Everything is changing. The economy and markets change daily. As you get tossed about on this sea of constant change, most business fundamentals never change. Here are seven sure-fire ways to fail in business, no matter what else changes.
1. Do everything, everywhere, for everyone
No written plan Companies that try to be everything for everyone are spread too thinly, move in too many directions, and are too busy. These companies are in the "Yes" business: "Yes, we can do that!" However, companies who have a clear picture of their projects, their customers, and their markets can succeed in any business environment.
2. Compete on price
"Nothing differentiates us" Would you go to any doctor for heart surgery? Customers want to hire experts who specialize in specific types of projects or services. When you claim to be an expert in everything, you'll never get the job unless you are the lowest bidder. Customers pay more for experts. Why should your customers pay more for you? What do you offer beyond the minimum required per plans and specifications?
3. Hire cheap
"We can't find any good people" It is tempting to hire cheaper people. But when you hire less experienced, less qualified, lower paid employees while your business is growing, you are kidding yourself. These people require more supervision, which takes you away from making your business successful. When you spend all your time monitoring junior people and helping them learn the business, you're not spending your time where the money is made: with customers, looking for opportunities, inspiring and motivating your crews, and on your bottom line. Better people require little or no supervision and will allow you to do more business and make more money.
4. Do it yourself
No written systems: "It's all in my head" It is easier to do everything yourself than to try and get other people to do it for you. This control requires you to be everywhere to ensure everything is done perfectly. This also holds back your company and your people from reaching their maximum potential. Replace yourself with checklists and systems to improve productivity, so you can focus on your top business priorities.
5. Spend it all
Too busy to set financial goals Most business owners don't sit down and write out their financial targets. More than 90 percent of all business owners reach age 65 with no net worth. This is a result of spending every dollar the company earns on overhead and salaries. The purpose of your business is to build equity and wealth for the owner and key management people, so they can eventually sell or pass on the business, retire and live off the income stream from the wealth created. Without clear targets and a plan for the future, the company will never fulfill this dream.
6. Too big, too fast, with no cash
No cash-flow controls It is too easy to grow your construction or design-build business by being low bid. The No. 1 reason companies go broke is that they outgrow their working capital. Before you take on more work than you can handle, assure you have the resources to do the work. Plan to have the additional overhead, personnel and equipment required to manage projects properly and get paid in a normal manner. Keep adequate reserves on hand, incase payments get delayed. Most contractors need a minimum of 20 percent of their backlogs in working capital to stay comfortable and afloat.
7. Go with the flow
No marketing or sales plans Companies without specific written marketing and sales plans tend to bid whatever comes in the door. This is a reactive approach to business and will not take you where you want to go. Successful companies have an ongoing approach to sales and methodically approach the markets and customers they want. Identify your top 20 customer targets, and make them a priority.
The choice is yours. Strive and thrive, or fail and bail! Consider these seven factors to chart your future in any economy or business environment as it changes.
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