Fed up working for wages in your own building company?
If your building company is not hitting industry benchmarks for profit margins, cash flow and workflow, then you may find yourself hitting a glass ceiling when it comes to growing your income.
And when you don’t know the benchmarks you should be hitting, how can you course-correct and steer your building company in the right direction?
What if you could have a full understanding of your numbers and you could benchmark those numbers against industry standards on a monthly basis?
Would that help you to power towards greater success?
Why Benchmarking Is Crucial To Your Building Company
In the words of Karl Pearson, “That which is measured improves. That which is measured and reported improves exponentially.”
Monitoring your KPIs on a monthly basis puts you in control of your business and enables you to know what to work on and where adjustments are needed.
You’ll know if there’s a weakness and have the ability to course-correct your business in order to stay in line with the leaders in the industry.
It’s Not As Simple As Taking On More Jobs
It sounds simple enough, but so often builders think that in order to make more money, they just need to increase their revenue.
The hard truth is, just because you’ve taken on more jobs, doesn’t mean that you will make more money.
In fact, in many cases, quite the opposite occurs.
Higher revenue does NOT necessarily equal higher profit.
Eighty percent of building companies fail in the first 5 years.
How many failed businesses could have changed their fate had they been able to identify a problem or a weakness sooner?
Construction Is Different To Other Industries
To make matters harder, the construction industry doesn’t work like most other industries, so finding the right advice is never easy.
Even some of the biggest experts in business have been caught out because they don’t fully understand the nature of this industry.
The Association Of Professional Builders recently attended a seminar being held by a world renowned business coach.
During his introduction the coach shared a story about a building company that he coached which doubled its turnover within just 12 months.
This story was used to excite the crowd on how successful his strategy was in generating leads.
However, he went on to mention that the building company failed to ‘scale up’ during this expansion.
As a result, 8 family members of that building company are now facing personal bankruptcy.
Not All Business Coaches Understand Construction
Growing a building company is not as simple as generating more leads or signing more contracts.
So business coaches who simply say “business is business” and “it’s all the same,” really have no idea and probably shouldn’t be giving you advice.
If a building company is taking on jobs with low margins, or worse, no margins, then all you are creating is cash hungry monster that requires constant feeding.
And if your business coach doesn’t know the financial benchmarks specific to the construction industry, then you’re playing with fire and probably going to get burnt.
That’s because KPIs for building companies are very specific depending on your niche and revenue.
It’s not just about signing more contracts, it’s about understanding your complete financial position, month-in and month-out.
Once you understand this, you will be able to benchmark your business against industry standards on a monthly basis.
The Chartered Management Institute have concluded that 74% of businesses that monitor KPIs hit all of their growth targets.
A Case Study
Long time member of the Association Of Professional Builders Matt Smith from Rainbow Building Solutions found himself in a tough situation a few years ago.
Although he had lots of working coming in, his business just wasn’t making enough profit on his jobs.
He was considering closing down the company and working for someone else until he discovered which numbers he needed to focus on and how he could improve them.
He’s now enjoying good profits on contracts which not only cover expenses, they bolster the bottom line which allows for additional shareholder distributions at year end.
The Next Step
While it’s completely vital to be across your KPIs, it can be confusing if you don’t have the right guidance.
So that's why we created the ultimate checklist to help you understand your building company's financials.
It doesn’t matter if you don’t know what numbers you should be looking at.
You’ll discover the specific numbers that need to be monitored every month so that you always have a clear picture of how your building company is tracking.
Even if you don’t know whether your numbers are good or bad, you’ll be shown how to benchmark your company against industry specific standards, relevant to your niche.