A year after retiring from running a remodeling company, I can look back and reflect on what a wonderful career I chose. I made a lot of mistakes and also had many triumphs.
The one regret I have is not getting involved with the educational portion of our industry sooner and not finding a mentor for guidance about the inner workings of the construction industry. I’m going to share why these things are important, so you can follow the right path sooner than I did.
After getting involved at the national level of the National Association of Home Builders Remodelers and meeting members who had attained advanced certifications, I began a more formalized educational process. Going through the process of getting a certification was a wonderful learning experience I will always cherish. I am constantly amazed some builders can’t understand why anyone should take the time to leave a busy business for a few days to attend a class. They are missing the benefit of learning more about their industry. Many teachers refer to “sharpening the saw,” learning techniques for business management and hands-on work that save time, money and energy. Too many remodelers still use a dull saw and just keep their head down, working hard—but not smart.
Online research shows most businesses fail in the first five years of operation. According to the Dun & Bradstreet Business Failure Record, the building trades have an even higher failure rate. Let’s look at why businesses fail in the first few years:
1. Wrong motivation: Just because you are a good technician does not mean you are a good businessperson. Running a business and swinging a hammer are very different. If you are trying to do both, your spouse will never see you, and your children will wonder who the person coming home late and leaving early is.
2. Poor management: Not understanding basic business processes and never taking a scheduling class or an estimating course is a mistake. Just being employed in the business does not necessarily mean you understand all aspects of running a company.
In addition, most new businesses are underfunded and do not have the resources to hire the right professionals to guide them. It is important to have a legal adviser and a certified public accountant with whom you can discuss the appropriate structure of your business and the required records and reporting. These professionals also will be able to assist as the business grows.
You must have an even temperament, as well, because you will be dealing with subcontractors and employees who will test your patience. I emphasize you must be a good leader, set the path you want your company to travel, and stand firm on processes and procedures. It is YOUR company, and your name is on the door and on every job.
3. No business plan: Too many remodelers start businesses without a business plan. There is software available to help you put one together, and many colleges have business assistance centers that can guide you and prepare you for unexpected expenses.
Your business plan should include planned growth. Growing too fast may cause stress down the line. Maybe your company wants to specialize instead of being all things to all people. Not many businesses are structured to do it all. Think this through with your business plan and become the best in the area you choose. You may include how large of a company you want to be. Large is not always the best. I always ran a small company. One time in 49 years I ventured outside my comfort zone and hired more personnel than I was comfortable with. This did not last very long; I scaled back and was happier and more profitable.
Seek a mentor whom you can really talk to, and schedule regular meetings. Think of your mentor or mentors as your “board of directors.” Their insight will save you many sleepless nights.
Don’t forget to include the means for more education in your business plan. Get involved with your local building group and community. Serve on committees and boards. People like to do business with people they know.
I hope this advice will help some young entrepreneur look at the overall picture and follow the right direction. There is a lot more to write about on this subject, so I may continue in the future—as retirement allows. Right now I need to fix dinner for my still-working wife.
Lonny Rutherford is enjoying retirement and assisting active remodelers through LGR Consulting LLC, Farmington, N.M.