Which Contractor Growth Phase Are You In?

It’s tough to move up in the world if you don’t know where you’re starting from, or what’s possible. Construction business success doesn’t happen by accident. There’s a path – and we’ve found it.

Breakthrough Academy has had the privilege of working with over 1500 contracting businesses, and in that time we’ve accumulated an eye-watering amount of data on companies of all sizes. We’ve spent the past year combing through those numbers to find patterns.

Which strategies and behaviors consistently set contracting businesses on an upward trajectory? We’ve collected our findings into a series of four growth phases, each with its own set of indicators and barriers to overcome.

If you think of growing your company like ascending a mountain, with each phase you’ll gain a better view of the potential for your business – and your life. As any rock climber will tell you, you’ve got to see your line before you can scale to new heights.

Which growth phase are you in?

We’ve compiled a set of questions to help orient you in your journey. This is no hard scientific test, but as you read through the following statements, keep track of which ones feel familiar:

• You’re still stuck on the tools more often than you’d like.
• You have no managers. You are the manager. Of everything.
• Job costing system? What job costing system? That’s a thing?
• Everyone on the team knows exactly what to focus on each week. LOL. Good one.
• Your cash flow is about as stable as mountain biking through the Rockies. With a flat tire.
• You’d love to put some SOPs in place, but frankly, who has the time?
• Not counting referrals, your lead gen is basically non-existent.
• You’ve heard about reliable trades talent, but you’re pretty sure it’s an urban legend.
• A 20-hour work week is something you’ve only experienced in your dreams.
• The thought of taking a long holiday gives you a headache. The fires you’d return to…

Okay. Count up how many made you nod. Here are your super official scores.

If you resonated with:

• 7 to 10 = you’re in the Operator phase
• 4 to 6 = you’re in the Manager phase
• 1 to 3 = you’re in the Leader phase
• None at all… Congrats! You’ve reached the pinnacle = the Strategist phase

The Four Phases of Contractor Business Growth

Now that you’ve got a sense of where you’re at… let’s dig into what each phase entails and, more importantly, how to reach the next level.

#1 - Operator

What it looks like

As an Operator, you’re just short of being a one-contractor show. You may have crews and employees, but you don’t have managers. This leaves you having to take care of all the admin, put together the estimates, and order the materials, on top of regularly jumping on the tools. In terms of tracking your projects and finances, if you have any systems in place at all, they likely consist of whatever spreadsheets you’ve managed to cobble together in between doing, well, everything.

What’s standing in your way

This is deceptive, because most Operators tend to believe their biggest constraint is time, when in fact, it’s their approach to job costing. In an effort to win bids, Operators tend to undercharge for their services, but that just locks them onto a hamster wheel of earning just enough to keep the business running, while not going anywhere.

How to move up

Once you get a good job costing system in place and you start charging rates in line with what your craftsmanship deserves, your profit margins will improve. This allows you to hire a manager in at least one of the three core business areas: admin, production, or sales. With that extra help support, you’ll be freed up to concentrate on moving your business into the next phase.

When you’re ensnared in the Operator phase, it can be impossible to imagine a life outside the daily grind. If you’re in need of a little inspiration, take a look at how Mike Van Capelle of Blue Water Concepts grew his construction business by a whopping 20X over five years.

#2 - Manager

What it looks like

At this point, you’ve got someone running one of your core departments (usually admin), which has relieved you of a few duties, though you’re still getting pulled into the daily operations of the other areas. If you don’t keep an eye on things, they go sideways. Quickly.

Maybe you’ve improved your project and financial data tracking a little, but you still don’t have a clear picture of how the business is doing month-to-month. Plus, you’re busy. You can barely keep up with all the demands, not just from customers, but also from your own staff. You’re pretty sure your family still remembers what you look like, but you’re not totally positive.

What’s standing in your way

In a word: systems. Or rather, the lack thereof. With so many facets of the business still dependent on you, you become the bottleneck to your own growth. For Managers, this is often due to not knowing what they don’t know in terms of the platforms and technology solutions available to them. But without getting the right systems in place, these companies risk slipping back down to the Operator phase.

How to move up

Many of the contractors Breakthrough Academy works with are in this phase, and the Contractor Growth Method has been designed around implementing growth-changing systems. Our collection of resources will help you create everything from Standard Operating Procedures (SOPs) to job descriptions, while our trade-specific benchmarks will help you understand where your business should be financially, including sales ratios and profit margins.

Watch this 4-minute video to get an intimate look into Jason’s journey from Operator to Strategist.

With the right systems in place, your business runs more efficiently, saving you time, money, and stress. Good Key Performance Indicators (KPIs) alert you to red flags in your production and sales. SOPs streamline onboarding practices and ensure tasks are completed with consistency. Job descriptions define people’s roles so they understand what’s expected. A thoughtful hiring funnel attracts prospects that fit your company’s values.

This can sound like a lot of change to take on – and it is – but it’s worth it. Despite being a demanding phase, you don’t want to linger here for too long. The benefits of advancing are too spectacular to delay, as you’ll see when you head towards the next phase...

To get the blueprint for growing your contracting business to the next phase, sign up for the Contractor Growth Method Web Class.

#3 - Leader

What it looks like

To be honest… pretty darn good. By the time you’ve reached this phase, your business is spinning off at least 10% in net profit, and you’re bringing in a healthy income, which allows you to (very) comfortably support your family. You rarely have a week that demands more than 40 hours of your time. You’ve got dependable managers in each of the three core departments (admin, sales, and production), though it’s possible one of them is you. You’ve got systems in place across your business tracking projects, financials, and goals… and they’re working.

What’s standing in your way

Possibly… nothing. Many contracting business owners reach this phase and are happy to just stay put. Which is totally okay. No judgment. It’s a great plateau on which to sit and catch your breath. Howeverrrrr, if you did want to consider continuing your climb, the one thing you would have to start taking very seriously is leadership development. We’re talking Jedi-level stuff here.

How to move up

Difficult as it may be, to make the final ascent, you will have to give up the last remaining department if you’re still managing one, and look at hiring a general manager. You need to become a leader of leaders, with a strong team beneath you, who themselves are not just managers anymore, but leaders in their own right. At Breakthrough Academy, this could mean joining the Leaders Circle, where you’ll improve on the foundational systems you have in place, and continue to progress alongside other tenured and driven contractors.

#4 - Strategist

What it looks like

You’ve become that ultimate zenith of leaders – a visionary. You’re creating future-focused strategies designed to propel your business into whole new stratospheres. Your business may be in the $10 million range, but you’ve got plans to reach $20 million. Notice we said “plans,” not “dreams.” You’ve got actionable, executable steps, and your team is all in, coming up with innovative ideas of their own to help you get there. Operations run smoothly – in the office and on sites. Your leadership team is empowered, and that trickles down to a culture of accountability, quality, and efficiency. You’ve shed the daily grind and can take months off at a time and still return to a thriving business with net profits in the 10-20% range.

In other words… you have arrived.

What’s standing in your way

At this phase, it’s time to come to terms with your shortcomings. From your newfound viewpoint, more than ever now, you must realize your journey is no longer about you.

How to do it

At this phase, you need to hire people with experience and skills beyond your own, embracing outside perspectives from coaches or mentors who can reveal possibilities that may not have occurred to you.

How are you going to share your wealth? Not just in terms of financial prosperity, but giving back in a broader sense. How can your business better the world at large?

That is your primary challenge now.

No matter which Growth Phase you’re currently at, remember that it’s not just about climbing THE mountain, it’s about climbing YOUR mountain. Breakthrough Academy is here to support you every step of the way.

Want help getting your business to the next phase? Let’s chat.