tape measures as a graph

The Importance of Back-Costing

Financial Management, Owner, Profitability, The numbers

Do you know what the actual gross margin you make from a job as soon as its finished, or for bigger jobs how you are tracking at each stage? Or are you so busy you just rush to the next job and hope the previous job delivers enough profit to stay in business?

Tracking how a job performs from a profit perspective compared to a quote or estimate is called back-costing, or job-costing as Americans call it, and is vital to maintaining a profitable company and to help you achieve your goals.

Man with pen writing a business plan

How to Manage Variations

Financial Management, Owner, Profitability, The numbers

As the old saying goes, “The only certainties in life are death and taxes”. In the building industry that should read, “The only certainties in life are death and taxes AND VARIATIONS”.

There is seldom a project completed without some change to the original plan or scope and this can lead to work being done that is not well documented or billed to the client on a timely basis. Variations are therefor a major potential cause of profit leak from a business, and also disputes with a client. It is essential that you, your client and your build team clearly understand what variations are and you have a reliable system to capture and process them through the job management and billing areas of your business.

Leaky bucket

Are profits leaking out of your business bucket?

Financial Management, Owner, The numbers

It’s profit reporting season. Do you have your latest financial accounts back from your accountant yet? Does the Net Profit seem lower than you expected? Maybe the profit is leaking out somewhere.

Your business can be viewed as a kind of bucket.  In the top you pour revenue, which comes from your marketing, sales and production efforts, then deduct the direct and indirect costs of producing that revenue.  Unfortunately everyone’s bucket leaks and so the amount left over (as net profit) is often a lot less than it could be and what is required to balance the effort and risk that you assume as the business owner.  It leaks out through holes such as: too many overheads, insufficient margin, working with the wrong clients, burning hours on fixed price contracts and a number of other ways.

proceed with caution sign

Building Inflation Monster Rising

Financial Management, Owner

Building materials are up in price around 34% compared to a year ago and more increases are on the way. We are suffering a perfect storm of high demand, due to the boom in building, and tighter supply lines due to Covid, shipping bottlenecks and now the effects of a war in Europe.

While most, if not all of this is beyond your control, how you react and deal with it is something you can take action of. Two key actions should be at the top of your list….

Coaching word map

5 Mistakes of General Contractors

Owner, Your team

As part of my business coaching for builders, I am in the fortunate position of seeing what successful builders do versus those who have some improvements to make. One thing I think we can all agree on, running a business in the construction space is not easy. The work is physically hard, it’s often quite complex, it often comes with emotionally charged clients and margins are often too slim. There is limited space to make errors, either technical or in running your business. 

I can’t help you become a better builder, from a technical perspective, but I can help you reduce errors in the running of your business. So what are the main errors I see by builders finding and running their own jobs, ie the general contractor? There are many, but here is my top 5 to work on first…

The Leader in You

5 Elements of Effective Leadership

Owner, Your team

Becoming a leader isn’t easy because it takes a conscious commitment and consistent effort to develop one’s leadership skills. It is focusing on doing the right thing first, rather than focusing on doing things right. That’s what a good manager does. But on the positive side, anyone who is willing to make the effort can become a good leader. And because good leadership is critical to business success, your efforts to improve your leadership skills will be amply rewarded. By working on these five keys of leadership, you can become the leader your small business needs.

The Great Resignation

Owner, Your team

One of the main frustrations of business owners at this time is the difficulty in finding qualified staff to grow their teams. A strong construction market, coupled with a close to zero immigration flow, is resulting in the demand for workers increasing while at the same time the supply is shrinking.

Now, according to a recent report in the NZ Herald, employers are also facing a growing trend in team members actively looking at quitting their current jobs and finding something new. It is a phenomenon that has been noted overseas over the past 12-18 months and it looks like it is coming here. In the US it is being referred to as The Great Resignation. The widespread trend of a significant number of workers leaving their jobs during the pandemic. Many are leaving the cities and looking for jobs in smaller centres, or looking for less stressful roles. Some are using the opportunity to better themselves and go for a higher paying position. 

What should you do about it?

above or below the line

Operate Above The Line

Owner, Your team

Is your team (and you) operating above the line?

I was meeting a builder client of mine today and we got on to the topic of incentives versus fines for staff performance. Also how some team members seemed to constantly come up short and be quick with an excuse. My client said he regularly talks to other builders and they often compare stories of what excuses their staff come up with as to why they failed at a task, forgot to do something or generally screwed up. While they laugh about the excuses, there is a river of frustration running below. These team members are choosing to be “below the line”.
What does that mean and what can you do about it?

Personal Resilience and How to Improve It

Owner

In challenging times it can be tough running a business. While people are far more aware of the mental health aspects of business ownership, you can’t hide from the tough decisions needed also. This video post gives you a simple process to follow that will help you improve your personal resilience to stressful situations, be they in business or life generally.
It was shot in mid 2020, but still is relevant to today. And the future for that matter.

success triangle

The Success Triange

Owner, Planning

While the occasional person is “lucky” and achieves success by accident, the vast majority of successful people get there through focused hard work. Conversely, not everyone who works hard becomes successful. Hard work by itself is not enough. It needs to be focused in the right direction and aligned with a long term goal in mind. How do you get the blend right and maximise the chances of success. I have a model you can use. Read on….