Despite the old adage that if you’re not growing, you’re dying, growth in construction doesn’t have to be a constant thing. It can and should be a well-planned, prescriptive process. For many of us, 2020 was a wild year, with mixed results for sales, staffing, and profits. And because of that wild ride—and a potential forecast of further uncertainty—most contractors I know are taking early 2021 slow. Maybe even slower than normal.
You don’t have to be constantly growing to be successful but to apply what we talked about last week, you do have to know what growth looks like to you and plan accordingly. A successful roofing company positions itself for growth. So, even if you want to pace yourself for growth in 2021, here are a few things you can do to position yourself for growth as you wait to see how things pan out.
When you create an annual plan, you start by projecting your sales and revenue for the year. However, to plan for growth, you need to get more granular than that, so try to narrow down your projections to quarterly or even monthly sales. Getting a month-to-month view of your business is the easiest way to determine where things are heading.
There are a lot of ways to do this. You can look at historical sales and trends, assuming you have a CRM that can provide you that data and that the metrics are not wildly skewed from COVID or other circumstances. You can also look at Previous-Year P&L statements by month, or you can even look through your spend history by month with your vendors and suppliers (although this might be less accurate). Based on those numbers, you should be able to come up with a rough projection of the metrics you are targeting, which should give you the information you need to build out your plan.
Make a plan (PLEASE)
I can’t emphasize enough that setting up a plan is the foundational step in setting up your year. If you fail to plan you plan to fail. Regardless of your desired outcome, it all starts with a plan. But as I mentioned above, an annual plan does you no good when you are trying to be more prescriptive about when you deploy certain aspects of your plan. So let’s break this down further and discuss the different metrics you should have in your plan:
- Sales & Cash Flow. Whatever your plan is, you will likely need money to do it. Breaking down your annual sales to monthly sales is an easy way to know if you will have the financial resources necessary to do what you want when you want. For example, let’s say that you are a siding contractor in New England. Your work is probably almost always outside, and for many months, it gets pretty cold in New England. So your business might slow considerably from November through March or even April. Knowing that and having it built into the plan is really important because you might not have a lot of capital to spend during the slow months.
- Hiring. This is very similar to sales & cash flow. Having a baseline on when money comes in is generally synonymous with demand (more jobs equals more money). Therefore, you don’t want to hire a bunch of people in January if you don’t get busy until May.
- Budget and Expenses. It may seem obvious but you should project what your major expenses are going to be. Planning a company trip? Add it to that month’s budget. How about a new piece of equipment, or a large job that’s going to chew up some cash flow? Knowing these things is an integral part to planning for them.
- Your Calendar. Knowing my business plan allows for me to plan my own personal and work calendar. I am a roofing contractor and my busy season is from March to November, so I take my vacation in February.
Track your results
If you take the time to plan out your business, then take the time to track the results. I can think of no bigger waste of time than to create a plan and not analyze the results. Make sure you have a means to track the result of each part of your plan. I find it helpful to communicate and share my plan with some “accountability partners,” people who will make sure I do what I say I’m going to do. The point to remember is that no matter how you create a plan, there is always going to be a result—and you need to track it!
Like I said earlier, we are coming off of a wild year. So if your plan includes a slow January and February, but you are busting out of the gate despite your plan, then adjust your plan! Don’t be afraid to make corrections. A plan is notional and data-driven, but human behavior is not. Construction isn’t managed off of a spreadsheet. We all experience reality in the course of our day. So if your reality is different from your plan, adjust your plan.