 |
 |
The Perfect Fit
Almost all entrepreneurial businesses grow and develop reactively. In other words our businesses end up looking like what the forces of the market shape. Our size, our services, our personnel all may have been dictated - but not by the founder.
Did you know that you could grow and shape the company that fits you and your skills perfectly? I'm sure you knew that intellectually - but did you really BELIEVE that? And did you know that the benefits would be a high level of satisfaction for you, the right amount of income and a uniquely personal one-of-a-kind, not-to-be-copied company? If this intrigues you - keep reading.
Think of yourself -- as owner -- as driving a team of four oxen. One represents average job size, the second pricing, the third owner's role and the fourth represents company volume. By controlling these oxen, by making deliberate decisions in each area, you will consciously design the company you desire. Let's look at each of those areas:
Average Job Size. The bigger your average job size, the fewer jobs must be sold and supervised and billed etc. Thus overhead in dollars and people is reduced. However, risk may go up since the failure of any one job can be significant. A $1million company could mean ten $100,000 jobs or 200 $5,000 jobs. There will be huge differences between those companies. The client will be in a different demographic and the type of job will be significantly different. What size and type of job and client most excites you?
Pricing. If you sell $1 million in work at a 20% markup, you anticipate
job costs of $833,333 and a gross profit to cover overhead and net
profit of $167,667. If however, your $1 million in sales is sold
at a 50% markup, you will do significantly less work ($666,666 in
anticipated job costs) for double the gross profit ($333,334). Thus
pricing tends to control how many people you need in the office
and in the field and how much service you can give and how much
return is available for salaries and net profit.
Owner's Role. This area is key to creating owner satisfaction for
to paraphrase -- "If the Owner ain't happy, ain't nobody happy!"
Here's my prescription for a happy owner:
-
Pay - 10% of volume as salary and 10% of volume as net profit.
-
Excellent Benefits
-
Hours averaging 50-55 a week.
-
Leisure - 2-6 weeks a year vacation
-
Role - at least 50% of time spent doing work he/she enjoys
-
Satisfaction level - at least 8 on a scale of 10, where 10 is perfect.
Volume. I'm purposely leaving this for last because it should be a result of the other factors. In my book, you don't want to do any more volume than you need to or want to. Don't be driven to high volume by poor pricing or by too many jobs that walk in the door or by an unexamined wish to be the biggest remodeler in your city. Every dollar of volume adds complexity, personnel, and risk. Choose your volume consciously to serve a purpose. Don't let your volume choose you.
Underlying all this advice is the belief that you have to know yourself first - or how will you know what you want.
A recent exchange of e-mails with David Gerstel, author of "Running a Successful Construction Company," brought this wonderful example of an entrepreneur finding the perfect fit. "I am in business but not in the way I have been in past years. Now I take a project, design and cost plan it, and then build it - acting as project manager and lead carpenter. I am having an absolute ball, love doing carpentry again and mix it up with writing and study and a bit of consulting and teaching. It is a serene and rewarding existence and I feel very lucky."
Don't get green with envy, just get going on your own design-a-company
project!
| FREE 101 PowerTips Report! Subscribe to our Newsletter |
Getting Started
How do you like
our Website?
Quick Links
|
 |
 |
Official Charity of 2008
Remodelers Advantage Inc.
535 Main Street, Suite 211
Laurel, MD 20707
ofc: 301-490-5620
fax: 301-498-6869
Info@RemodelersAdvantage.com