OK, I’ll give you more dollars but what about margins, slippage and organizational disruption? “Yeah, but doing it my way will let me move into another part of the market and make money doing it,” you say.
This has happened to most of us and usually in the first five to seven years in business — we get a real chance to go after a legitimate job that is from 50 percent larger to two or three times our average effort. It seems irresistible; we have been operating smart and our ratios are good, why not go for it?
Recently a good friend sent an e-mail to five of us whose companies are about the same size (between $1.5 and $3 million), full-service remodeling contractors all with over 10 years in business. His question was simple; he had a good chance to get a job between $1.7 and $2 million, by far his largest job ever — what should he look for? What had we found when we had done them in the past? Without naming names (you would recognize most of them), every one of the five recommended staying away from the opportunity. Why? Why walk away from such a plum — there’s a whole year’s worth of overhead in just that one job; we’d have to make some money on it, wouldn’t we?
Here is some of the rationale behind the warnings, those subtle things that are part of the process and need to be considered before taking on the Biggie: full-time supervision. Fine, but what does this do to the “other” jobs? Who will run them? The job will take more than the proportionate amount of administrative attention just because it is large and on your mind. Large jobs are fraught with the psychology that simply because of size; you need to do more, not only quantitatively or qualitatively necessarily, but also thinking about decisions instead of making them. Clients can leverage the size unfairly ala, “I have paid you over a million dollars. Are you are going to charge me for an extra Dumpster?” I have said before we do our best work when we are relaxed and confident and this type of job brings with it anxiety; more is at stake so I have to worry about it more.
Many times the larger job brings with it a sophistication, a quality of goods and execution that is a little beyond our experience. Trades can feel the same effects; shrinkage and slippage will be greater than you are used to by 1 percent or more. Schedule management is an absolute key with the big, long job.
Potentially, the most dangerous issue is the change in company pulse. As the biggie gets more attention, often our mainstay jobs and past clients from whom we make our numbers are neglected. In just one year we can find ourselves still a little uncomfortable with the big job and bemoaning the fact that we have lost some of the shine of our client service and contact, enough to change our return and to require rebuilding.
If you truly want to move into a large-job market, advanced planning and research is a must. Make sure you investigate the differences so they can be under control when you start because when you are up to your ears is not a good time to be developing a new strategy.
To quote a good friend, Bob Hanbury, CGR: “A company owner’s income is most threatened during significant growth.” And often that is just what the “sweet” job can be — it came up quickly so planning is challenging, and come to think of it, so is everything else, while you’re here . . .
M M “Mike” Weiss has been a full-service remodeler for over 25 years. As an instructor for the CGR and CAPs programs, he spends many weeks each year on the road teaching other remodelers. He is also a past chairman of the Remodelors Council of the NAHB.
And while you’re here . . . Agree? Disagree? Want to know more or even argue? Send me an e-mail with your ideas or suggested topics, we’ll think about them and see what we can do. Mike@WeissRCMI.com