How do you manage Performance? Months 5 - 9
“A purpose or intended course of action”
Okay, to date, we have established your position, now it’s time to put the practices in place that will best enhance Performance. I think this is the number one problem for most owners. They want to do the right things, but don’t understand what it takes to manage performance or the value in it. Most people I deal with are so busy doing work or putting out fires, they don’t have enough time to properly manage performance. There in lies the problem, if your performance is being driven by demand (meaning everybody else is controlling your actions instead of you) that is reactionary and there is no way you can control profits. You must be proactive in your approach so you can control your own destiny. “Failing to Plan means Planning to Fail.”
In construction, it is said you must manage two things, Risk (Money) and Relationships (Customers and Employees). If this is true, am I not correct in saying that managing Money + Customers + Employees = Performance? And what is performance equal to? Profits. That is right, Profits are the only true measure needed to determine how well your business is or is not performing. Then, the bottom line, to me, is if you are looking to improve your profitability, it must start with your ability to manage Money, Customers, and Employees.
So, Section Two is about developing the correct practices to manage the company’s money, customer expectations, and employee productivity.
Company Performance (Understanding the money side of business and what it is or isn’t doing for you!)
Profit Planning is every small business owner’s nightmare. I got into this industry because of my skills in building something. No one told me that I’d have to be an expert in finances. Well, you don’t have to as long as you understand some basic practices and how to use them. We’ll get into the practices of Accrual vs. Cash, Income Statements (A measure of performance over a specific period of time), and Balance Sheets (The equity position of your business at a specific time). The beginning to building better profits lies in your ability to interpret and understand what the numbers are telling you. I will take you through this in a common “cents” way that will be specific to the construction industry with examples to apply to your business.
Month Five will be:
Cash Flow
- I will teach you the basics to cash flow management and what it means to your company
- I will provide you with a cash flow tool to use
Income Statement (The measurement of performance over a specific period of time)
- I will teach you the basics to an Income Statement and how to interpret your company’s performance through it.
- I will teach you the basics of accrual accounting and why you must use it to properly determine how well your company is performing
- I will provide samples to assist you in setting your format up correctly
Balance Sheet (The equity position of your company at a specific time)
- I will teach you the basics of a Balance Sheet and how to interpret your financial position.
- I will provide some examples to assist you in setting your format up correctly
Customer Performance (Understanding the things that will assure you of exceeding their expectations!)
Do you seem to have issues with your customers? No matter what you did or how hard you tried, they expected something different. This is because you haven’t figured out how to properly manage the Service, Quality, and Price you offer through your customer processes.
As you recognized above, in your position, all three of these have a different value to your business depending on what you want to be and offer. We also agreed that you can’t be all things to all people, so the key here is matching what you sell with what the customer expects. For example, if you have a remodeling business and want to be known as the best service provider, who do you think should be the first to call a prospective customer back? Who should be helping them the most through the design process? Who should get the proposal back to them first? Who should always be on the site when promised and, if not, how did you communicate? Now, if that same business wants to be known as the best quality provider, who do you think should have the most impressive proposals? Who do you think spends more time inspecting their work? And who do you think should have the best warrantee?
The quickest path to success in construction is as simple as doing what you say you’re going to do when you say you’re going to do it. After all, isn’t that what the customer expects you to do? For Month Six, we will determine how you should react with your customer.
Service, Quality, Price
- I will help you determine the best level of service, quality, and price to provide for your business
- I will show you how to integrate them into your Prospecting, Estimating, and Contract processes to get the desired effects
- I will provide tools to work with
Employee Performance (Understanding how to efficiently get work done)
Productivity, in construction, is all about “your ability to produce the most billable work while controlling the costs.” It is estimated that the average construction business loses at least 35% in productivity due to poor scheduling, project management, and job site productivity. We’ll identify the 4 or 5 main things you must control in order to improve productivity and provide practical tools to get you on the right path.
We will be spending Months Seven, Eight, and Nine on this topic. Many struggle here because they can’t figure out how best to coordinate everything in a manner that makes sense, depending on what size their business currently is. Too much time and money here and you’re throwing money away on the front side but, yet, not enough and you’re throwing it away on the back side. This is about doing what is necessary today to get the desired results but, yet, setting a foundation to build on as your business grows. Because I know many don’t have a lot of staffing yet, we will try to do this through the KISS method (Keep it Simple, Stupid)
Scheduling, Labor, Materials, Equipment, and Subcontractors
- I will help you determine the correct processes to manage each for your business
- I will show you how to coordinate workload through a scheduling tool
- I will show you how to properly manage projects a month at a glance, a week in advance, and a day not to chance.
- I will show you how to get the most work done today on that job site.
- I will provide tools to get you started on the right path
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