PEOPLE of Construction

Business Tips for First-Time Business Owners

As participants of my TableTop Discussions and readers of my “Guide to Better Business” books are aware, I like to present my business ideas by way of TOP TEN lists.  I can easily find ten points that are important, if not essential, for new or existing business owners to keep high on their priority list if they are planning to achieve long-term sustainable success in this competitive industry.

For this series of blogs though, I am going to pare my list down a bit and go with the top three business points on my mind.  My thinking is that a simpler and more concise approach will cause new or existing business owners to pause and pay a bit more attention as to how to stay on the path to success.

Here is my view on the TOP THREE business points that simply must happen if one is to have any shot at success with their business.  This is not meant to get you successfully home; but to get you on first base and better prepared to progress forward.

Even though I am listing only three points, they are not listed in any particular order of importance.  All three of these points must happen, and I will quickly add that once these three points are accepted as valid and important, there are numerous tips to follow, this is simply to get you on the right road from the beginning.

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POINT NUMBER ONE: VISIBILITY:

Simply put, your business must be known, which means you must make an effort to let the marketplace know you are in business and you are ready to perform your trade for them.  Just because you formed an LLC or Corporation or printed up some business cards, does not mean that your phone will start ringing.

Getting your business name out and about in the marketplace and letting potential customers know you are in the game will take a concerted effort and a great deal of time on your part.  For some, this may be easy and considered fun; for others, this process may be considered a waste of time, a royal pain, and something they would prefer to avoid.

So, how do you make your business known to this expansive marketplace?

The very first step is for you to sit down and clearly define the purpose and the mission of your company.  If you do not have a clear idea of what your business is all about and what services you have to offer, and how you want to price them, and who your competitors are, there is no way you can present any selling message to the marketplace.  Hopefully, you have already done this with a carefully, prepared business plan—but that is a separate issue for now.

The next step is to clearly define the marketplace you want to talk to.  Who are your potential customers?  Residential or commercial; union or non-union; large or small projects?  Do you have family, friends, or relationships of any sort that you can tap on the shoulder and ask them to possibly open a door for you?  If not, how do you plan to approach these customers: where will you find them?  Sit down and prepare a list of at least five clients you would like to work for; clients that you feel would benefit from your services.

By far, the best form of advertising and marketing is word of mouth by way of testimonials from those you have worked for in the past.  This is why I recommend to new business owners that you create some sort of running start to your business before you put your name on the door.  People like to do business with businesses they know, love, and trust.  Think about what message you want to share with potential customers and be prepared to enter the public arena and shout that message.  Get a few projects under your belt before you tell the marketplace how great your company is.

Depending on your trade and the type of customer you want to attract, there are numerous networking events available in our industry.  I suggest to new business owners that once they officially declare their company ready for live action, they map out a networking schedule and attend as many large industry networking events that they can comfortably fit into their business week.  This may be an ASA event; a PEOPLE meeting; an AGC event; a SLC3 event; a Construction Forum event; or various networking opportunities presented by the SLDC and other public entities.  The list is rather endless so I do suggest you be careful as there is only so much time you can devote to networking as a single business owner.

When you do attend an industry event, it is important you make yourself known in the room.  Have a pocketful of business cards and give them out freely.  Say hello to strangers and look for ways to connect with individuals in the crowd.  If you attend an event of a thousand industry folks and you sit in the corner and say nothing and come home with all your business cards, you have accomplished nothing.  That is not what I consider making your company visible.

Once you are up and running and have a better feel for where you want to take your business, be active on social media.  LinkedIn is a very easy and accessible way to let the industry know you are out there, ready for action.  Be careful of what you post and make sure you can back up all words and thoughts you shout out to the public.  Always stay professional and remember, you are reaching a wide variety of personalities.  Stick to the basics.

I want to keep this brief and simple, so I am not going to outline all the means and methods you have at your disposal to make your company visible.  My main goal with this business tip series is to get you thinking and to emphasize the importance of making your company known to the marketplace.

Let’s move on to Point Number Two.

POINT NUMBER TWO: ADMINISTRATIVE/OFFICE ORGANIZATION

You cannot perform successfully in the field unless you are organized in the office.

This is a statement I would love to see every small business owner repeat to themselves at least once a week.  There are a lot of components that make up a construction project and unless you have a firm grasp on the administrative side of your business, you will eventually fail.

Bid invitations; jobsite walk through information; proposals; contracts; certificates of insurance; product submittals; approvals; application for payments; lien waivers; payroll time reports; prevailing wage reports; OSHA reports; safety manuals; site specific safety plans; union reports; federal and state withholding and other tax reports; and the many other paperwork requirements of a construction contract are important and necessary elements of a successful project.  It is essential that you have an organized method of managing these project requirements.  Keeping everything on your phone is not an acceptable option.  These documents will have multiple visitors from time to time; they need a home.

The firms that succeed recognize office organization as a necessary requirement of a successfully run company.  If you cannot put your finger on an important document within seconds, your office is not as organized as it needs to be to support your work in the field.

Many new business owners fail miserably at this most important project requirement.  Most business owners come from the field, and they are experts at their trade, but they are not comfortable with paperwork and not suitably trained and educated to manage the intense paperwork requirements of this industry.  There are answers to this important and necessary business point, but you must first accept that this is a necessary component of a successful company.  This would be a good time to stop and re-read the first sentence above very slowly.

If your wife, or kids, mother, or neighbors love paperwork and are willing to help, maybe this is an answer.  Fumbling through a stack of papers on Sunday afternoon when you should be paying attention to your wife and kids is not an acceptable answer.  Certainly, it is not a long-term answer.  You must be involved and you must know what is going on within your company, but if you are to find long-term success, you must accept the fact that you will not have the time to prepare, submit, record, and file these documents.  At least not until you have the field work under control and the business humming a nice tune.

Administrative help on a part-time basis or on a contracted basis is not that expensive and it is an expense that simply needs to be.  The sooner you recognize this, the more chance you have of ringing the bell year after year.

POINT NUMBER THREE: ACCURATE AND TIMELY ACCOUNTING RECORDS

All businesses have a starting point, and that starting point needs to be recorded accurately.  You start on a certain date with a defined amount of money, and you quickly start spending money, collecting money, distributing money.  You cannot proceed with this process for long without getting totally lost if you don’t start keeping track of all monetary events from the very beginning.

Number one rule which I want to state alone and quickly is that the mixing of business and personal expenses is a recipe for disaster.  Have a separate bank account for your business and pay for all business expenses out of that account, without fail.  All revenue received should also be deposited into that account.  If you are not doing this, it is important that you start this separation of income and expenses immediately.  Today would be a good day to start; yesterday would have been better.

You are most probably not an accountant, and you probably skipped bookkeeping class in high school and/or did not pay as much attention as you should have.  Believe me, you are not alone.  Therefore, you probably are not on a first-name basis with terms such as Gross Revenue; Cost of Goods Sold; Gross Operating Profit; General and Administrative expenses; Overhead; Profit; Net Operating Income.  If this comes close to describing you, you need some professional assistance in the maintaining of your financial records.

If you are already six months to a year into running your company and have yet to produce timely and accurate financial statements, do not despair as the right people can get you to an acceptable starting line.

When I refer to financial documents, I am referring to a monthly Profit & Loss Statement (P&L); a monthly Balance Sheet; and a Schedule of Work in Progress.  Depending on the level of activity of your company, I would also like to see you produce a monthly schedule of Accounts Receivable and a schedule of Accounts Payable.  Most small construction business owners use QuickBooks software, which is perfectly acceptable and very accommodating for producing the required information on a timely basis.

My recommendation to all business owners in the design and construction industry is to contract this basic bookkeeping and accounting work out to others, even if you happen to have a college degree in accounting or business.  The keeping of good records simply takes too much time and mental energy on top of the time and mental energy required to run a construction business and manage your employees.  This is especially true for owners that also work in the field with their tools, which is quite common in the construction trades.

A small bookkeeping office can maintain your records for a modest fee which will be based on the number of transactions.  With QuickBooks Online, they can manage your accounting records remotely; you just have to feed them information. Yes, you have to trust them but there are good people out there doing this type of work.  Email me and I will help you find them.

When your company grows to the next level—which your business will if you follow my advice and practice these three points–-you can always consider hiring your own employee to handle the administrative work and the accounting work.  Typically, that is an expense that can be delayed until your revenue and profits support the move.

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This is the first in a series of blogs on tips of how to start and manage a successful business in the design and construction industry.  In future blogs, we will take on other important ingredients to a successful business, always at three points at a time.

Stay tuned.  I welcome all questions, comments, and constructive suggestions.  Email me anytime at PEOPLEofConstruction@gmail.com to set up a time to talk further, either in-person at Delmar Divine or via Zoom.