What to be when you grow up?
I had a great conversation the other day with one of my BANG clients about the need to get some systems in place to help automate processes. It’s a pretty common problem faced by a lot of small business owners, but before you can really make a call on what the right solution is, you really need to start thinking about a different question.
How big do you really want your business to be?
That may sound like a silly question, you might be thinking “I want my business to be HUGE!!!”, but do you really want that?
Your business is just a tool for you to get what you want out of life! Nothing more, nothing less!
When I was talking with my client Oliver – owner of Truog Construction, he was telling me about a guy he met recently that used to own a flooring company (and was now a sales rep for a flooring vendor).
This guy used to have a very busy business – he was running 3 or 4 crews installing floors on a full-time basis and had more work than he could handle.
He was also working more than 60 or 70 hours a week.
Finally he took the time to do the math and figured out that he was clearing just about the same amount of money with 3 crews as he had with just 1 crew a few years ago when it was a lot less effort / risk / oversight. He had increased his revenues, but his systems and processes weren’t scalable and he hadn’t created an organizational structure that could do the work without his direct involvement.
If that’s what you mean by wanting to grow your business and get bigger, you might want to rethink that goal. I don’t know of very many happy and successful business owners that can hang on to that kind of model for the long run.
A lot of business owners got into their own business because they wanted to be their own boss, call the shots and ideally build something that had some long term value. However, if you pressed them on it, most of them would also say they would like to have a business that gave them time with their family, a chance to take a vacation or two every now and then and something with the ability to continue to make money whether they were there or not.
What are your choices?
Oliver is off to a great start with his business. He’s a smart guy, very likable, conscientious, trustworthy and knows what he’s doing when it comes to building and remodeling (and smart enough to know when to get help if it’s something new).
He’s building up a great reputation based on satisfied clients, doing what he says and not trying to sell more than needs to be done. He’s developing a strong network of expert resources that he can use as subcontractors to get the big and hard jobs done right the first time.
He needs to grow his business at least some so he can get to the appropriate income level, but beyond that he’s got some choices to make.
- He could be more of a boutique ‘specialist’ builder, specializing in certain neighborhoods, types of houses and / or certain types of projects. This approach would allow him to charge a premium for ‘special’ work and keep the overall size of his business down. This is what I would call the artisan approach.
- He could perfect his processes and products, making it fairly easy to plug in new employees and teams of people. He would focus on more of a mass production approach to solutions and cater to specific problems but do it in a very cost-effective, value added way. This would allow him / encourage him to grow as large as the local market could support (with potential for opening in other markets using the successful model). This is how a lot of franchises get started.
- Money permitting, he could kind of split the difference and really just do what he enjoys in terms of jobs and make it more of a lifestyle business. This tends to be a tradeoff of time for money, but depending on your financial needs it might be a great option.
Technically he also has the choice to be the low cost provider or to brute force an operation together like the flooring guy he was talking to, but I don’t think those are really longer term alternatives.
Whatever choice he decides to make will greatly influence how he goes about building and investing in his business.
What are your thoughts on growing your business? Do you know what you really want to get out of your business? Are you actually getting what you want out of your business? If not, we should talk – give me a call or drop me a line.
Shawn Kinkade www.aspirekc.com