Here's the 13th newsletter in the Business Management series that will take you through aspects of managing (business, financial, jobs, labor) giving you insights and techniques to help you build a better business.

The following content is extracted from Mike Holt's Business Management Skills Workbook.

Many contractors find or develop a niche in their market, but that market may be a moving target. The local market might change, expand or contract depending on technology, product development, the economy, and customer demands. You should consider every request for an estimate or proposal as an opportunity to gain insight and monitor the market’s direction. The consumer may be better educated and exposed to new products that you might not even be aware of, and they'll typically base their buying decisions on that exposure when requesting an estimate. Think about this as research that for all intents and purposes is done for you and, if used wisely, can help determine the trajectory of your company and even present an opportunity to grow.

When planning for expansion, or when an opportunity to expand presents itself, keep two goals in mind:

1. It’s logical to expand based on your strengths and the kind of work you are best equipped to handle and do best. Network with your current customers to try and connect with prospects that are in the same line of business as they are, (perhaps its gas stations or convenience food stores for example). Because of your familiarity with this type of work, you’ll be able to estimate more accurately and increase your chances of getting the job. Your reputation and expertise will precede you. Having a crew and a vehicle equipped to specialize in this type of work will only serve to further your effectiveness and compliment that reputation. Some of the factors to consider when planning for expansion are, financial gain, profit, economic benefit, equity building, and effective asset utilization.
2. Identify which areas of the industry are growing, and get there ahead of the competition. Being at the forefront not only gives you the opportunity to make higher profits, but it also helps you establish a longer track record of expertise in this new growth area instilling confidence in your customers. Recognize and take advantage of the fact that there are manufacturers and distributors of these new products and specialized items that will be glad to provide training on installation and service. Sometimes, this type of training and or demonstration can be accomplished at the same time you’re on the job doing other, more familiar work.
   

Determine the dollar value of the jobs you can do efficiently. While the dollar range is important, you must consider all factors including labor, material, overhead, profit and taxes. The markup, material/labor mix, and a marketing plan along with the job’s specific contribution to overhead give a better overall picture of the value of a job than just the dollar range. The timing, location and credit worthiness of the owners, along with who the general contractor is, are also factors to be considered when the decision to bid a job is made.

Start small and keep employment stable. Only pursue growth from a solid well-established foundation. Employees who develop confidence and take pride in their job and their company grow to become company-oriented. That's when you know you can count on your people. You can’t get good employees offering only short-term intent, little or no opportunity for personal growth, and with no benefits or job security. Your employees are a part of your "extended" family and have families of their own with proportionately the same needs and concerns as your own. Stable, meaningful employment in challenging and gratifying work is key to everyone’s success!

We'd love to hear from you about this series, and the ways you're using it. Send us your comments and feedback by clicking on Post a Comment below. Look out for the next part in this series a month from now, and please share with your colleagues.

This content is extracted from Mike Holt's Business Management Skills book. If you have enjoyed this newsletter, you can get the full content here.