ONE OF THE greatest impediments to successful contracting businesses is the total lack of business training on the part of anyone involved in administration. The more intensively people were trained in the skills of the trade, the less likely it would be that someone would ever bother to mention that success — your ultimate financial success — will be built by being a good businessperson, not a good craftsman. All of us were constantly complemented on neat solder joints, clean wiring, good troubleshooting and all the basic elements of being competent installers.
The people who trained you probably were just that, and proud of it! They were highly competent installers who really had no clue about the managementskills that would make a contracting business throw down the profits that were the reason you really went into business. You can have a great contracting business in the eyes of all those mechanics and still be a failure as far as society, your community, your family and your banker are concerned.
Let me be dogmatic about this. For all the years I have been writing, I have not wanted you to be just reasonably successful; I wanted you to be almost obscenely successful. I know this can only happen if, through significant personal effort, you can learn how to manage your business as a highly profitable, efficiently run part of your business community. And when I say member of the business community, I mean I want you to compare yourself with the successful business leaders in your community, not the other contracting businesses. Your competitors may be the worst measures of success you might find.
If you are going to pay yourself well for what you do and rise above the level of the ordinary day-wage, no-fringes average guy, then you must learn to manage your affairs as a true business and treat your family and employees as team players in your remarkable enterprise.
You must have a fringe benefits program for you and for all your employees who are so well paid and so well provided for into the future that they will never leave.
As a quick aside, this doesn't mean you might not have to fire some people. You'll find people who will never leave but who never should have been hired! When you develop a good, coordinated, happy team of players, they deserve to share your vision and share in your predictable flow of generous profits.
If I had my choice between somebody who was a good craftsman vs. somebody with a fundamental business degree and a firm understanding of basic accounting, I'd pick the person with the business training to run a contracting firm every time. Great craftsmen who are honest are easier to find than good business instincts. That applies in this and every other trade.
There is a reason for this. The people who run apprentice training programs have preached that you are proud craftsmen and completely ignore giving you any understanding of the accounting behind successful management or the sales techniques required to be successful. Believe it or not many of these instructors stress you should never sell, that selling is not for you to do. And they are condemning you to a life where you will never know the thrill of an above-average income.
Too often contractors look to their suppliers and their manufacturers for whatever training they get and we all know exactly what they receive. They receive training in installation, troubleshooting and repair. They seldom, if ever, get in-depth business management advice.
I do not blame suppliers. First, it is hard to convince you that you should take a business management course. Second, a little bit of business management training can be more trouble to the supplier than it would ever be worth.
I am personally acquainted with contractors who have been more successful than your wildest dreams. These success stories are so outrageous that I would not attempt to put them in these pages. These stories tell of wealthy contractors whose education ended in the middle of grade school and who never took a formal business management course in their entire lives. These men are highly intelligent "naturals" who would be successful entrepreneurs in any industry, but they chose contracting because there are so many inept businesspeople in this field that their success has been easy and swift.
These great successes have a strong respect for the plumbingheatingcooling industry but, to a great extent, they look with dismay and pity at the way most of you mismanage your companies.
Now, don't jump to the conclusion that I think you should hire a business manager. Certainly a business manager could be one of your solutions, but defensively, you must learn enough to understand business fundamentals.
If you have children or if you have young employees whom you wish to groom for management, insist they go, at minimum, to a community college and learn the elements of good business practice, business communications and personnel administration. You should resolve to never again let anyone manage your business who has not been trained in business management.
I will back off from that statement to this small extent. Training takes many forms. If you're making a solid profit, that's a better test of business education than reading a book.
Over the years I look back and remember that we have visited about many of the elements of the successful contracting business. I am proud and comforted in the knowledge that Ihave indeed helped many to succeed as contractors.
Success is a group of successfully executed elements. It is not just "flat-rate pricing," although if you do service work, this is fundamental. It is not just understanding adequate markups and the recovery of costs both fixed and variable, but I can't imagine how you could be successful without having your arms around these subjects. It is not just about the intensive managementof your invested capital, but most of you fail miserably in this area. It is not just about advertising and sales promotion, but, face it, this is an industry where some think a clever refrigerator magnet is all the promotion they need!
You'll hear more about this in the months ahead, because I'm firm in my resolve to seek out and find those of you who really care about being successful and making more money than most of you ever thought possible.