Successful Contractors Recognize Systems

Contracting can be a good business or a bad business!  The thing that separates a good business from a bad business is whether you run the business or it runs you.  I think we all agree that you need to run the business and to do this you need to recognize that the business is composed of a number of systems.

The systems that are involved include:

                1.  Project Procurement systems.

                2.  Marketing systems.

                3.  Take-off systems.

                4.  Bidding systems.

                5.  Office managerial systems.

                6.   Record keeping systems.

                7.   Billing Systems.

                8.  Collecting systems.

                9.  Etc …..

These are just a few of the systems that are involved in running a successful contracting company.  If you really review the processes involved in running your business you can see that there are a lot more that needs to be added to my list.

I believe in breaking down each process into a system and you need to fine line how you approach each task.  My reason for breaking each process into a different system is because once you identify each process into a system then you can develop an acceptable way that you want to have each process performed.

After you develop each system then you can teach every new employee how you expect that particular event to be accomplished.

This is basically the same procedure that McDonalds uses to run their different franchises.  They developed a system for running the business and use the systems to cook hamburgers, French fries and every other item on their menu.  Every item has a system!

I will explain my line of thinking in upcoming articles.

SUCCESSFUL BIDDING TIP

Know what you are bidding when you bid on a project.  You should only bid on what the project specifications and the scope of work calls out to be completed during the construction process.  Do not read more into the project even though you know that you have a better approach to completing the project at a cheaper cost.

Read the specifications thoroughly and make sure you and your bidding team understand what the architect and engineers are trying to accomplish with the project.  If there are any questions they should be addressed with a written request for clarification.  Your question needs to be made public so your competition is aware of the potential issue that can affect the cost.

Plan to provide what the project plans and specifications specify; no more and no less!

I know of several projects that were lost because subcontractors inserted a cost to do the job right because they thought that the architect and engineer had incorrectly specified the desired equipment.  Any corrections or changes should be addressed by a change order if the issue is approached after the project award.

I would like to share a true story from one of my contracting friends.     

Once upon a time there was a large project in Northern Arizona that was going to be built after a competitive bidding process.  The project consisted of building a new daycare center and the bid documents package was huge with many pages of specifications and rolls of blue prints.  There was a mandatory pre-bid meeting which meant that if you did not have a representative at the meeting you would not be permitted to submit a bid proposal.

All of the competing contractors had a representative at the meeting and since my friend could not attend, he sent one of his employees to attend as his representative.

The project had a large kitchen that was meant to be a part of the building and the intent of the Architect and owner was to have the equipment installed.  They even included a set of blue prints that documented the location of the different pieces of equipment.

During the pre-bid meeting the Architect told all the attending contractors to make sure they had the kitchen equipment included in their bid proposal.

When my friend received the bid documents and read the project specifications and he reviewed the project blue prints.  He remarked that they were indeed a nice set of blue prints and bid specifications.  He noticed something during his review that he did not share with anybody else.

On the day of the bid my friend was the low bidder by approximately thirty thousand dollars.  Everybody assumed that he had not included all the necessary items for a complete bid and upon further investigation it was discovered he had not included the kitchen equipment.  The architect and owner’s immediate response was to disqualify my friend’s bid proposal, however, he responded that it was their mistake and they would have to accept his bid proposal or the issue would have to be resolved in court.

Reviewing the bid documents during a meeting about the situation my friend pointed out that there was no specification section for the kitchen equipment.  My friend told them that if there was no documentation showing what brand was needed to be installed and he assumed that they did not want the contractor to provide the kitchen equipment.  In addition since there was a specific set of blue prints for the equipment that was drawn by a kitchen equipment company and it appeared that there would be a separate contract to the kitchen equipment company.  My friend had submitted his proposal exactly as documented in the bid documents!

After the owner’s attorney review and the owner’s board of directors; it was decided that my friend was the only one that read the bid documents correctly.  He and his company was awarded the contract.

By reading the bid documents and analyzing the information; my friend found an edge to the project that nobody else saw.  The architect and project officer had not reviewed the bid documents thoroughly and, while their intent was to include the kitchen equipment, the bid documents did not reflect their intent.  

I suggest that if you are serious about being successful; you need to cultivate the art of reading.  The truly successful people are always searching for new useful information and most good information is found in written documents.  You rarely find useful informative material on television.

OUR SEARCH FOR MEANING

We all search for meaning!    Where can we find the true trail that can lead us to where we can provide meaning to ourselves and our loved ones?

We must look into ourselves!  What are our strengths?   What is our weakness?  How can we provide meaning into our lives?

Each of us has learned during our journeys; no matter how long or how short; that there are lessons that have been learned.    Why not capitalize on our lessons and provide others what we have learned during our journey.

Each of us has some knowledge that we have learned that can help others!

Our knowledge must not die within us!  Share your triumphs, your failures and what you have learned so others can gain from your trek!

We are one!  We gather strength and knowledge with our journey!

Join with me and share!

We can overcome and become among the great if we unite and share!

Best Free Construction Business Software Review: Top Building Scheduling Estimating Accounting Programs Comparison

I ran across some materials that I thought would be helpful to my readers.  Since it is free: check it out and see if it will help you.  If not; pass it by!

Anything I can do to help my readers I will do!

Best Free Construction Business Software Review: Top Building Scheduling Estimating Accounting Programs Comparison

Do Not Follow the Herd!

Indian Contractors and Indian business owners should look to lessons that should have been learned in the past.

Years ago; when the great herds of buffalo were the main substance of the tribal food supply, hunting parities would go out and hunt the buffalo.  In many instances the tribal hunting parties would rely on the buffalo’s natural instinct to follow the herd.  As a result many hunting parties would stampede the herds over canyon walls and then take their time to scavenger the remains.

There are several lessons that can be learned but the lesson that was taught to me was that it is not always wise to follow the herd!

During our present economic times we see most companies pulling back and lamenting about how bad times are.

The thing that you need to remember is that the financial times run in cycles.  Yes!  Times are bad now; however, history shows that these times will pass.

This is the time that you need to prepare for the coming recovery!

You need to learn everything you can and get your contracting and financial house in order!  Good times are coming!

The “Great White Father” (government) is confused but it is apparent that they will soon be pumping money into the private sector.  They have already been pumping money into the government sector with little and embarrassing success.  Soon they will be redirecting their focus about where the money needs to be spent!

Look at the news headlines and you can see that there is a growing need to rehabilitate the existing infrastructure.  There is a growing need that will need to be filled.

Will you be ready??  You need to take the necessary steps to be prepared for when the call comes for help!

Remember!  Success comes when the prepared meets the opportunities!!

Guest Writer's Article - What You Need to Start a Construction Business

I have obtained an article from a friend over at Ezinearticles.com that has some valuable information so I am providing this for my readers.  Hope you enjoy and profit from it.

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What You Need to Start a Construction Business

By Nelson Nigel

To start a construction business, first you have to learn the basics. There may be times when you feel like giving up, but given the construction project management business requirements' know-how, you will surely make it as a successful entrepreneur and manager.

What's in a name?

First of all, you will need to have a name that concisely describes your company's services. You may strongly take into consideration a company that goes as a Subchapter S Corp. (Sub S) or a Limited Liability Company (LLC). As you craft a legally recognized company name, you will then be able to shield your personal assets shall there be claims or lawsuits versus the company.

Aside from this, you also have an advantage when it comes to taxes as you give your company a name which uses LLC or Sub S. Since the loss or profit out of the business can be passed to you as well as to the other owners (if there are), you can file it as a normal income. And now, because a Sub S or LLC does not pay any federal or state income tax, you do not receive double taxation.

Seek help from a CPA

To aid you in the organization paperwork, a certified public accountant (CPA) can greatly be of help to your company/business. This professional indeed serves as a vital construction project management business requirement. Now that you are still starting, you will definitely need all the help you can get. And even if you yourself are a CPA by profession, it pays to seek the help of another CPA to ease your burden of managing such heavy paperworks.

Your accountant can likewise tell you the other important know-how's in organizing your company as a Sub S or an LLC. In addition to this, the CPA can help you out in applying for the following:

- Employer Identification Number (EIN)
- DUNS number, used for business credit reporting
- Doing Business As (DBA) registration

Written agreements

Nevertheless, if you have shareholders or partners in your business, it does well if you have a written agreement. Through such agreement, you will then be able to specify the responsibilities, duties, rights and obligations of every member/shareholder. You may locate some examples of these agreements from the internet.

Learn more about starting a construction business from the experts! Read "Construction Secrets Exposed" and save on hiring consultants to fill in the info you need. Article Source: http://EzineArticles.com/?expert=Nelson_Nigel

Check out the Contractor Best Practices Newsletter

 I have found an article that I think my readers would like to review.  There is a lot of information contained in this article so take a look; hopefully, this will help you.

I plan to cover a lot of these subjects down the road.  If there are any subjects that you want me to clarify or go into deeper please let me know!

wr

 

~~ Contractor Best Practices Newsletter ~~

by Ron Roberts
The Contractor's Business Coach

http://www.FilthyRichContractor.com

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Volume 2 - issue 12

March 21, 2007

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Tip of the Week:

Pay yourself the minimum salary that the IRS will consider fair and reasonable for your business.
All other income should be paid out as a distribution/dividend. That minimizes the 15% FICA you pay on your personal salary.
By the way, not paying yourself any salary is a red flag to the IRS.
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Today's Article:

How Contractors Get Rich
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Management gurus (can you say Michael Gerber) frequently implore business owners to "systematize your business if you seek wealth and freedom."
What we "experts" are trying to tell you is that you need to know why and how you do the things you do in your business...then teach employees how to do those
things.
Few, if any, consultants give you the laundry list of systems you need to get in place and manned by your employees. Why don't they share the exact list?
Because it is HARD work to systematize every part of your business and until you do, your company is unlikely to make you rich. Getting rich is hard.
Today, I am going to share the list of systems we "experts" refer to when we tell you to systematize your business. I hope you appreciate the honesty.
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Your Business’ Success Rides on the Performance of Six Systems

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If you want to make a lot of money, you must get all of these systems up and running smoothly!
» Marketing
» Selling
» Staffing
» Planning
» Tracking
» Financial Control
You need to be able to teach your employees how to perform each of the following subsystems. Once they can perform the subsystems for you, you have maximized the value of your company, freed yourself from the daily grind of the company, and positioned your business for explosive growth.
Let’s look at each system and the subsystems that make it up.
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MARKETING SYSYEMS

The purpose of your marketing system is to produce a flood of qualified sales leads. You need systems for:
» Generating leads from new customers.
» Generating leads from existing customers.
» Prodding referrals from existing customers.
» Collecting testimonials.
» Staying in touch with your customers.
» Publicizing your business.
» Developing new advertising pieces.
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SELLING SYSTEMS

The purpose of your selling system (and you need to think of selling as a system) is to get commitments from buyers to hire you. The selling subsystems are a combination of sales tasks, motivation, and development. You need systems for:
» Assigning and prioritizing leads.
» Qualifying leads.
» Following up with prospects.
» Creating proposals and presentations.
» Processing orders.
» Following up with customers after their project is finished.
» Motivating the pursuit and procurement of profitable sales.
» Improving salesmen’s selling skills.
» Networking.
» Strengthening your customer relationships.
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STAFFING SYSTEMS

The purpose of your staffing system is to get the right people in your company and get them placed in the right jobs so that they are successful individually and as a group. You need systems for:
» Advertising job openings.
» Interviewing.
» Creating and updating job descriptions.
» Communicating performance expectations.
» Monitoring market wage rates.
» Dismissing non-performers.
» Developing employees’ skills
» Rewarding good performance.
» Selecting the right people for promotion.
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PLANNING SYSTEMS

The purpose of your planning systems is to eliminate negative surprises by proactively addressing problems before they arise. You need systems for:
» Determining which markets you are going to pursue.
» Creating your annual budget.
» Creating a cash flow budget.
» Increasing your bonding capacity.
» Planning project completion.
» Scheduling your work crews.
» Determining when to buy equipment.
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TRACKING SYSTEMS

The purpose of tracking systems is to make sure your business is performing as you need it to. Your tracking system should be monitoring the following items:
» Expenses vs budget (job and company)
» Revenue vs budget
» Gross profit vs budget (job and company)
» Labor productivity (job and company)
» Advertising effectiveness
» Selling effectiveness
» On-time completion
» Employee performance
» Equipment costs
» Labor time by primary tasks
» Receivables outstanding
» Sales backlog
» Safety efforts and lost time injuries
» Estimating accuracy
» Market-up success
» Re-work
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FINANCIAL CONTROL SYSTEMS

The purpose of financial control systems is to make sure that your business is on solid financial ground. You need systems for:
» Developing relationships with bankers.
» Developing relationships with bond and insurance agents.
» Qualifying and evaluating your CPA.
» Getting the proper business licenses.
» Processing payroll.
» Making scheduled federal and state tax payments.
» Managing your cash.
» Verifying money is not being improperly removed from the company.
» Ensuring suppliers' bills are legitimate.
» Collecting late receivables.
» Paying bills on time.
» Paying employees appropriately.
» Filing liens and claims.
» Collecting employee information.
» Sending out 1099s.
» Getting the proper insurance coverage.
» Verifying lease terms and payments are proper.
» Building and managing your credit line.
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Quite a list, eh? Heck, I'm sure I've left a few out. Nobody ever said running a business was easy.
One final comment. You can’t prevent problems if you don’t have a system or process installed to prevent them.
If you have a problem in your business, check to see whether you have created the system that should be preventing it. If not, create the system, then test it to see whether it permanently resolves the problem. If it doesn’t, improve your system.
Until next week, good luck with your business.
Ron Roberts,
The Contractor's Business Coach
P.S. Share this with your contractor friends. They will thank you for it.