My business has increased to the point where I need to move out of my home office and storage units and move into a real brick and mortar location. 2400 s.f. shop and office. We do home repair and remodeling. I will have to hire an office manager and two new home repair specialists to manage the increased volume for a total staff of six, not including myself. I wear too many hats and I can’t keep up with the production, design, estimating, billing, etc… It is a leap into the unknown. I know delegation and having the right people in the right places is key, but does anyone have any advice on controlled growth.
Constructing in metric…
every inch of the way.
Replies
You don't "have" to do anything; no one is forcing you to grow................
Grow to a goal. What is it exactly that you are trying to achieve? Define it very clearly and with detail. Go from there.
Growth for the sake of growth is rarely wise.
And I hope you are buying that building, not renting it.
Eric
[email protected]
Eric, Thanks for the response. You make some very good points. For further clarification and discussion, I do have a goal. I hope to franchise my business model and have locations in all 50 states. Seriously. I have a unique, extremely low cost, marketing concept that has allowed me to grow my business exponentially even in the economic state we are in. I am renting the building, but the back 850 square feet are being converted into a practice room for bands that I will rent out by the day. It has HVAC, a garage door, and is in a non-residential location on the main drag in town. By renting the space just half of the days in the month, I will actually make money. Band practice space here is hard to find.I have hired a professional company to do my logo, ad copy, branding, market position, and trademarking. I am not doing this fly-by-night. Everything we do is first class and professional. My weak point is the office and systems, and this is where it will make or break me. I have hired a production manager who is better than I am. He will help alot. The office manager position I think is key to the success or failure of my endeavor. I am now using a shoebox, an abacus, and lots of legal pads for my book keeping system. This has to change and fast.
Constructing in metric...
every inch of the way.
develop job descriptions for each position so those filling it have a clear understanding of whats expected of them
every morning you reread these descriptions to help remind you of what they're supposed to do and help prevent you from micromanaging them
establish a check & balance system to regularly keep up with progress, quality, & oversight (esp of those w/access to accounts). this can be done through regular follow-ups, weekly meetings ect. If they have access to accounts, check your banks accts daily.
set a sched. for each day for you to help ensure you meet your bus. plans
Very good points![email protected]
don't be scared of creating and managing a back-log, and if you're going to be running 6 guys you'll want/need one.
I try to keep at least 2 months work in the pipe and I'm comfortable telling people they have to wait 8-10 weeks for us to start their mid-major projects. Usually there are speacial order materials that will take almost that long to get anyway.
Smaller repairs usually need to be taken care of much quicker and provide an oppurtunity to create a future client for a larger project.
Currently we try to keep 3 lead carpenters going with usually 4-5 projects going at one point in various stages. I have another guy I can bounce between projects and he is capable of doing smaller projects and repairs on his own. We also have 1 1/2 painters on staff. One really good painter and the other is a decent painter and carpenters helper.
Flexibility is the key and do not start more projects at once then you can devote someone to at all times.
If people are wanting YOU to do the work they will wait, don't allow them to push you into something you can't manage well out of fear of losing the job. If someone absolutely has to have something done NOW, and I can't do it, we just tell them that.
It's easy to underestimate the cost of the shop.
I watched a guy start a roofing business and thrive. He opened (rented) a storefront and dived.
I watched a guy build a thriving window replacement business. He opened (bought) a storefront and it killed his business.
I knew another remodeling contractor who did high end remodels that opened a shop. A year later he closed it and explained that it was just a drain on his bottom line.
Most home repair and remodeling operations do not have a need for high visibility and space. The work is being done in their homes...not in a factory. You situation might be unique and you're mileage may vary.
Don't underestimate the real cost of having a shop. Put a number to EVERYTING associated with it's cost. Then think "Did you build your business with the money needed to cover these expenses, or did you build your business with pricing that reflected the lowered overhead factor?"
Raise your prices 10% to cover the shop and expenses and see what it does to your closing ratios. See if you're backlog remains, increase or stays stagnant. If you were anticipating the opening of a brick and mortar shop, you're pricing should have included that in every proposal for the last year.
Bob's next test date: 12/10/07
Everyone else is dying on the vine and you're complaining about growth?!
First off congrats on the growth. I know its hard to find people that will work to your standard but you have to.
As far as the building goes, may I suggest that if you need 2400 sqft buy a 5000 sqf building and rent out half. Thia will absorb alot of the cost of the building plus get you on your way to earning some cashflow so you can eventually sit back and just let the money roll in.
"Everyone else is dying on the vine"
Yup. In fact, I think I may already be dead on the vine! View Image “Good work costs much more than poor imitation or factory product†– Charles GreeneCaliforniaRemodelingContractor.com
I do have a good job coming up in June. I guess that means my vine has a little bit left.
i tried to make this leap a few times and failed.
Why??? because its my biz and i gave 100 percent, Hired people that gave30 percent.
All i got was 10 times the headaches, I know i have no one to blame but myself, maybe i was just not smart enough.
Instead of me going out making money i ran around putting out fires.
I dont have the figures but i think it takes 3 to 6 men working to make up for you not working.
I dont think im the smartest carpenter but if i go out on a job i think about what tools and material i might need and cover most of it.
I hired guys that went out, stopped every few hours because they "forgot" something or other..
It all ate me alive or dead.
Somehow everyone knew there hours to the second.
It's always a curiosity to me that those type of employees think everything in life is important but the job comes last! Bob's next test date: 12/10/07
HH,
Congrats to you! Seriously, I think thats awesome as my business went the other way. First moved out of the office last year than a year later (just this past month) had to shut down due to lack of work. We kind of did the same thing (new construction, remodeling, etc)
My only suggestion would be to "Grow Slow" as its easier to move slow and feel overworked than to be sitting on top of a building loan or lease and a staff and maybe some high dollar equipment and then sweating when the work might slow down and you are waiting for the phone to ring.
And I might consider using a "billing service" or other companies to do the work you can't get to as they are a business that specializes in that while the hourly employee you hire for say $8-10 an hour is just that, an employee with no real interest in more than just getting a paycheck.
Mike
I second the billing service., Also ask your accountant & attorney ( if you don't have theese get thee arse in gear & aquire them) for reffreralls on help to set up the accounting & billing systems. you want it to be something the accountant is able to decipher & something the attorney is able to use to your favor in a legal fight (it will happen).
you might consider hiring a free lance book keeper to handle that part untill you can find a full time book keeperand or office manager. I hired a personal assitant that I use as i need. My paper work is updated at least once a week and all the little things like getting bills ready to pay, picking up stuff at the printer etc is no longer eating into my day and night. .
The current issue of Remodeling magazine has the Top 50 remodeling firms featured in it, from general remodeling to specialty remodeling. They all have anywhere from two or more office persons and three or more field personell and do $750,000 yearly volume up to more than $50 million. There is a brief synopsis of each firm with a picture of their staff in the magazine and I would say it is very pertinent to your situation. You would probably learn a lot just flipping through it. Some of the stories of how they got to where they are now are illuminating. Some guys wanted to scale down and they did, and some wanted to spend more time with their families and yet still be successful and they managed to do that. Get the issue and read it! Some of the guys started out small and before they knew it they were doing millions in volume a year in two or three short years. Crazy stuff.
Handyman, painter, wood floor refinisher, property maintenance in Tulsa, OK
Construction is one business that can make a man forget his money bucket has huge holes in it........and how easy it is to lose the new pickup to a midnight repossesser.
Every builder I know is flopping along the shoreline like a fish out of water.
The times are NOT in your favor.......it's up to you to decide if this is good business or just an ego trip.......sure there are guys at the top......but the waterline stinks with dead fishes.
Yikes! What stinky analogy you've painted. (I agree) Bob's next test date: 12/10/07
I don't have any pat answers: I do know that making this sort of transition is where a lot of very successful folks stumble.
Sure, some manage to put it off, keeping tight control even after the move, and the firm grows to dozens of employees. Yet, at some point:
You have to let go.
At least a little. Limit yourself to steering the ship of commerce - and let the crew go about their tasks. They don't work for 'you' anymore; you, like they, work for the company.
The end result of this is that you will have a firm you can sell, a firm that will continue after you die, a place that's not limited to just you.
Many small business fail this test; when retirement comes, they have little or no value, as the 'business' also essentially ceases to exist when they step down. They failed to create an on-going concern.
You're making the right move, though. By my calculations, as soon as a firm has three guys working, they need a fourth at the office, answering the phone, receiving parts, etc. They also need a fifth doing nothing but preparing bids, meeting inspectors, pulling permits, meeting customers, etc. This leads to #6, just for the bookkeeping. Next thing you know, you need two more field guys to pay for the office help.
Simple ratio: three field guys for each office person.
Good luck!
Will this rapid growth require you to borrow money?
GOOD QUESTION JIM!!!
If this move does require a loan and its not for buying the building, I would tread cautiously.
i'm going to throw my 2cents in on buying a building. now i come at this as a landlord who has some commercial property. i see business's that should go well within a year or two fold,and there are a million reasons.some the people could of fixed some they had no control over.
i would suggest leasing a building for a year with maybe 2-1 year options. this lets you put all your capitol into making the business work,no down payments,upkeep etc. with the options your only at risk for one year at the most. if you buy a building and the next day need to sell it you will at the minimum lose 6-8% real estate fees.
now once your feet are firmly planted you can decide just what you need in space and location requirements and make smart buy.the bottom line on renting is the most you are wasting is the principal portion of the payment. larry
if a man speaks in the forest,and there's not a woman to hear him,is he still wrong?
I agree.He did state that he could create a cashflow by renting out some space. I'd want to have the tenants signed before I bought though. Things seem easy and predictable on paper but once the docs are signed...it's not so easy. Bob's next test date: 12/10/07
i know many businesses that operate out of storage units... and you stated you had a few.... around here if you have 4-5 you might as well have leased a building... commercial real estate feeds me... it has allowed me to do what i do...
I have been in alot of businesses... been around business all my life so i have a feel for that which i speak...
I have many tenants and i offer good to great rental rates... most of my tenants couldn't come close to owning a building for what they pay me.... my office tenants could hardly pay utilities for what i charge for the space with utilities and janitor service... so owning is NOT always the way to go...
keep this in mind...
A. any money you don't spend is money you don't have to make...
B. know your books... do not get lazy and believe what the computer and the papers pushed in front of you say...
C. read every bank statement
D. it takes a whole lot of production to feed even one who doesn't produce income
business would be great if all those that worked for you were bees and brought home the free honey.... but when you start gettting bees that count the honey, map where the honey is, keep track of which bee brought in the most honey. insure'n heating and cooling and protecting the honey... then the honey just ain't so free...
I had a good friend in the car business... always was offer'n to let me have this or that car at "cost" i hung around enough to know that he used this same line with many... so one day i just asked... "dude how do you make anything selling all these cars at cost?" with as honest of a face as i've ever seen... he replied "simple i buy em below cost"
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