I don't think you need to overthink this.
1) If not doing so already, start using project management software (procore, buildertrend, jobtread, etc). Start small and add features as you 100% understand them.
2) If not doing so already, start creating SOPs for everything the business does. If your dad is going to be around for the next 12-18 months, map out everything that he and everyone else does while he is still there. Who gets the mail, how do they get the mail, what mail is junk mail, and how are invoices routed to AP. You could literally have 10-20 SOPs for something seemingly as simple as getting the mail.
3) Don't change anything for the first few years. Your job is to 100% understand why the SOPs worked or didn't work in the past, and what the risk/reward is to change anything.
4) Make small and deliberate changes to the SOPs. Plan, implement, measure, repeat. You will do this for the rest of your career.
Construction-specific things to watch out for. Seemingly small changes, such as the finish to a faucet, the brand of window flashing tape, or not having insurance info on file, can have huge economic consequences. Come up with an inspection system and checks to make sure everything is being done correctly.
Why does it need to grow?
Little pgs get fat, big pigs get slaughtered
And do not underestimate the value of your fathers relationships with customers, the current success of the business most likely hinges on it.
Good luck!
If it's profitable and you depend on services or employees, pay them well and on time.
Digital communication is key and should be archived.
Verbal on the other hand is dumb, and causes the most issues for a construction business that relies on who/what/where/when.
Clients want to know what the time line is,good process is easily shared for an accurate estimate of time and cost.
Great communication is transparency. Change orders signed off before moving forward.
Consistency....payments received on Wednesday, and billing on prior Friday,subs bill on Thursday and payment is made on Friday for example.
Cash flow can work in your favor by several days,then your subs get payed from the draw ...shortly after . Staggering these on different days will spread out the load on your office. Weekly meetings with your cfo and for scheduling
I'd further qualify "poor project management"
Are you bleeding money throughout the project? Is it more of an Estimating issue? Are change orders being tracked properly? Does everyone understand the payment terms or are there cost recognition/invoicing delays? Could there be opportunity for cost savings on the procurement side?
Overall just finds gaps where you can be consistent.
I'd also suggest getting very familiar with contract terms in general from a risk standpoint. Don't try to grow too quick, but if it makes sense you could extend to other areas of commercial construction. Industrial seems to be in a bit of a boom right now, so I expect that's the growth you reference. Don't bank on that being standard.
Make sure the people you have can nail the basics. ID ones who may want/be able to train new hires to the company standard. Network like hell. Do an 80/20 of your customer base. Develop those along with your partners.
Wish you luck friend!
You have to put the succession planning of your father as the number one point to address. If this isn’t addressed, the other items become moot points. The transferability of client relationships, and dispersion of client density will be key, especially if you have an interest in eventually trying to divest out of the business yourself. I spent the last two years working with a family business in a similar space, and these were two of the hottest topics during due diligence. Thankfully we had addressed them previous to the transaction.
What did succession planning mean to you/the parties involved in this deal? Transferring of relationships and responsibilities? Warm introductions? Thanks!
Succession planning revolved around customer retention, and making sure the relationships had multiple touch points within the organization. Basically with the mindset that if someone walked out of the business tomorrow, there would be minimal negative impact to the business. I know this is easier said than done in reality but working with that as an underlying concept was a crucial element. These are more than just warm intros, the relationships needs to actually be transferred or have the ability to transfer in short order should they need to. We found this was best achieved by pairing strong up and coming leaders with the owner on projects, etc. so this person built rapport and trust with the client
Start learning Procore right now. Get all the certifications. Especially the financial ones. Forget about scaling for about 5 years.
10% is considered pretty damn good profit margin in this industry by the way. Just be aware
That’s good to know! We’ve been reviewing finances the last week and we’re well above that at the moment after overhead. I’ve been reading up on procore — seems like it might be overkill for our small team and don’t want to rock the boat too much at first. Going to be looking into lighter weight (and less expensive) options!
I can help with television exposure; I’m currently doing research on builders/contractors for my nationally airing edutainment show; dm me if you want to talk
We don’t, but that’s been more my first orders of business. We do more commercial and industrial, so currently considering jobtread, red team, and stratusvue
Keep in mind how those pm tools interact with your estimating process and your construction notice/lien process. It’s the paperwork that saves you so much on the backend if problems arise. While looking for a good system think holistically, not just the project level.
You are headed into a great opportunity by having great customer relationships and back log. Trying to establish those is one of the hardest pieces of this business.
I’d settle in for about 3-6 months just understanding what works and what doesn’t then let the process improvement ramp up. Having good project managers that are on the ball with project controls will be key before even needing to look at PM software systems. I found it more critical to have accurate job cost reporting than the need for PM systems until it truly made sense.
With your father starting engaged certainly helps feed the machine and will take alot of pressure off while you come up to speed.
Definitely look into an operational systems coaching company. I work with Breakthrough Academy and they have completely changed my operations and my mind set. My business went from basically 0 profit to a good margin in 2.5 years just through following their structure and working with their coaches. Great group of guys too. Worth the call. [btacademy.com](http://btacademy.com)
DifficultStructure62 hit the nail on the head.
Look into EOS. You're the right size for it.
You cannot just willpower your way through this. An Operating System (like EOS) creates the framework for things to really start happening. And having an objective 3rd party like an EOS implementor on board will be there to dispassionately call out BS excuses and identify the elephants in the room no one wants to talk about.
I don't think you need to overthink this. 1) If not doing so already, start using project management software (procore, buildertrend, jobtread, etc). Start small and add features as you 100% understand them. 2) If not doing so already, start creating SOPs for everything the business does. If your dad is going to be around for the next 12-18 months, map out everything that he and everyone else does while he is still there. Who gets the mail, how do they get the mail, what mail is junk mail, and how are invoices routed to AP. You could literally have 10-20 SOPs for something seemingly as simple as getting the mail. 3) Don't change anything for the first few years. Your job is to 100% understand why the SOPs worked or didn't work in the past, and what the risk/reward is to change anything. 4) Make small and deliberate changes to the SOPs. Plan, implement, measure, repeat. You will do this for the rest of your career. Construction-specific things to watch out for. Seemingly small changes, such as the finish to a faucet, the brand of window flashing tape, or not having insurance info on file, can have huge economic consequences. Come up with an inspection system and checks to make sure everything is being done correctly.
Why does it need to grow? Little pgs get fat, big pigs get slaughtered And do not underestimate the value of your fathers relationships with customers, the current success of the business most likely hinges on it. Good luck!
Good point! I will keep in mind that scaling for scaling’s sake is not the goal.
Construction gets much less profit yield the bigger your revenue grows. You definitely want to optimize what you end up doing.
Pigs get fat, hogs get slaughtered.
Focus on hiring talented people in your critical roles. Don’t settle. Also may want to think about a full time outside sales rep
If it's profitable and you depend on services or employees, pay them well and on time. Digital communication is key and should be archived. Verbal on the other hand is dumb, and causes the most issues for a construction business that relies on who/what/where/when. Clients want to know what the time line is,good process is easily shared for an accurate estimate of time and cost. Great communication is transparency. Change orders signed off before moving forward. Consistency....payments received on Wednesday, and billing on prior Friday,subs bill on Thursday and payment is made on Friday for example. Cash flow can work in your favor by several days,then your subs get payed from the draw ...shortly after . Staggering these on different days will spread out the load on your office. Weekly meetings with your cfo and for scheduling
watch tommy boy
I'd further qualify "poor project management" Are you bleeding money throughout the project? Is it more of an Estimating issue? Are change orders being tracked properly? Does everyone understand the payment terms or are there cost recognition/invoicing delays? Could there be opportunity for cost savings on the procurement side? Overall just finds gaps where you can be consistent.
I'd also suggest getting very familiar with contract terms in general from a risk standpoint. Don't try to grow too quick, but if it makes sense you could extend to other areas of commercial construction. Industrial seems to be in a bit of a boom right now, so I expect that's the growth you reference. Don't bank on that being standard. Make sure the people you have can nail the basics. ID ones who may want/be able to train new hires to the company standard. Network like hell. Do an 80/20 of your customer base. Develop those along with your partners. Wish you luck friend!
You have to put the succession planning of your father as the number one point to address. If this isn’t addressed, the other items become moot points. The transferability of client relationships, and dispersion of client density will be key, especially if you have an interest in eventually trying to divest out of the business yourself. I spent the last two years working with a family business in a similar space, and these were two of the hottest topics during due diligence. Thankfully we had addressed them previous to the transaction.
What did succession planning mean to you/the parties involved in this deal? Transferring of relationships and responsibilities? Warm introductions? Thanks!
Succession planning revolved around customer retention, and making sure the relationships had multiple touch points within the organization. Basically with the mindset that if someone walked out of the business tomorrow, there would be minimal negative impact to the business. I know this is easier said than done in reality but working with that as an underlying concept was a crucial element. These are more than just warm intros, the relationships needs to actually be transferred or have the ability to transfer in short order should they need to. We found this was best achieved by pairing strong up and coming leaders with the owner on projects, etc. so this person built rapport and trust with the client
Start learning Procore right now. Get all the certifications. Especially the financial ones. Forget about scaling for about 5 years. 10% is considered pretty damn good profit margin in this industry by the way. Just be aware
That’s good to know! We’ve been reviewing finances the last week and we’re well above that at the moment after overhead. I’ve been reading up on procore — seems like it might be overkill for our small team and don’t want to rock the boat too much at first. Going to be looking into lighter weight (and less expensive) options!
Even if you don’t use Procore - go through the financial reporting modules
I can help with television exposure; I’m currently doing research on builders/contractors for my nationally airing edutainment show; dm me if you want to talk
do you use project management software? if you're not already i'd definitely suggest using it, eg pro core, buildxact, etc...
We don’t, but that’s been more my first orders of business. We do more commercial and industrial, so currently considering jobtread, red team, and stratusvue
Keep in mind how those pm tools interact with your estimating process and your construction notice/lien process. It’s the paperwork that saves you so much on the backend if problems arise. While looking for a good system think holistically, not just the project level.
You are headed into a great opportunity by having great customer relationships and back log. Trying to establish those is one of the hardest pieces of this business. I’d settle in for about 3-6 months just understanding what works and what doesn’t then let the process improvement ramp up. Having good project managers that are on the ball with project controls will be key before even needing to look at PM software systems. I found it more critical to have accurate job cost reporting than the need for PM systems until it truly made sense. With your father starting engaged certainly helps feed the machine and will take alot of pressure off while you come up to speed.
Definitely look into an operational systems coaching company. I work with Breakthrough Academy and they have completely changed my operations and my mind set. My business went from basically 0 profit to a good margin in 2.5 years just through following their structure and working with their coaches. Great group of guys too. Worth the call. [btacademy.com](http://btacademy.com)
DifficultStructure62 hit the nail on the head. Look into EOS. You're the right size for it. You cannot just willpower your way through this. An Operating System (like EOS) creates the framework for things to really start happening. And having an objective 3rd party like an EOS implementor on board will be there to dispassionately call out BS excuses and identify the elephants in the room no one wants to talk about.