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I played a lot of touch football when I was around 10 years old. Eight of us boys from the neighborhood would gather at our local park and choose teams. After kickoff the offensive team huddled to decide on a play for the next down. The quarterback usually called the plays, even though he wasn't always the smartest player on the team. He was usually the one who was the tallest, fastest or had the best arm. Obviously, there wasn't a playbook, nor did the teams have time to practice their game plan. Before each down, the inexperienced quarterback gathered his team in a huddle and called plays based on what he thought would work and surprise the opponent. The players were also loosely told what position to play, who would run which way, whose job it was to block, and where they were to go ... not a good strategy for a winning outcome.
Think about your company. Is your business strategy better than my neighborhood pickup football game? Do you huddle up before every decision? Do you tell your players what to do before every project? Do they know what to do based on written systems and strategies from your company playbook? A professional football team is a good model to copy for small business owners. Professional teams have written strategies for every season and each game. They also have written plays designed to work in every situation they encounter. Do you?Unless you want to run your company like a 10-year-old quarterback, you need a winning playbook to follow. Thinking like a professional sports team, what needs to be in your company's business plan?
Professionals must have all their bases covered to put a winning team on the field while making as much money as possible. Where should you start to draft a winning game plan?
1. Determine your overall company mission, vision and values.
Sit down with your key managers and take time to discuss why you are in business.What's the purpose for owning your company? This exercise will get you focused on the real reason you go to work every day. I often ask business owners why they are in business. They answer something like: "To make money installing or refinishing wood floors." You are not in business to install or refinish wood floors. You are in business to maximize your resources of time, energy and money so you can get the biggest return in whatever manner you desire.
A construction company is a great start to achieve what you want. It is rewarding but demanding work. But it is limited in net profit margin potential, as it is very cyclical with what can be thin margins. In my opinion, a construction company creates an excellent opportunity to seek opportunities to build wealth versus just building for others. When you build for customers, that allows you to make some money. When you build for yourself, that allows for passive income, freedom and equity growth. What are your overall company mission, vision and values?
2. Assign coaching staff assignments and responsibilities.
When a professional sports team is not winning many games, what happens? They don't fire the players, they fire the head coach. What else happens? Most of the coaching staff gets let go as well. In order to build a winning team, you must surround yourself with the best managers possible. Excellent managers require high pay to keep them. A while ago I was speaking at a national association of material distributors. A successful business owner approached me and stated his goal was to double his company to $30 million in sales over the next five years. He loved selling and wanted to try to find someone who could run the operations side of his company. I asked how much he was willing to pay to give himself more free time, double his company and make more profit. He said he was willing to pay $50,000 to $75,000 per year to find a vice president of operations. I smiled and said, "Good luck!" In my opinion, to find the right person would cost him around $100,000 to $150,000 per year.
The problem with small thinkers (and entrepreneurs) is they try to hire cheap and think they can fill in the gaps themselves with a weak (cheap) manager. When you hire cheap and you fill in the gaps, you are not selling or doing what your strength is. And guess what else? You don't make any money, and your business doesn't grow. Make a list of the top five positions you need filled with the best possible people you can find at whatever it will cost:
1. Sales 2. Marketing 3. Operations 4. Estimating 5. Finance
Next, decide which will benefit your company the most. Go out and hire at least one top professional to help your company grow. Then look to the future and do it again and again until your company is growing and maximizing the bottom line.
3. List your players, their strengths and weaknesses.
Professional sports teams have many people assigned to scouting and managing their players. They realize that winning games is all about the players they put on the field. Most small business owners don't spend a lot of time managing their employees and working to help them become the best they can be. Small businesses hire people to do a job and then hope they perform. When they don't, they get frustrated and complain they can't find any good help.
To solve this problem, sit down and make a list of all the positions you need to operate your company. Next to each position, list what accountabilities and responsibilities are required to achieve the results you want. Then look at who you have assigned to each position. You'll find that several positions are filled with the wrong people. On a professional sports team this almost never happens. The manager of player personnel is always looking to fill each position with the best player possible, even if it means trading away a player for another. And guess what else? The bad players who don't achieve the expected results are benched or cut from the team quickly. How are you as the manager of player personnel?
4. Design your offensive plays and strategy.
Winning more games than you lose is simple: Score more points than your opponents. In business, what plays will guarantee you win, provide excellent service and provide superior quality? I just left the dentist's office. While waiting in the chair, I was impressed with the preparation. All of the tools and supplies for my procedure were laid out in the exact order of when the dentist would need them. And my new crowns were sitting in a small box ready to be installed. Prior to my arrival, a technician had prepared the room for my dental work. I am sure they must have used a checklist to get ready. What kind of preparation and checklists do you use to ensure your offensive plays work?
Think about where you can lose the most money the fastest. For example, someone forgets to order the custom moldings on time and holds up the entire job and payment. Someone didn't get final signed approval on the stain color, and now you have to resand the entire floor and start over. Or a project manager runs a meeting without a standard agenda and forgets to review some urgent approvals in a timely manner. Where have you lost money? Make a list of the plays you need to write out and make them standard in your company.
5. Design your defensive plays and strategy.
And without a good defense, you also can't win many games. Defensive business strategies are those that ensure you don't get sued or need to sue to earn your money. We use a checklist on our construction contracts to list out how many days' notice is required for things like approvals, changes, notices, etc. We also have a general contract checklist to make sure we don't miss a clause that we won't want to agree to. We have a collection policy we follow that includes how we invoice, what we do when not paid and how to file a lien. What system do you follow when you want to protect your rights or things aren't going your way?
6. Implement a training program.
Professional sports teams spend a great amount of their time practicing and training. Football players attend a long spring training camp and then practice and train five or six days a week during the season. They only play games once a week. In business, most companies don't train or practice very often, if at all. They just hire people, throw them into the game and hope for great results. Proper training takes a concentrated effort and a priority to implement a comprehensive training plan with exercises and drills to improve people's skills.
To start a simple and effective company-wide training program, make a list of the top things each position must do well. For example, a project manager must be able to organize, manage and lead meetings. A job foreman must be able to ensure the job site is actually ready to start the installation. A bookkeeper must be able to make sure any change orders have been fully executed prior to payment and funded by the customer. Estimators must be sure they have read the project specifications. While all of these seem simple, each of them costs lots of cash if not done properly.
Make training a priority by implementing a weekly 20-minute training session for each department or crew. Pick one or two areas to review with the teams. Then have them practice doing the task on their own with input and coaching. Remember, no train, no gain!
7. Develop an equipment inventory management system.
Imagine being an equipment manager for a professional football team and not keeping an up-to-date list of what you have, what needs to be fixed and what you'll need in the future. Without a good equipment inventory management system, your team would eventually show up without enough helmets or uniforms for the game! In your business, employees rely on nailers, sanders, saws, extension cords, and more to get their jobs done. With outdated, broken or missing tools and equipment, it's impossible. Start by making a complete list of all your tools and equipment. Next to each piece, write out the condition, maintenance schedule and rental value. Then assign someone in your company to be in charge of managing the process for you. The ultimate goal is to keep your crews working efficiently so you can make as much money as possible.
8. Initiate business development plays.
The key to success in any business is customers, and lots of them. Even in professional sports, an empty stadium won't keep a team on the field very long. What is your sales system to sell the most tickets and fill all your seats to the top? Do you regularly contact your repeat and loyal customers and thank them for their business? Do you have an ongoing program to reach out to potential customers and lure them into buying from you? Without a fan appreciation and attraction program, your company will not reach its bottom-line potential.
9. Track your financial plays and strategy.
The rubber meets the road up on the scoreboard. Did your team win or lose? Without a prominent scoreboard, sports are irrelevant. In your business, score is of utmost importance. What numbers will you keep track of? I suggest every week you spend time getting to know your numbers: sales, gross profit, net profit, job costs, employee costs, equipment costs, receivables, payables, bid-hit ratio and markup trends. Without a clear knowledge of your financial score, you can't judge how well your team is playing the game.
10. Play business like a sport.
Business is more fun when you manage like a professional sports team owner or head coach. Every day, ask yourself what decisions you need to make and how a coach would go about making the right decision. In order to win, you've got to be working on all nine cylinders described above. Without any of these chapters in your playbook, you will eventually lose more games than you win.