|The Golden Hard Hat Mentoring Program - "Taking Care of Business!"|
If you think every different type of job you do is making you money, you may be sadly disappointed.
Not every job or type of work makes you money.
In fact, some are real losers.
In a competitive market your competition’s willingness to take the job cheap, or below your costs, hurts your Sales and bottom-line.
On the other hand …
Some owners may also be leeches of your profit margin. Slow payment, expecting you to do extra work for nothing, and the never-ending punch list.
It is painful to think what work will make you money but not really know, can steer you in the wrong direction.
This is where knowing your business metrics and having the right tools will help you optimize your approach to getting work.
Making smart decisions based on valuable information is the key.
Understanding your business metrics makes your business work for you.
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However, if you don’t know your own business metrics, you become the victim of your own ignorance.
Let me explain what I mean.
When I first started out as a contractor, I thought I made money on every job.
Unfortunately, that wasn't the case. Some made money, others made less or none.
This bothered me.
I kept asking myself the question: “Why?”
At a glance, I couldn't uncover the underlying details.
I kept thinking, what is causing me the problem?
With that drill-down question, I embarked on developing a method of uncovering and revealing what was really going on. In other words, the metrics.
You see, most contractors focus on the basic Job Cost VS Estimate result.
This is fine because it will tell you if you brought it in as estimated or if you didn't.
Sadly, it doesn't reveal what is really going on under the covers. The real root problem or problems.
In my “Golden Hard Hat Mentoring Program,” I give my clients my Job Characteristic Spreadsheet that points to the plus and minus of the project, expending of company’s resources, and even … the owner.
This drills down farther than the typical job cost report.
It also flashes to you the good, bad and ugly of the job, so you can make intelligent decisions about the work or owner.
The report displays the time to complete, size and type of work, as well as the consumption rate of the company’s resources.
The report also informs us to the turnover rate, profitability, and the collection cycles of the owners.
This compliments the company’s volume derivation and distribution of management time which establishes the best economic goals for the company to pursue.
The metrics are revealed in color. Red is dangerous, Yellow is warning, and Green is good.
Figure 1 Job Characteristics Report of www.hgassociates.com
To optimize your construction company’s profitability and maximum use of capabilities and capacities, understand where and with what work and/or owner you make your highest return for your effort. This is the smartest way to jump-start your company’s success.
By understanding the metrics, you’ll be able to focus in on the work where you make money and get paid.
Knowing your business metrics is the key to success.