Last week we discussed creating systems.
Most people resist creating systems because it feels like more work. Effective systems actually make your work easier. When you are overworked, overbooked, and stressed, the best thing you can do for yourself is to create effective systems.
Effective systems are the lifeblood of any business. They enable you to develop products, market, sell, and ultimately deliver the value you want to provide to your clients. They also enable you to replace yourself by cataloging what happens, how it happens, when it happens, and who does what.
Unfortunately, most businesses are driven by what the owner wants, not what the business needs.
According to Michael Gerber, author of E-myth, there are different stages of business development:
In the technician phase, the business does not grow because the owner does not want it to grow. Technicians want a workplace where they can do what they want, when they want, free from the constraints of working for a boss.
But you are expected to do both the work you are good at and the work you are not so good at. “During Infancy, you’re a Master Juggler, keeping all the balls in the air.” At this stage, the owner and the business are one and the same. If you remove the owner, the business stands still.
That’s the point where people often throw in the towel and go back to work for someone else
You figure out how to move to adolescence.
Adolescence begins when you decide to get help from another technician. You need someone with experience, experience in construction. That’s where most contractors fail. You need someone who can do the very thing you hate the most (hello Bookkeeper and/or Project Manager!).
A contractor with trade experience should look for someone who has a strong background in project management.
Someone with office experience should look for a strong foreman who can manage field operations and run the field.
I would add that you need a bookkeeper. Someone who just does bookkeeping. Preferably someone with years of experience working with contractors who knows how to charge project expenses to a project, but that’s a topic for another day.
When you start hiring different technicians who are better than you at different things, you are likely to hit a limit that Gerber calls the owner’s “comfort zone,” defined by how many technicians the owner can supervise before losing control.
He breaks it down like this:
When launching a business with an Entrepreneurial Perspective (as Gerber calls it), you must still go through Infancy and Adolescence, but the perspective is different.
Well, you start thinking about the entrepreneurial business model I discussed last week. Instead of asking “What work needs to get done?” an entrepreneur asks “How should the business operate to get the work done effectively and efficiently?” (Does anyone know systems?).
What does the entrepreneur see that the technician does not? It is a business model that meets the perceived needs of a specific client. It is less about the technical work and more about the systems and processes that allow the work to get done.
If you outline the nine building blocks for a successful business model and show the systems required to maintain each one, you will see what technicians you need for each system. I recommend that even the smallest contractor start here.
For a business model to work, it must be balanced and comprehensive so that the Entrepreneur, The Manager and the Technician all find their natural place within it. Once you have determined who belongs where, you can start hiring the appropriate people as soon as the appropriate resources are available. You do not need to rush into anything. You may find that you are hiring people for one task who would be better off in another position. The faster you find the right people for the right seats on the bus, the faster your company will grow.
Again, I highly recommend writing this down or charting it so you can track your progress, make changes, and see where you may have made incorrect assumptions. This reflection will help you make better decisions later.
If you’d like to talk to us about how we can help you build a scalable contracting business, schedule a meeting with us!