Latest / Contractor Business Builder Podcast / Construction Business Is Hard, Until You Build Systems Like This

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Construction Business Is Hard, Until You Build Systems Like This · Contractor Business Builder Podcast

0:01
Sound, sound. Now, a major setback for a lot
0:03
of contractors is everything lives inside the owner's head.
0:06
You have a process, you have a system, you have the knowledge
0:10
of how to run your business. It's either in you or your
0:14
different employees within the company, everybody.
0:16
The knowledge is out there. But the first component to get
0:19
into place for systems is the knowledge succession.
0:22
So how does that knowledge get into the hands of the right
0:25
people? How do they learn it?
0:26
How do we standardize it? How do we make sure everyone's
0:28
following the same playbook? And this often looks like an
0:33
SOP. This is kind of the first step.
0:36
The big problem with just creating, you know, a bunch of
0:40
SOP's or having random stuff is chaos essentially, which is
0:43
probably what you've experienced in the past.
0:46
So the way to do this is you need to break your operations of
0:49
your business, all the different functions into specific areas.
0:52
So you're going to have estimating, scheduling on
0:55
boarding, fulfillment, what happens when a new client comes
0:57
into business? What happens when you know, for
1:00
marketing, like there's all these different components of
1:02
the business, but grouping into the large ones.
1:05
And the first step is just to get things down on paper.
1:09
You can even just record yourself and talk through what
1:13
you do to get the big steps in place of this is the overall big
1:19
process. Create a quick stop.
1:21
And you want to just keep it really simple.
1:24
Then you want to involve the other team members.
1:27
So if you have an admin person that you know handles phone
1:30
calls or files paperwork for, you know, whatever it may be,
1:35
ask them what is your process for this?
1:37
How do you do this? Can you please write it out so
1:39
you don't have to, as a business owner, do all of this
1:42
systemizing yourself. Ask your team to be involved,
1:46
rely on your team. If you've got a good assistant
1:48
or admin, they can kind of spearhead this and take all your
1:51
notes and your knowledge and put them into nice systems.
1:55
Now, this can get overwhelming because obviously there's a lot
1:57
that goes into running a business, but this is sort of
1:59
the first step of that knowledge succession of how do we get the
2:03
right knowledge in front of the right people?
2:05
And we have like a standard of of what we want people to know
2:09
and how they want to handle it. Now that's one component.
2:13
The other component of knowledge succession is decision making.
2:16
So it's nice to have, you know, this is how you do this.
2:18
Step one, Step 2, step three-step 4.
2:20
But what happens when the problem comes up?
2:22
Well, they're going to call you, right?
2:24
And that's the fires that come up every day for you is how do I
2:27
do this? Where do I find this file?
2:28
This isn't working. This client, you know, said
2:31
this, I don't know how to handle it, right?
2:32
So you need as well in your Sops or separate document that
2:36
outlines decisions. So who makes what decisions?
2:40
When does it need to get escalated?
2:42
What decisions can you provide to your employees And tell them
2:47
that, you know, I trust you with this.
2:49
If it's, you know, this type of thing that happens, do your best
2:53
and ask for forgiveness later kind of thing.
2:56
So take charge. I've had this come up so many
2:58
times, especially with like early admin people who don't
3:02
want to make a mistake or they, you know, they, they, they want
3:06
to do everything by the book or they want to wait until they
3:08
meet with you or ask for your approval on everything.
3:12
And that's no way to run a business.
3:13
We need to enable leaders inside your business.
3:16
And everybody is a leader even doesn't matter the guy cleaning
3:19
up materials or the admin person filing some paperwork on a
3:23
couple of hours a week, whatever it is, tell them you make the
3:27
decision on this. I expect this of you.
3:29
And if it's wrong, I understand mistakes happen and we will
3:33
correct it after the fact. If it's super critical, like
3:36
it's going to cost you thousands of dollars or it's going to make
3:38
a client upset, then definitely they need to escalate it to like
3:41
senior manager or yourself take care of it.
3:45
But that is the key component that's often missing with
3:48
systemizing of business people get the soap or you know, some
3:52
training videos in place or whatever it may be, but they
3:54
haven't explicitly explained how decisions get made and what when
3:59
those perfect steps don't line up and things don't work out
4:02
perfectly. How do you use your team handle
4:05
it so it's not you having to handle it and then to make sure
4:08
that your team is getting refreshed on the content and
4:12
that they're getting trained on it.
4:14
So everybody, again, is on the same page, everyone's following
4:17
the same process. And the SOP isn't there for to
4:20
make a bunch of robots in your company.
4:22
It's there to train people efficiently and properly and
4:25
take the guesswork out of them. Like, well, I'm supposed to file
4:28
these papers, but I don't really know what I'm supposed to be
4:31
doing, so I'm just going to make it up, right?
4:33
That's not where you want an employee to be doing.
4:35
First of all, it gives them a bad impression.
4:37
Second of all, they're probably going to do something that you
4:40
are not going to want them to do.
5:02
Now the second component in getting systems up and running
5:06
in your company is the constraint bottleneck.
5:09
And this is where it's like which systems do we start with
5:14
or how do we do this? Or maybe you started on a whole
5:17
bunch and you're trying to build systems left, right and centre
5:20
and figuring out that it's a very lengthy and difficult
5:24
process. So what we want to look at is
5:27
what's limiting your business. There's always a limiter to
5:30
business is it is leads a limit as sales, maybe it's getting
5:34
estimates out the door or the preconstruction.
5:36
A lot of people are falling off production, maybe close outs,
5:41
unlikely, but usually there is, you know, it's it's money, it's
5:44
leads, it's time or it's yourself as a business owner
5:48
needing to get out of the way and get your people involved.
5:50
So what are what's the big constraints?
5:52
What's holding your business back from growth or
5:55
profitability? Profits first, growth second
5:59
have got to get the profits right.
6:02
But from here you need to pinpoint specifically which
6:05
system is going to give you the best return on investment and
6:08
which one is holding your business back.
6:10
Often they're the same, but there's gonna be different
6:12
things. And then decide what
6:15
specifically are we going to improve?
6:17
And then you need to be able to measure to make sure that it's
6:21
being effective, that it's actually having the outcomes
6:23
that you want. There's no profits that are
6:26
being leaked out and you want to fix that, that biggest
6:29
bottleneck. So if it's estimating, what part
6:33
of the estimating system do we need to improve?
6:35
Is it we don't have any job tracking, so we need better cost
6:38
codes and job tracking is that we have no database for pricings
6:42
or pricing is always all over the place or takes us hours to
6:45
call a bunch of suppliers and figure out pricing.
6:48
What is like the you're going to have bottlenecks within
6:51
bottlenecks essentially. So estimating maybe your
6:54
bottleneck, but there's going to be, you know, 5 to 10 different
6:57
smaller components inside estimating that you're going to
7:00
need to fix. So which one do you start with?
7:02
And that's how you chunk it down.
7:03
That's how you stay streamlined and focused.
7:05
And that's how you get systems in place that are going to give
7:08
you the maximum ROI for time and money and going to make it most
7:11
simple for you to implement and your team to implement.
7:14
So you're not trying to do everything all at once, but
7:16
you're very refined, very focused, and you got it planned
7:19
out be. 3rd component that we're going
9:31
to be looking at for building out systems in your business is
9:34
data collection. So we need to be looking at what
9:37
does the data say, not just obviously if you're feeling less
9:41
stressed and like you have more time, things are working, but
9:44
what is the actual effects and not just the effects on you, but
9:47
on your team. So you want to be collecting
9:49
data, as you mentioned in the previous step, you need to set
9:53
what kind of things are we measuring or what are the
9:55
outcomes that we're looking to achieve and decide on one key
9:59
metric. So is it, are we looking to
10:01
improve profits, maybe the lead to sales?
10:04
So how long it takes from a new lead to go to a sale or
10:07
preconstruction agreement? How much time are you on or off
10:12
of the schedule for project? So what are we looking to
10:15
actually improve with what we're implementing so that we have
10:18
some goal posts, some field markers to see how are we doing
10:23
this. First and foremost, obviously it
10:26
helps you track what's going on, but it gives your team that
10:31
sense of accomplishment and that objective of of this is what
10:35
we're going for and looking for so that everybody again, is on
10:38
the same page. It's not just like, oh, this is
10:40
so the company is better and everybody feels better, you
10:44
know, nice. But what are we actually trying
10:47
to achieve here? So and then you're going to make
10:49
adjustments to the system. So did it have the desired
10:52
outcomes? Did you reach your targets or
10:53
are you above or below? How can we adjust?
10:56
And through these observations, the data is going to help you
11:01
make better decisions and it's also going to help you recognize
11:04
what's possible with the next systems that you put into place.
11:08
And you have this continuous feedback loop now of we had a
11:12
starting point, we reached an objective and we can see if
11:16
things are starting to slip or if they're going up.
11:19
So really important, the data also helps you catch issues and
11:24
problems before they become, you know, giant problems.
11:27
So if things are, you know, going up or down or didn't make
11:31
a change, then you need to be able to look at it objectively
11:35
and identify, you know, what is the actual problem here, what
11:40
are the weaknesses in the system that we need to improve and
11:43
getting feedback consistently. I know when you start building
11:55
systems it feels a bit overwhelming but these are non
11:58
negotiable. For your growth, you must have
12:01
systems. You know, when you start
12:08
building systems to feels a bit overwhelming, but these are
12:11
non-negotiable. You have to have systems for
12:14
growth, which is why we build all the essential systems for
12:18
construction companies and that's how we help them scale.
12:21
So if you also need our help, click the first link in the
12:25
description to apply to get our help.
14:28
Passing sound I know when you start building system it feels a
14:32
bit overwhelming, but these are non negotiable for your growth
14:36
which is why we build all the essential systems for
14:39
construction companies and that's how we help them scale.
14:42
So if you also need our help, click the first link in the
14:45
description to apply to get our help.
14:55
I know when you start building systems it feels a little bit
14:59
overwhelming, but these are non negotiable for your growth.
15:02
You need systems in your business, which is why we build
15:05
all the essential systems for construction companies and
15:08
that's how we help them scale. So if you also need our help,
15:12
click the first link in the description to apply to get our
15:15
help. All right, moving on to
15:54
component #4 if you're doing things the way they've always
15:59
been done. All right, so component #4 doing
16:17
things the way they've always been done is not how you how.
16:24
OK, moving on to component #4 here, doing things the way
16:29
they've always been done is not how growth happens.
16:33
If you really want to grow, you have to optimize each system
16:37
consistently. You want to be looking at every
16:40
single step and going through creating a workflow.
16:44
So what are the large components?
16:46
The way that I like to continuously optimize my
16:48
systems, The best point to do that is when you have a new
16:52
employee, because a new employee is going to be fresh to the
16:54
company, not going to be trained, and you're going to
16:57
have to walk through the system. So this is a great opportunity
17:00
to walk through the system with them.
17:02
And if something's not clicking, they're making mistakes or
17:05
they're confused or there's parts missing, you know, hey, we
17:09
need to update this. We need to improve it.
17:11
How can we better ensure that the next person that comes
17:14
through is even more on, you know, on the ball and the system
17:18
is really working at a super high level.
17:28
A good question to ask that I love to ask about systems too is
17:32
if I was gonna do this 1000 times, is this how I would want
17:37
it done so often you'll figure out like well, no, if I had to
17:41
do an estimate like 1000 estimates like this, I wouldn't
17:44
want to be doing, you know, take offs from scratch or I wouldn't
17:47
want to have to call my suppliers every time I need
17:50
pricing, right? So how can you make sure that
17:53
this is the most optimized system?
17:54
That's a great question. And another good one is how can
17:57
I make this twice as good? So twice as fast, twice as few
18:01
steps. How can I remove steps possibly,
18:04
How can I make this twice as good?
18:06
And that'll, you know, it'll be rare that you'll actually double
18:10
the effectiveness of, of a process.
18:12
It does happen, but at least that'll get your mind thinking
18:16
in a way that it's not. Small tweaks, those are helpful,
18:19
but how can we, like, really massively improve what we're
18:23
doing as a whole in this system? Now certain steps that really
18:34
don't add value to an operating procedure or a system as any of
18:38
the nitty gritty technical aspects, especially for things
18:41
like software, your team should be relying on your softwares
18:46
training to know about the technical aspects of the
18:50
training. And there's, there's a whole
18:52
bunch of like it's, there's a whole bunch of additional
18:59
components that kind of go into these, these, these smaller
19:03
components. But essentially you should have
19:05
like a knowledge bases or additional links inside your
19:09
stops so that you are not recreating the wheel here.
19:13
Essentially, if you need someone who's training on a software,
19:17
there's tons of videos online. The software should have like
19:20
maybe support or whatever. You just need the big steps and
19:25
the specifics of how you want it done inside your company.
19:33
Now, if you want to actually destroy any inefficiencies with
19:37
inside a system, create a checklist.
19:40
Checklists are fantastic. Checklist for how to optimize
19:43
the system. Checklist for how to create your
19:45
sops. Checklist for quality control.
19:48
Checklist for when a new lead signs up checklist or the bees
19:54
knees of of systems because they're clear, they're concise
19:57
and they're specific and. Every person can follow a
20:02
checklist. It's, it's just the, the
20:04
simplest way to do things. So yes, you'll have your SOP and
20:08
your process and your software and all these things, but there
20:12
should be just a really nice concise checklist for all of the
20:16
major components of your systems.
20:19
And checklist work in a fashion that you know what it takes to
20:23
complete it. And then you can also tie it to
20:25
like A to do list for every project or every new lead to
20:28
ensure that steps are not forgotten.
21:48
Our component #5 is how do we actually get your team to follow
21:52
the process and utilize the process.
21:55
So this component will make your team improve the systems, not
22:00
just you improving the systems. You see a lot of systems will
22:10
just say, you know, do step one, do Step 2, do Step 3 and then
22:15
hopefully relying on discipline your, your employees actually
22:19
follow it. But that often fails because
22:23
people forget they resist following systems or they try to
22:27
do little shortcuts that's gonna save them time and or they have
22:30
their own ideas of how they think should things should get
22:33
done. So they'll give you some, you
22:34
know, face tracks as far as, Yep, sounds good, I know what
22:37
I'm doing. And then they'll go off and do
22:40
their own thing. So you really need to set up a
22:42
proper culture and a reward system so that employees have
22:45
buy in and that they are motivated to intrinsically
22:49
follow systems and steps and do things the right way that you
22:53
want. Now, the first way to do this is
23:07
to get their buy in. So when you're creating a new
23:09
system, if anybody's going to be operating it, get their input.
23:13
That way they know it's not just you or somebody else in the
23:16
company handing them a system. And here go follow this, but ask
23:20
for their import input, ask for their feedback, ask if they
23:23
understand it and always explain the reason why you want it done
23:27
this way and what it's going to give them.
23:30
So you know, rewards of, you know, the Better Business
23:34
culture, better efficiencies across the business, providing
23:38
more, you know, bonuses or or opportunities for growth within
23:41
inside the company and could be more team outings.
23:47
You could also gamify it with levels.
23:50
So I always like to have certain training levels when you have
23:54
someone new coming into the business of like in the first
23:57
three months, this is like where we expect you to be trained and
24:00
how efficient we want you to be or whatever, you know, six
24:03
months, one year, 2 years, so they can see where when they get
24:07
started and employment, hey, if I follow these systems, I do a
24:09
good job. I stay with the company.
24:11
There is a path and a plan for growth, for improvement, for
24:15
learning. Money is a great motivator, but
24:20
ultimately people are just gonna want to find shortcuts and kind
24:24
of game the system, if you will, if it, if all they're going to
24:28
get out of it is money, right? Money is important, obviously,
24:31
but there's much, much more motivating when employees
24:35
actually want to improve themselves.
24:37
And when you start to build people and build people through
24:40
training and having good systems in your business, then that's
24:43
kind of like where the magic starts to happen.
24:50
You're also going to need a little bit of patience with
24:54
people and realize that when people missteps that there
24:57
should be some checks and balances, right?
24:59
And you need to be able to communicate this with your team
25:03
of managers and other top kind of level employees of the
25:07
business that people are going to make mistakes.
25:10
They're not going to follow the procedures and operations, you
25:13
know perfectly, but that when you do see something out of
25:16
place that enable them to have a way to communicate that to the
25:21
employee of you know what, you didn't quite do this or you
25:24
forgot this or this wasn't done properly and you don't want it
25:27
to be like in a nagging way or like got you or your failure
25:32
because you do everything wrong. You just simply like, hey, this
25:35
is feedback. I just noticed you missed this.
25:37
When you missed that, then I can't send this out properly or
25:40
you know, it costs us money or or whatever, right?
25:43
You don't have to be a complete ass about it, but just like
25:47
always have that culture of like everyone's providing feedback.
25:50
We're trying to do our best. And if, if it's tiny, then not a
25:55
big deal. But if you let things slide and
25:58
let things go too long, you slowly things dissipate and you
26:02
have everybody running their own show, everybody doing their own
26:04
thing. And there's, there's no like
26:07
adherence to the the structure of your business.
26:16
Another great way to ensure that employees are rewarded for
26:23
learning and progressing in the company is slowly give them more
26:27
decision and more autonomy. And you can let employees know
26:32
that, hey, once you've learned this and you can do this at a
26:36
high level. The reason we have these
26:38
operating procedures is specifically because you know,
26:40
this is what we found to work the best.
26:42
This is so everyone's on the same page.
26:44
Once I feel like you've got this, I'm going to not need to
26:47
check up on you as much. And that also enables me to
26:50
start adding more responsibilities and have you
26:55
make more decisions on your own and be more autonomous.
26:59
Right now I'm, you know, I check up on you pretty often and I'm,
27:02
and I'm like constantly involved, but the, the road map
27:05
is that, you know, in three months or six months or a year,
27:08
whatever it may be for the position that you should pretty
27:10
much be running with this. I shouldn't have to really check
27:14
in except for, you know, just seeing where things are at and
27:18
you should be able to take the ball and run with it.
27:20
So letting them know that they're going to get to a point
27:23
in their job where they're not going to have necessarily a lot
27:26
of oversight. They always have support that
27:28
they need, but there's not going to be this constant oversight
27:30
that's needed. Can give the motivation enough
27:33
because most people do not want to feel like, you know, they're
27:36
in jail or have to serve their time when they show up to work
27:39
right. They wanna feel like the part of
27:41
the team and they can take their own, have their own authority to
27:47
do their job properly. So tell them and they'll be
27:50
rewarded with it. Another great way to reward or
28:34
improve the motivation of employees is to have those, you
28:39
know that data that we mentioned earlier.
28:42
So if you can show that, hey guys, great job we have.
28:52
Another great way you can reward employees or provide more
28:56
motivation is to show them the actual data of what's happening
28:59
with the processes that you're implementing.
29:01
So if you can show your production team like, hey guys,
29:05
great job. These last two projects we've
29:07
been on schedule or we decreased our schedule overage by 10% or
29:13
5% or whatever it may be. Show them, tell them, celebrate
29:16
it, bring them out. You know, pizzas, like the the
29:20
comical thing, like yeah, team, team pizza, who doesn't like
29:24
pizza? But still, you know, take them
29:25
out, show them a little appreciation, get them coffee
29:28
and Donuts at work or whatever, right?
29:30
Doesn't have to be a big thing, but show some appreciation tied
29:33
to specific achievable numbers. Or when employees, like I
29:36
mentioned, if they've completed their three month training or
29:39
six month training, have some sort of little reward, Show them
29:42
how they have contributed to the improvement of, you know, the
29:46
business or the metrics or what have you.