Project referrals are like gold to a contractor. Who better than a satisfied customer to sell your capabilities to a new client?
While no one can argue the benefit of word-of-mouth business, a paving company can only increase sales so far using this method before growth tapers off.
“Businesses stop growing because contractors don’t master the business activities they need to master at their current level, and they don’t prepare for the new challenges they’re going to meet at the next level,” says Bill Silverman, owner of Springboard Business Coaching in Cherry Hill, New Jersey. Silverman specializes in business coaching for contractors and has advised several paving companies.
Silverman focuses on creating basic five-year plans, in which he reviews several facets of a business and charts projected growth patterns. As he says, the exercise isn’t an effort to try to become a “fortune teller” but rather the first step in figuring out how to plan for growth.
These plans account for staff, management changes, equipment, and marketing plans. Then Silverman calculates the number of customers it would take to reach the forecast sales, saying it forces companies to look at, for example, their current marketing systems, then determine what they need to reach the target growth.
“They then can turn the vision of today into a moving picture of the future,” Silverman explains. “So they can say, ‘Wow, when I’m a $2 million business I’m going to have 25 people and five crews. That’s more than I can handle on my own. By the time I’m there, I’m going to need an operations head.’”
Working off a five-year plan may seem daunting to someone who’s never looked beyond the next six months, so Silverman then guides owners in compartmentalizing the long-term approach.
“You take that five-year plan, then break it down into a one-year plan. Then you take the one-year plan, break that down, and determine the priorities that move your agenda forward,” he says. “While it’s not an absolute guarantee that growth is going to happen, you do have a method that makes things more predictable and consistent in terms of growth.”
One component that comes from this process, Silverman explains, is also the weakest: a marketing strategy. “People try to push a business forward without ever mastering something as basic as a marketing system,” he says.
Many contractors Silverman works with say they’re not getting all the clients they want at their current target market, so they believe they should pursue larger clients. “That’s a big mistake,” he says. “I tell them to learn now to get really good at the market they’re attacking today, and once they nail that, move on.”
Silverman says he’s seen growth stop for paving contractors because they get so large they no longer can effectively run the business.
“Many of them start off doing seal coating jobs, and then they grow and get to a point where they have several crews, but the owner is still trying to do everything,” Silverman says. “The business just stops growing because the owner becomes the bottleneck.”
Silverman explains owners must install a management team, promote themselves to CEO, and put processes in place that allow them to place more responsibility on the management team. This sounds easy on paper, but often meets resistance across a company because employees often fear change and are unsure of their abilities. Plus, an owner can be reluctant to step away from certain tasks.
“Because he doesn’t want to let go, he doesn’t always train his management team to do the things that he needs to, and then he turns around and realizes the plan doesn’t work,” Silverman adds.
Chris Fink, owner and general manager of Dale’s Paving in Bossier City, Louisiana, realized several years ago he was stretched too thin and made a shift. In addition to paving, he and his wife also ran a car wash business.
“When my father was around it was easier,” he says, referring to his late father Dale W. Fink, Sr., who established the company in 1982 and passed away in 2008. “It was just too difficult to run the car wash and run the paving business,” he says. “I felt like I was never 100 percent anywhere – I was a third at home, a third at Dale’s Paving, a third at the car wash and 100 percent nowhere. So we sold the car wash and really ramped up and focused on Dale’s Paving.”
Running and managing his business has changed; he now delegates responsibilities to seasoned and capable employees. “My management honestly is more hands off now for me than ever before, which is scary, but I feel necessary considering our growth,” Fink says.
Silverman recommends owners continue the activities that provide long-term return on investment, such as creating strategic relationships, planning a new service and following up with large customers to make sure they’re happy.
“You want to make sure your clients clearly know they are a priority and are being taken care of,” he says. “At the same time you can’t have the attitude that clients only want to see you, the owner. That’s a recipe for being small forever.”
Silverman’s point about the importance of following up is a facet that Andrew Smith says he staunchly practices.
Smith, vice president and project manager for Robert Smith Incorporated in Chattanooga, Tennessee, says he works to grow his business by separating himself from his competition via top-notch customer service.
“It’s an entire approach from us,” he says. “I follow up with people quickly and return phone calls and emails right away. We get their budget numbers to them, sit down on the design end if needed, and then come alongside people during the permit process. We’re focusing on customer service from beginning to end.”
To Silverman’s point, Smith says he maintains a top-level contact position, a step he says helps maintain trust with a customer. “I am one central point of contact. If somebody calls Robert Smith Incorporated, they’ll talk to me on the front end, then they’ll see me out there with all the guys during the project, and then on the back end we’ll walk through the job together,” he says.
Part of this strategy is making sure his employees are cross-trained. His company is big on its employees wearing multiple hats, with no one employee doing just one function. He gives himself as an example.
“You’re talking to me as an estimator, a partner in the company, and someone who can make a decision in the field, so there’s no disconnect between the field and change orders,” he explains.
Smith also says a simplified hierarchy helps keep customers apprised of project activity and timeliness, and maintains a high level of quality control.
“We found that best way of maintaining project quality is effective communication from me to all the guys out in the field,” he says. “But then also from me to customer representatives and the engineers. There isn’t a lot of breakdown because there aren’t a lot of people involved.”
Effective communication also includes marketing. Smith and Fink both take pictures of their projects and use them in social media platforms and as part of presentation packages, but Smith takes things a step further by serving as an advocate of his primary product, roller compacted concrete (RCC).
He proactively seeks out opportunities to promote RCC by speaking at industry conventions and “lunch and learns” with engineers. “I am an ambassador of this product,” he says. “I want it to be used in the right applications and sold for the right projects.”
In tandem with delegating responsibility to senior level staff, Silverman recommends a continuing career development process for employees, which in turn will benefit any long-term growth strategy. This development, he says, starts with the atmosphere at the company.
“Owners should work to create a positive work culture that reflects the business they want to have,” he explains.
Another part of this culture is developing a hierarchy of responsibility and recognizing how an effective work crew is developed.
“If you create the right structure, hold employees accountable and expect they’re going to rise to the occasion, many times they exceed your wildest expectations,” Silverman adds. Doing this directly relates to delegating responsibilities because it helps identify employees who can, or have the potential to, fill those higher-level positions.
“Reaching the next level of growth an owner has identified is only enhanced by having procedures in place that makes it easy to create one good crew, and then ‘clone’ them so that each successive crew is as effective as the last one,” Silverman adds.
Fink recognizes that developing and maintaining a competent work force is key to growth, saying that his success is “110 percent” due to his employees. Most of his crew has been with Dale’s Paving for at least 10 years.
Smith’s “multiple hat” approach, in addition to making sure he has a six-month backlog of work before hiring additional staff, allows him to develop long-term skills for his employees as well as a small turnover rate.
“That’s another reason we’ve grown, because we try to really put our guys first, so we don’t overhire and then we don’t have to lay off or cut back in lean times,” Smith explains.