Here are the 3 mistakes contractors should avoid this summer

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Are you struggling to keep up with the day-to-day summer grind of running your trades business? Not to mention finding time to work on things that move your business forward?

I get it, I’ve been there myself and seen it time and time again. Having grown a multi-million dollar home service business and coached hundreds of entrepreneurs through it, I understand the challenges you’re facing and have also seen what it takes to get through it successfully. So what separates those who work 80 hour weeks to the point of burnout, and those who maintain balance while profitably growing their trades businesses to the next level?

Here are the three mistakes that successful entrepreneurs avoid at all costs, especially in the busy summer months:

Mistake #1 – Hiring “B” level staff to urgently fill crews

We’ve all been there – a team member or two quit without notice with a full production schedule coming up, and suddenly you’re scrambling to find anyone that can get work done. What we know is that 8/10 times the rushed hire is not going to succeed in the long-run and that no employee is worse than a bad employee. After painfully learning this lesson myself multiple times, I’ve gone to great lengths to push back my production schedule (often with an annoyed customer on the phone), because I know that it is the right decision in the big picture.

So the next time one of your employees suddenly quits, take a breath, and follow this process:

1. Look at your upcoming production schedule and create an “options list” of all the crew combinations you can shuffle through in order to keep production on pace. If not possible, call the upcoming customers to tell them that you may be later than expected because you are holding up quality through challenging work.
2. Utilize all of your recruitment channels to put out recruitment ads that are specifically written to speak to your ideal candidate.
3. Pre-plan time in your schedule over the next two weeks to focus on recruitment related activities: posting ads, calling potential candidates for thorough conversion calls, completing in-depth interviews, and following up with top candidates.
4. Pre-plan time in your schedule for a full week of training with new staff about two weeks out. This thorough training time will set up your future staff for success in their role and end the cycle of turnover.

Our members at the Breakthrough Academy follow a methodical recruitment process to attract “A” talent and select the best candidates through behavioral interviewing.

Mistake #2 – Lack of focus on gross profit margin

Gross profit margin (revenue less your variable costs: labor, subcontractors, materials, etc.) is the #1 indicator of how well your business is running. In the landscape construction industry, for example, attaining a gross profit margin of around 36% is critical in achieving a profitable year.

In busy times, it’s easy to get away from regularly tracking your gross profit margins on the jobs you’re completing. Successful trades business owners track the gross profit of each job as soon as it is completed, and often partway through. These results are measured against goals and help make changes in day-to-day operations. For example, we may notice that a particular crew is always over-budget on their labor budget, and then investigate why that is happening with them. This way, changes can be made early-on to bring jobs back to that 36% gross profit and help bring in a profitable year.

Over the years, we’ve developed a simple yet highly effective system for tracking variable costs and gross profit margins on jobs. Our members use it to track their numbers weekly, and it’s helped raise the profitability of dozens of trade businesses in our program. Best of all, it’s available free of charge, included with the downloads you can grab at the bottom of this page.

Mistake #3 – Prioritizing the wrong tasks in your week-to-week schedule

Here is one truth that I’ve seen proven countless times: what got you here probably will not get you there. The type of work that will take to grow your business to the next level is very different than the type of work that has gotten you to this point. I often see entrepreneurs spending less than 10% of their week working on tasks that truly make an impact on moving the business forward. Menial tasks such as getting materials for crews, dealing with customer complaints, getting vehicles fixed, etc. will not allow you to focus on the priorities that impact growth.

Working on tasks that influence long-term results requires methodical and intentional planning. Yet, I see very few business owners spending a focused two hours each week to review results, set goals for the week, and outline weekly action plans to achieve their goals. It is this disciplined “Goal Setting and Review” process that has been a staple in the rapid growth of hundreds of companies we’ve worked with.

Entrepreneurs who are serious about profitably growing their trades businesses must follow this weekly ritual to spend a focused two hours at the beginning of each week mapping out goals and priorities, without distractions of the day-to-day.