’s harder to make excuses to not do it, once it’s written on the calendar.
  • I take it more seriously; it becomes more real when it’s written on the calendar.
  • Big things become more manageable when they’re broken down into small sections of time and put on the calendar.
  • Seeing things that have been done when looking at the calendar provides a sense of accomplishment.
  • When there is a reminder that something else is starting in 30 minutes I stay more focused.

I never like to start something without being able to finish it. This makes it hard for me to stop when I’m in the middle of something. Having things scheduled tight on the calendar helps remind me that sometimes I just have to stop what I’m doing and come back to it later. It depends on it’s level of importance.

I’m more productive with a full calendar.

I push harder and focus better if I know there’s something else to do in 15 minutes. If there’s open time I take my foot off the accelerator. It’s how I get control of my life.

One of the greatest things about a digital calendar is the ability to easily move things around. Your calendar like your life is up to you. You can choose what you will do and when you’ll do it.

Just be flexibly rigid.

My go to calendar is Outlook because I love the way it connects with OneNote and syncs with my Motorola phone. Next week we’ll discuss how the Task List portion of Outlook completes this organizational system.

Opening the Toolbox & Looking at OneNote

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Organizational Tools Are as Important as Any Other…Maybe More

Last week I told you that we would open up my organizational toolbox and take a look inside. So, OneNote is the first tool that we’ll look at.

Being a self-employed small business owner is a difficult undertaking at best. This difficulty increases exponentially when organization and communication are operating poorly or not at all. This problem only increases when you’re successful and there are more things to organize and more people to communicate with.

During my thirty-five plus years of continually working to achieve and maintain some level of control I have used a whole lot of different tools. Some were old school some high tech.

The best tool I have found for organizing and communicating is Microsoft OneNote.

This tool is great for organizing and communicating. It does so much, so well, that I don’t need a bunch of different apps to do different things. To often these various apps don’t sync well across different systems and devices.

I would equate OneNote to a three-ring binder on steroids.

Maybe we should call OneNote the ‘Six Million Dollar’ binder. I have used binders for my organizing for years and still do, to a small degree.

A good comparison of OneNote to a binder is the way I used to have project binders on site at construction projects. This was a place where things would be kept so that employees, sub-contractors, project management, architects and the customer could all have access to the specifics of the project.

OneNote is organized very similar to a binder. You can have different ‘notebooks’ and each book can be divided into multiple ‘sections’ and each section can have bunches of ‘pages’ and subpages.

Just like “The Six Million Dollar Man” this computerized version of a ‘notebook’ has superhuman bionic computerized capabilities.

Here are a few of them –

  • Share with other people across multiple devises. This can be as simple as sharing a shopping list with your spouse or as detailed as an entire notebook with colleagues on a big project.
  • Syncs automatically across multiple devises. If someone adds to the shopping list or checks something off, you will know it in a matter of seconds as long as you are connected to the internet. If not, it will sync as soon as you are.
  • When changes are made, they are highlighted until read. If one of my virtual assistants makes a change, I will be able to know that, go to the specific change and know who did it and when it was done.
  • Insert almost anything on to a page. You can insert copies of other documents, screen clippings, photos, audio and video recordings, links to other pages and/or web locations, etc. This is just part of what I’m currently using or is available with OneNote.
  • Link from and to multiple locations. I can put a link for a specific OneNote page in a task reminder or calendar event or on a word document. Click on it and it will open up that page, even if OneNote isn’t open yet.
  • Editing is really easy. Things on a OneNote page can be clicked on and moved to a different place on the page. This feature is great for prioritizing a list. If I want to move something higher on the list, I just move it there, no cutting or copying or pasting (although you can do those things as well).
  • It’s always ready to open up and use. It doesn’t require the opening up of a program and folder a file before you can write something down. Click on the OneNote icon in the task bar and it’s open. A couple more clicks and you can write down your note before you forget it.
  • Great place for filing and storing. If I want to save an email from a customer with a picture and a link to a web site, I can do that right from Outlook.
  • Can protect sensitive info within a shared note book. If I have a page that has ideas for my wife’s Christmas or passwords to my bank account, I can password protect those pages. This means that if my wife accidently goes to her Christmas page when she meant to go to the shopping list, she can’t open it without the password…which she doesn’t have.
  • Can draw or write on it just like paper. This feature is great for getting down quick information with my tablet or phone. I can draw the floor plan for a room addition and write dimensions and notes right on it.

This tool can do all this and much more. Some people will probably say that it has too many bells and whistles or it’s complicated. I’m sure this isn’t the best tool for everybody and that’s okay. Not every person uses the same cordless drill.

This tool is simple to use and it makes it easy for me to stay organized.

Next week we’ll get out another tool that work’s in conjunction with this one.

This post was originally published January 21, 2017

How To Get Control Of Your Life

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Budget Your Time…You Have a Limited Amount

For years I have heard people express frustration with organizing and managing their schedules and “to do” lists. For years I was one of those people. These issues are multiplied when running a business.

Not that I have it all figured out but, I’m closer than I’ve ever been.

The question of what the best tool to use to manage scheduling and “to do” lists, has come up a lot lately. Most people are looking for a simple app or tool that will magically do it all.

There is nothing that will miraculously do this for you.

I’ve been refining my scheduling system for decades. Trying different things, starting with paper calendars, notebooks and notes on scrap paper. Now it’s all on my computer. I like my system way better now than before (I still use some paper for quick notes). However, it doesn’t do the work without my involvement.

Here’s the thing, most of us have way more things on our lists than there is time to get them done. Or we forget to do something because it wasn’t written down. Or the paper it was written on got lost in a stack of papers. It’s easy to get overwhelmed and forget or misplace reminders.

Keeping track of things is the most important part of being organized.

We naturally want order in our lives. We want to be in control. The problem is we live in a world of chaos. Organization is a weapon to fight against the chaos. The more organized we are the less chaos there is.

What does organization look like? According to Webster, organization is, “the act or process of organizing or being organized.” Organize is, “to form into a coherent unity or functioning whole, to arrange by systematic planning and united effort.” This sounds good to me.

Having OCD, Organizational Compulsive Disorder, I organize at a level more intense and detailed than most.

My system works for me. This doesn’t mean that everyone’s has to be at this level. Some people feel restricted by a schedule. Just like some people feel that a budget restricts them financially.

I find both to be freeing.

My detailed system allows me to know what to expect. Not to mention it keeps me motivated to get more done. I used to struggle to determine what thing should be done next.

It is a combination of lists and calendars. My “to do” lists are a place to write things down so that they aren’t forgotten. I then prioritize the things that need to be done to reach goals. Each task gets an amount of time and then put on the calendar. The calendar allows me to see the tasks as a block of time and not just an item on a list.

A calendar works like a “budget” for time.

It is easy to let things slide if you aren’t intentional about planning. The most important thing is to know yourself and figure out what works for you.

Next week I will open up my toolbox and show you the tools I use to keep control of my life and minimize the chaos.

Building Your Business Is Critical to The Survival of The Business

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Just Like the Construction of a Building – You Need a Blueprint for Your Company

 

If you own your business and aren’t being intentional about the organizational operation of your company, it is likely that you won’t make it past your 5th year. This is according to the Bureau of Labor Statistics https://www.bls.gov/bdm/entrepreneurship/bdm_chart3.htm. Just think about the number of businesses that you have seen come and go.

Whether you are a solopreneur or you have a team. It doesn’t matter if you have been in business for 30 years or just starting out. Regardless of the kind of work you do, the organizational plan is just as important as the work you do…maybe more.

I know in my 40 years of being in business I have learned some lessons the hard way. Let me tell you, the tuition for ‘The School of Hard Knocks’ is expensive. There were times when I got behind on taxes to pay bills and times that I got behind on bills so that I could pay taxes. Neither of these is a very good business plan. One of my SHK professors once told me, “that when you steal from Peter to pay Paul, you make Peter a Paul bearer”. If you want to avoid the need for a pallbearer for your business…you need a plan.

It is common for people to start a business without a plan. Generally, someone has learned a trade or a craft and for whatever reason they decide to go into business on their own. Most of the time they have given little, if any, thought to business structure. They show up every day working hard and then…surprise, you owe some taxes and haven’t saved any money to pay them. They needed a plan, a blueprint for building the business.

Being in the construction business I see a lot of similarities in constructing a sound building and a constructing profitable business.

  • Both need to start with design plans – the thing that gives you a clear direction of what you want the outcome to be.
  • Both need an architect – the person that can see the vision of what the finished product will be.
  • Both need a good solid foundation – the thing that will support you when the storms come.
  • Both need good framework – the thing that holds everything together.

     

  • Both need a builder – the person that reads and understands the plans and puts all the different pieces together correctly.
  • Both need the proper tools – these are what allow the pieces to be shaped and fastened together in the right places in the right order.
  • Both need a good team – these are the different people with the different skills and knowledge needed.

It doesn’t matter if you have been in business for years or are just starting, YOU NEED A PLAN. If you would like to minimize the time you spend attending ‘The School of Hard Knocks’, then keep following our blog. We are working on some Business Building Solutions for just this purpose.

 

What areas of building your business would some ‘higher education’ be helpful.

Opening the Tool Box & Looking at OneNote

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Computer Tools Are as Important to Construction as a Saw or a Hammer

 

Being a self-employed small business owner is a difficult undertaking at best. This difficulty increases exponentially when organization and communication are operating poorly or not at all. This problem only increases when you’re successful and there are more things to organize and more people to communicate with.

During my thirty-five plus years of continually working to achieve and maintain some level of control I have used a whole lot of different tools. Some were old school some high tech. To this point the best tool I have found for organizing and communicating is Microsoft OneNote. This tool is great for organizing and communicating. It does so much, so well, that I don’t need a bunch of different apps that do different things and don’t sync well across different systems and devices.

I would equate OneNote to a three-ring binder on steroids. Maybe we should call OneNote the ‘Six Million Dollar’ binder. I have used binders for my organizing for years and still do to a small degree. A good comparison of OneNote to a binder is the way I used to have a project binder on site at construction projects. This was a place where things would be kept so that as different employees, sub-contractors, management, architects and the customer could all have access to the specifics of the project. OneNote is organized very similar to a binder. You can have different ‘note books’ and each book can be divided into multiple ‘sections’ and each section can have bunches of ‘pages’.

Just like “The Six Million Dollar Man” https://en.wikipedia.org/wiki/The_Six_Million_Dollar_Man this computerized version of a ‘note book’ has superhuman bionic computerized capabilities. Here are just a few.

  • Share with other people across multiple devises.
  • This can be as simple as sharing a shopping list with your spouse or as detailed as an entire note book with colleagues on a big project.
  • Syncs automatically across multiple devises.
  • If someone adds to the shopping list or checks something off, you will know it in a matter of seconds as long as you are connected to the internet. If not, it will sync as soon as you are.
  • When changes are made they are highlighted until read.
  • If one of my virtual assistants makes a change I will be able to know that, go to the specific change and know who did it.
  • Insert almost anything on to a page.
  • You can insert copies of other documents, screen clippings, photos, audio and video recordings, links to other pages and/or web locations and this is just part of what I’m currently using.
  • Link from and to multiple locations.
  • I can put a link for a specific OneNote page in a task reminder or calendar event or on a word document and click on it and it will open up that page, even if I haven’t opened OneNote yet.
  • Edit things really easy.
  • Things on a OneNote page can be clicked on and moved to a different place on the page. This feature is great for prioritizing a list. If I want to move something higher on the list I just move it there, no cutting or copying or pasting.
  • It’s always ready to open up and use.
  • It doesn’t require the opening up of a program and folder a file before you can write something down. Once you open OneNote it just takes a couple of clicks and you can write down your note before you forget it.
  • Great place for filing and storing.
  • If I want to save an email from a customer with a picture and a link to a web site, I can do that right from Outlook.
  • Can protect sensitive info with in a shared note book.
  • If I have a page that has ideas for my wife’s Christmas or passwords to my bank account, I can password protect those pages. This means that if my wife accidently goes to her Christmas page when she meant to go to the shopping list, she can’t open it without the password…which she doesn’t have.
  • Can draw or write on it just like paper.
  • This feature is great for getting down quick information with my tablet. I can draw the floor plan for a room addition and write dimensions and notes right on it.

 I know that there is so much more that this tool can do and a lot that I don’t. Some people will probably say that it has too many bells and whistles or it’s complicated. I’m sure that this isn’t the best tool for everybody and that’s okay. Not every person uses the same cordless drill. I think this tool is simple to use and it makes it easier for me to be organized and to communicate.