The 5 Pillars to Growth

Greg Wilkes (00:01):

The construction industry can be a tough business to crack, from cash flow problems, struggling to find skilled labour and not making enough money for your efforts, leaves many business owners feeling frustrated and burnt out. But when you get the business strategy right, it’s an industry that can be highly satisfying and financially rewarding. I’m here to give you the resources to be able to create a construction business that gives you more time, more freedom, and more money. This is the Develop Your Construction Business podcast, and I’m your host, Greg Wilkes.

(00:37):

Hey, welcome back to the podcast everyone. Hope you’re having a great day. It’s lovely and sunny today. I’m looking forward to playing a little bit of golf later. That’s my little routine on a Friday, try to take Fridays off. But the first thing we’ve got to do on a Friday is get my podcast out there for you all. So really appreciate all of you that have been listening. I get a lot of feedback coming through on emails, so really appreciate that. If you are getting some value out of the podcast, it would mean a lot to me if you could give me a rating on wherever you’re listening to it, on Apple Podcast or Google, wherever you are catching this podcast. Just those ratings really help to drive the podcast forward and let a few more people in the industry know about it, and hopefully they can pick up some great tips too. That would be much appreciated.

 

(01:23):

One of the things I wanted to address today is a question I always get asked, and it’s really the first question people ask me when they come into coaching and it’s, “Well, what is the the big thing that I should be focusing on at this time?” When you look at the business, there’s so much to do, isn’t there? It can be really overwhelming thinking, “Oh, what should I do in my business?” One of the big questions is, “Well, come on Greg, what’s the number one thing I should be focusing on?” That isn’t an easy question to answer because obviously every business is different and we want to pick the right thing for you at the right time. But if I was going to answer that, I would actually break it down and say, there are five pillars in business that will help you grow. If you focus on these five pillars, these are the things that you want to focus on at any one time. This is the broad stroke of how a successful business runs. These are the foundations of where you want to get started. You can pretty much put all business into these categories.

 

(02:19):

The five pillars that I work from are; first of all, you need to Plan. You need to Attract the right sort of clients to your business. Then you need to be able to Convert those clients into paying customers. Then you need to be able to Deliver effectively. Once you’ve got those four in place, then you can talk about scaling your business to the next level. The purpose of this podcast is that we’re going to run through those five pillars to explain what they are, and how you can use them in your business to take it to the next level.

 

(02:51):

Let’s start from the beginning. This is often the one that people miss out on, and it’s Plan. Do you have a business plan in place for your business or have you got a plan in place for the next year or for the next five years (whatever it’s going to be)? If you’ve listened to earlier podcasts, you know the importance of goal setting and how it’s really important to have a BHAG or your Big Hairy Audacious Goal. It’s really crucial that we reverse engineer those goals so that we are more likely to make them happen. When you reverse engineer big goals and break them down into bite size chunks, it seems that more manageable and you’ve got a clear plan in place on how you’re going to do it. The first thing I usually focus on with clients that come over to me or if I’m giving people advice is, have you got a plan in place of how you’re going to get there? You’ve got a few questions you need to ask yourself first of all. Where do you want to go over the next 12 months? Where do you want to be as a business? And maybe you can break that down into categories, where do you want to be at turnover wise or size wise? Often people say to me, “Well, yes, I’m not focusing on turnover Greg, it’s all about the profit.” “That’s great,” I say, but obviously turnover drives the profit. You can be a hundred percent profitable and do 10,000 pounds turnover and only earn 10,000 pounds for the year. We need turnover to generate the profits. First question is, what’s your turnover target for the year? Is it going to be the same as last year? Are you going to increase? What margin are you going to increase by? If you are going to increase your turnover, what impact is that going to have? That then means you need more leads coming into the business. That then means you need more workers to be able to deliver that turnover. There might be a few obstacles in that, but it’s really important, first of all to think to yourself, how big do I want to be in a year’s time and how is it possible that I’m going to achieve that?

 

(04:47):

So that’s the first thing. Break down your turnover targets.

 

(04:51):

The next question I’ll be asking on plan is, once you’ve got your turnover targets in place, what do you want your profit margin to be? You might think, “Right, I want to to earn myself 150 grand this year, 200,000 pounds.” Well, let’s reverse engineer that. How are you going to make that happen? That is closely linked to your turnover. Let’s give you an example. If, say for example, you want to hit a million pounds turnover this year, but you want to earn yourself 300,000 pounds, then maybe your being unrealistic there. That’s a 30% net profit margin. Is that realistic in business? I can pretty much tell you that in construction that is unrealistic. You’re probably not going to hit that. Maybe you’re better off shooting for somewhere between 10% and 15% net profit. I always think 15% is a great number to go for. If you’re at million pounds, you could make 150,000 pounds for the year. That’s a realistic target. Think about that when you’re putting your plan in place. If you want a certain profit margin and you wanto to plan for that profit margin, you may need to adjust your turnover up or down accordingly.

 

(05:57):

That’s the first two things. Get your turnover locked in, get your profit locked in.

 

(06:02):

Also, you want to be thinking about your profit. “Well, how do I achieve that profit margin?” If you haven’t quite achieved it in years come by, we need to ask the question, why not? What’s happening? Is it that we are under pricing work? Is it that we’ve locked ourselves into fixed contracts where we’ve suffered because of price inflation and the volatility of material prices. If you’re in fixed contracts and you’ve got no way of charging clients for increases in prices, then that’s a problem. You need to address that going forward into the next year. Maybe your projects are overrunning constantly. You never finish on time. Your day rate workers are eating into your profit margins, that might need to be addressed. There’s going to be a multitude of things that might be a reason why your profit margins haven’t been the way they are and they need to be looked at. Then a plan needs to be put in place to think, how am I going to improve that this year? How am I going to buy better with my materials? How am I going to be more efficient on site, are my job’s going to run to time and on budget? There’s a a few things that you want to think about with your plan.

 

(07:15):

You might also want think about as part of your plan, how am I going to attract my ideal type of client to me? Whats my marketing strategy going to look like? Have I got a marketing strategy in place? That wants to be part of the plan.

 

(07:30):

Think about your role in the business. What do you want to be doing in over the next 12 months? Do you want to be still working on the tools one day a week or so? Or is it your absolute commitment to make this the year where you finally come off the tools and you become a proper director and owner of the business? Or maybe you are sick of firefighting, you’re doing everything in the business and you want to change that and want to change your role. Maybe your role wants to focus on the sales and overviewing the operations, but you don’t want to be getting involved in the day-to-day running of the sites. You want to get some site foreman or project managers to do things for you. There really needs to be a plan across quite a few areas.

 

(08:11):

To summarise them I would plan: what’s your turnover going to be? What’s your profit margin? What’s that going to look like? What’s your marketing going to look like for the next year? What type of jobs are you going to go for? What type of clients are you going for? What’s your role going to be in business? The last thing I’ll probably think about as part of the plan is who are you going to bring on board? If you want your role to change in business and you want to do less of the mundane tasks, who do you need to bring on board over the next year? They could be real crucial questions for your plan. Like I say, you want to reverse engineer that, and I would even put figures on it. If your currently doing 500 grand a year and you want to make a million pounds a year turnover, then break that down over the next 12 months. What does that look like month on month? What’s the growth going to look like for you? If you’re starting off at doing 40,000 pound turnover a month, how do you get that up to make eventually 80 odd thousand pounds turnover to hit the million pounds mark? That’s where plan comes into place. This is something people really miss. They just get on with it sometimes, they put their head down and and go for growth, and they haven’t got a clear strategy of how they’re going to make it. That’s really setting yourself up for failure. Step number one is put that plan in place.

 

(09:35):

Associated with that plan is then thinking about any roadblocks that might come along and stop you, or any obstacles because <laugh> the best laid plans, they don’t always go as you quite expect. You’ve got to think, what happens if an obstacle comes in my way as I try and achieve this plan? What happens if someone leaves in the business that’s crucial to the business? Have I got a plan in place to replace them or who could potentially carry out their role while I’m looking for someone else? That might need to be thought about. Think about obstacles too that might stop you. They are natural part of any journey, any roadblock, but you want to try and think about those and forearm yourself if you can, so you’re in a better position to move forward if that happens.

 

(10:23):

Once we’ve got the plan in place, we then need to look at step number two, which we said was Attract. We want to attract the right type of clients to our business. Where are you currently getting your clients from? What platform? Maybe you are winning all your work through word of mouth, which is great, that means you’ve got a good reputation. But as we’ve said before on the podcast, it’s very difficult to grow and expand a business when you are relying on that phone to ring or that email to come through. We want to have a little bit of a plan in place on how do we fill our funnel up and attract clients to our business. We also wanto to think about who is my ideal type of client? Maybe your ideal client is an affluent homeowner, or it may be an architect or a structural engineer that might be your ideal client that you want to get involved with. It may be a main contractor that you need to be getting on board with. Think about who your ideal client is and how you are going to attract them to your business.

 

(11:26):

Now, the the first thing you need in place in order to attract your ideal client is to think about your unique selling point. Your USP. Why are you going to be a good match for that ideal client? What is unique about you that will make your ideal client pick you over other companies? You’ve got to be able to answer this. A lot of people miss this step too. If we are not a good match for our ideal client, then they’re not going to come over to us and we’ll find that we’re always competing on price because people can’t determine what value we’re offering in business. There’s lots of tips on my website and other podcasts that talk about your USP and and how you can find that, but that’s a crucial part of attract.

 

(12:11):

The second thing you want to think about with attract, is your brand. Do you look like the type of company that that can handle the work that you’re pitching for? If you are pitching for 500 thousand pound projects, do you look like a company that can handle 500 thousand pound projects? When people go on your website and your social media channels, are they seeing a company that’s delivering that type of work? Have you got case studies of that type of work? Does the images on your website show you carrying out that type of work? Do you talk about it? Do you actually say on your website, we specialise in 500 thousand pounds construction projects? You want to think about all of that. A good friend of mine, Daniel Priestley, he always has the saying, “You get what you pitch for.” I’m a big believer in that. If you are pitching for work that’s lower than that, then that’s the type of work you’re going to get. We pitch for it, on what we’re showing people out there on our website and on our copyright on the website and on our social media. If we look like a company that’s doing 50,000 pound jobs or a hundred thousand pound jobs, then that’s what we’re going to get. Think about that. Think about, are you attracting people with your brand? Then the last thing you want to think about with attraction is, how you’re going to fill your funnel. We talk about sales funnels, don’t we? Filling the top of that funnel and then moving people through the funnel and they finally buy. Are you filling that funnel with your ideal type of client? When we talk about filling that funnel, we want to first of all think about how do we get people in that funnel? It may be we need to do some advertising, we might think we want to do some Google Ads or Facebook Ads, whatever we think our client is. LinkedIn Ads potentially. We can do it organically too. You don’t have to do adverts. You can certainly fill your funnel by organic posting on social media and or do an SEO that can fill your funnel too. Maybe you are using a lead generation service, like ‘Check A Trade’ or ‘MyBuilder’ etc. I don’t necessarily recommend those sites for getting your ideal client, but maybe that works for you. You might want to think about filling your funnel that way.

 

(14:25):

Once you think about filling the top of the funnel, how do you get people to actually contact you initially? We then want to think about how we get them through that funnel, and this is where we really want to think about Conversion and that that’s pillar number three of a business. We’ve talked about Plan, we’ve talked about Attract, but then we need to talk about Convert. How do we now convert people that are in our world? We’ve attracted them to our business. They like our website, they like our social media, they like our USP, they think we’re a good fit. Now we need to convert them and get them in be a paying customer. One area we need to think about with conversion is our pricing. We don’t want to have a hundred percent conversion rate just because we are pricing the lowest and we are the cheapest out there. That’s just a road to much pain <laugh> and certainly it’s a race at the bottom, isn’t it, if we are always the cheapest builder out there. We want to look at our pricing and make sure we are pricing profitably as part of our conversion. In order to do that, you really need to know your finances. You need to know what your gross profit margin is. And again, we’ve spoken about that on different podcasts. Understand how you’re pricing and where you need to be pricing in order to break even as a business. That’s absolutely crucial. Also as part of your pricing, as we said, we don’t need to be the lowest, but then you might ask, “Well, how am I going to win work then if I’m not the lowest?” This is where it really comes into demonstrating value to your clients so that you don’t have to be the lowest, because we don’t always buy because people are the cheapest. I’ve got a iPhone like probably many of you have. Now I’ve got an iPhone, not because it’s the cheapest phone out there, but because it does everything I want, it demonstrates value to me. I could probably go and get a nokia brick phone that might do much of the same thing. I don’t necessarily need emails on my phone (or whatever else) but I could get a much cheaper phone out there that’s probably got all the features of this iPhone. It’ll have email, it’ll have a decent camera, it’ll have everything I need. It’ll take the phone calls. I could probably pick up a decent phone for a few hundred pounds, but yet I choose to pay over a thousand pounds for the latest iPhone because they’ve demonstrated value to me. I’ve bought into their brand. The point is we don’t buy just because things are the cheapest. We buy it because it matches us. The product we want matches our values at that time. You want to think about that with your pricing, and again, this links back to your USP. Are we demonstrating value in our USP? I’m not going to go into that too much because there’s a lot in there about how you convert people, but part of conversion is making sure we are pricing profitably and pricing in the right way.

 

(17:18):

The next thing we need to do is once we’ve priced it the right way for us, we then need to think about nurturing those leads as part of our conversion process. Now it’s not just enough to introduce a client to your business, send them a quote and that’s it. Just forget about them and then sit back and think to ourselves, “Well, if they want me, they’ll contact me.” With any kind of investment that someone makes, it takes time to grow and trust in a company and feel happy that they’re the right choice. We want to nurture the leads that we’ve got. We want to warm them up and get them to Know, Like, and Trust us as a business. There’s lots of ways we can nurture clients. It might be multiple visits that we make to them after a quote’s gone out to try and be helpful. It might be nurturing on email, that can be done. There can be specific email campaigns that go out once you’ve sent a quote that just nurtures a client and answers any questions that they might have in the back of their mind subconsciously. We want a bit of a marketing system in place to do the nurturing. Once we’ve got the nurture side looked after and a proper follow up procedure, then we want to think about our sales pitch. This is an absolutely crucial part of conversion. How do we pitch to our customers? Are we selling our information and selling our company in an appealing way? A good sales pitch is really an art. We’re not talking about being a pushy car salesman type of pitch here, but it really is an art to be able to fully understand our client, fully understand their needs and their wants, and then pitch to them and show them how we are the best company that can fill those needs and wants and desires. There can be a lot involved in that, part of the sales pitch involves a bit of information gathering at the beginning, make sure fully understand why our client is getting involved in this project and how we can help them get the outcome that they want. We want to think about that too.

 

(19:18):

We’ve just talked about three things there as part of Nurture. Make sure we’re pricing profitably, make sure we are nurturing our leads, and then getting the sales pitch right. That’s all part of our conversion process. Once we’ve done those three things, we’ve put a proper plan in place, we’ve managed to attract our ideal type of client to us, and then we’ve mastered how to convert those clients on a high level.

 

(19:45):

We then need to think about delivering all that type of work, don’t we? If you’ve got a full pipeline that’s absolutely great, but now you’ve got to deliver and get through that massive workload that you’ve now built. We need a lot of structure in place in order to deliver efficiently. Obviously you want your reputation to be sustained, you want to be a nice professional business. Delivery is absolutely crucial. This is where a lot of businesses fall down. They might be great at the attraction and marketing side and the sell inside. They might be naturals at that bit, but delivery can really fall flat on its face if the organisation is not right in the business. There’s a few things you want to look at as part of your delivery. One of the first things you want to think about, is your structure of your business. What does your structure look like? Have you got the right people in the right place to deliver? Are there the right people in the office that can help you from an admin point of view, deliver your product? Have you got the right people on site that can deliver? Have you got the right people managing those people on site? E.g your contracts managers or projects managers, or site foreman. Think about your structure. We don’t want you doing everything. If you ever do a organisation chart and fill out an organisation chart and look at all the boxes and find that you’re in every single box, we’ve got a problem there. We want to think about getting you out of those boxes and putting proper structure in place, so that you’ve got the right people delivering for you and helping you deliver. Once we’ve got a good strong structure in place, both offsite and onsite, we then need to think about, what does our onsite operations look like? Have we got our sites set up the right way? I think last week’s podcast was all about that, getting the a perfect site set up and how you need to plan in advance to get those sites running the right way. Make sure that your sites are set up correctly. Make sure your timelines are in place. Make sure you’re monitoring the progress on your site regularly, every single week you want to be monitoring those timelines; checking your sites are running efficiently, making sure you’re buying correctly, not just buying anywhere from any builders, merchants, checking for three prices before you go out there and purchase. Delivery’s crucial on site and you want to have good systems in place so that everyone knows what they’re doing, and communication’s vital too, so that you’re delivering nice and quickly, efficiently, on time and on budget. Once we’ve got our onsite systems running the right way, we then want to think about our offsite systems, the backend. What does it look like in the office? Are we nice and efficient in the office and are we backing up what’s going on onsite? Do we look nice and professional in the office? That’s really crucial too. We want to make sure that we’re able to deliver the right way and our office paperwork and systems in the office aren’t a complete mess too, because if it’s a mess in the back office, you can be sure it’s going to be a mess onsite as well. Make sure we’ve got those processes right too.

 

(22:45):

We’ve touched on four things now. We’ve touched on Plan being in place, we’ve touched on how to Attract the right clients to you. We’ve touched on how to Convert those clients. Then we’ve talked about how you Deliver to those clients.

 

(22:59):

The last pillar that we focus on, the last foundation item, once we’ve got those four, is how do we Scale this business? Once you’ve nailed the first four, you can really talk about scaling up to the next level. I presume this is why you’re listening to this podcast, because you’re a growth hungry construction business owner and eventually you do want to scale. As we said, it’s crucial for the business owner if you are going to scale, to first get yourself out of those boxes if you look at that organisation chart, get yourself higher and higher up that ladder so you’re sitting at the top of your organisation chart. The key to do that, is you need a strong team around you. You need to make sure you’ve got a team that you can trust, that are going to deliver for you. There’s a lot in that, we need to attract and retain the best staff. Have we got a good recruitment policy in place? In my businesses, I’ve gone through tons of <laugh> interviews and I’ve brought on wrong people and I’ve brought on some absolutely fantastic people. It’s painful. If you get the wrong person on board, it is really painful and it’s so damaging for your business. There’s a saying, isn’t there ,that you should ‘hire slow and fire fast?’ I’m a big believer in that. Take your time to hire the right people into your business because it really will pay dividends if you get the right people on board. Part of scale is making sure you’re bringing the right people on board, have a good recruitment process in place, ensure that you’ve got the right documents like job descriptions and things like that. Make sure you’ve got nice and clear job descriptions so people know what they’re doing. Then you want to think about the company culture. Have you got things in place like your appraisals and a training matrix for your management team? Can they see clear progression in your business so that they can scale up with you? That can be the difference between someone potentially staying or leaving your business, if they’re investing their career and time into you. There’s a lot involved in scale, I’m not going to run into massive detail into that now.

 

(25:08):

What I just really wanted to do in this podcast, the initial question we get asked is, “What should I focus my time on in my business? What’s the the big area that I need to focus on?” Like I say, there’s really five key areas. Think about those five areas for you. Plan, Attract, Convert, Deliver, and Scale. Where are you at in your business journey at the moment? What one of those do you particularly need to focus on? Eventually all five need to be addressed in your business. You might start at the beginning with plan. You might be starting at delivery, maybe you’ve got the other sides nailed. What’s interesting is you can actually jump around between these five pillars. So maybe, at the moment, you are starting on delivery and you think, “No, I’ve got to really master how I deliver on site to deliver on time and on budget.” You might be delivering really well, and getting free work really fast and efficiently. Then all of a sudden you think, “Oh wow, now I need to bring on more work. I’m delivering so quickly, I need to get a little more work in the pipeline!” You end up going back to attract. So <laugh> business is fluid and oftentimes it isn’t a case of doing this in order. You address what’s needed at the time and then you end up going back and forth across all of those five. But like I said, I think those five are really the foundation items for you to focus on.

 

(26:25):

I hope that helps. If you’d like to talk to us here Develop Mastermind, on how we can help you really go into detail into those five and put those systems in place, feel free to reach out. We’d love to have a chat with you and help you grow your business profitably. All the best. We’ll see you on the next podcast.

 

(26:47):

If you’d like to work with me to fast track your construction business growth, then reach out on www.developcoaching.co.uk