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Hey Contractors - Here's How To Structure Your Company For Success And Growth

Nov 2, 2007
What does structuring your business mean and why is it important that you structure it right?

Structuring your business means that you've identified the tasks and processes that must be carried out properly in order to keep your business running. It means assigning those tasks and processes to specific individuals and giving them the tools and time to perform the tasks properly.

Structuring your business means getting the right people assigned to do the right work.

You might be amazed to learn how few contractors are structured for success.

Rarely have the contractors I've met been structured for success. When my consulting team dove in with new clients, we almost always had to start off with a restructuring of their staff.

It was almost as if we were a chiropractor and they needed a major adjustment to eliminate their aches and pains.

Several critical tasks would have been left unassigned. Tasks would have been grouped in strange ways that hindered smooth work flow. Employees would have been poorly fit to their positions based on personality or skill set.

Good fit is essential. Great salesmen make horrible estimators and great estimators make horrible salesmen. When you ask an employee to perform a duty that he or she isn't cut out for, the duty will be performed poorly. Fit is an important part of structure.

Once we had re-aligned our clients' businesses, they became much easier and fun to run.

The worst structuring problem of all is where there is no structure. Everything rests on the back of one person.

That individual would have inserted himself or herself as THE essential decision maker; approving all decisions (can you say micromanager); trusting no one...and holding up everything.

He or she would be horribly overloaded and making things difficult for everyone else. Hopefully, you've learned not to do that yourself nor allow someone working for you to do that.

Let's get to the solution: how to structure a construction company. We'll focus on the basics.

Every business, no matter how big or small, must have three roles performed adequately: sales, operations, and administration/accounting. Failure to perform any one of these three effectively will hold back, and eventually kill, your business.

The challenge for small contractors is staffing those three positions. Few can afford to support three full-time people for those roles.

This explains why so many small contractors have one spouse running the books while the other runs the crews and lines up the work. Effectively, they are filling the three roles with one wage (since all income goes to the same family). A very affordable approach, but very limiting in its ability to grow the business.

The downside to having only one or two people filling these three critical roles is that one of the roles usually gets shortchanged.

In construction, the sales role gets shorted most often. Heck, it usually gets shorted even when there is plenty of income to cover the cost of a full-time salesman...and that's part of the message: you MUST structure your business to have someone freed up to perform sales.

Businesses that are structured where all three roles can be properly performed should enjoy consistent financial success. They are also laying the foundation for substantial growth.

As you have heard a thousand times, you need systems to grow your business. What you probably haven't heard, unless you've been reading my articles or newsletter, is the current position holder's duty is to get his or her systems figured out and documented.

You just can't buy off-the-shelf systems that are ready for prime time. Whether you create them from scratch or greatly modify the ones you purchase, they must be customized for you and your business.

The best way to systematize your business is to put someone in the role, let them succeed, THEN document how they are succeeding.

1. First structure.
2. Then succeed.
3. Then document and systematize.
4. Then staff and grow.

Then reap the financial rewards of owning a business that others can run for you.
About the Author
Ron Roberts, The Contractor's Business Coach, teaches contractors how to turn their businesses into money making machines. To receive Ron's FREE Contractor Best Practices Newsletter visit http://www.FilthyRichContractor.com.
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