Why do we have to grow?
Unless you are a pure lifestyle business, growth is imperative. One owner put it quite succinctly:
Grow, shrink or become extinct
Curtis Blanton (CEO DCO Commercial Floors
Some of you may be contemplating the shrink fit option. After all, backlogs are down 15-20% across the industry.
It’s only natural to look at your overhead costs and see it doesn’t spread so nicely across a smaller volume. Yes, you could reengineer your business but would probably mean painful cost cutting.
But growth also has its challenges, so why go that road?
These numbers come from our commercial flooring benchmark database (you can get your copy by going to flooringbythenumbers.com/benchmark)
The revenue generated per employee in the larger business is 67% higher
It has the advantage of scale. Scale creates the opportunity for specialization.
In a smaller environment the salesperson might work with a GC. He estimates, sells, administers the contract, project manages the job, chases change orders, completes punch and send completion documentation. Oh, and hopefully, collects the cash. And then the retainage. P.S. don’t forget to ask for a reference!
Then the next day he is chasing a small residential deal or an end-user opportunity.
Big deal guy? Small deal guy? Residential guy? End-user guy? Contracts guy? Admin guy? CFO?
Imagine if he just specialized in winning big deals. You gave him a contract administrator, a field tech. Of course, he would sell more and become excellent in his specialization.
Similarly, you would get better outcomes if you specialized your project managers into complex bids with GC’s and small bids with home builders.
Scale gives specialization. Specialization provides the route to increasing productivity and effectiveness.
Some tips to grow (and scale):
- Get real familiar with what you do well. This is at the individual and total business perspective.
- Guide your key players so they take advantage and leverage what they are good at
- Identify where you are making money and reduce the activity in areas where you are not
- Standardize repetitive tasks. Invest in this capability it will pay enormous dividends over time.
- Use your size to your advantage.
- Think BIG. Act bigger than you are and run your finances based on your size.
- Build equity in your business. Strong reserves allow you to make the best decisions even when things are not so great.
Don’t shrink, don’t go extinct. Please grow.