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Delegation, expansion in your contracting business

Jan. 7, 2015
Some obvious concerns become focal points for the owner who first sends out a proxy to his customers: How will the new guy treat my customer? How well will he do the work? Will he do a clean, complete job (or will we have a callback)? Will he bill out the right parts, labor, taxes, etc.? How is he treating my equipment and vehicle? Is he representing my company as I would?

At some point in your business you get to that place where you just can’t do it all. For most one or two man shops, this point is arrived at along with a great amount of angst, worry and self-doubt. Often the first thing delegated is the accounting and bookkeeping.

Photo: Thinkstock.

As the business becomes more successful, the pressure to keep good books, pay appropriate taxes, fees and such gets to be so severe that even the most anal owner knows he must give that job to someone who can devote the time and energy needed to do it correctly. No one likes to receive “nasty-grams” from the IRS or state taxing authorities.

Sometimes, if they are so inclined and have the ability, a spouse fills this position initially. This makes the choice of delegation almost painless. In some cases a bookkeeper or accountant takes over the job. In any case, once the actual transfer of authority takes place, the first tentative step toward delegation has been taken.

The immediate impact of this transfer may or may not be readily felt. It has been my experience that many journeyman/owners view the chore of bookkeeping with little or no enthusiasm, but as more of a necessary evil, to be put up with in order to be in business.

Putting down your tools

The next delegation decision is a bit more stress-laden and more problematic as well.  Sending another journeyman out to do work on your behalf is a leap of faith that most owners do not take lightly. The trust issue looms large at this juncture. Everyone has their own way of doing a job. As the saying goes, “there are many different ways to skin a cat.” It is not so much that another plumber or HVAC mechanic has a different way of accomplishing the same work, it is the idea that they are doing what you normally do, and under your name and license. Some obvious concerns become focal points for the owner who first sends out a proxy to his customers:

1.      How will the new guy treat my customer?

2.      How well will he do the work?

3.      Will he do a clean, complete job (or will we have a callback)?

4.      Will he bill out the right parts, labor, taxes, etc.?

5.      How is he treating my equipment and vehicle?

6.      Is he representing my company as I would?

Delegating work that you usually do to someone else is a difficult thing to do easily. However, once you have made that move and survive it the subsequent decisions become easier. At some point the owner gets used to the idea that he is “the boss” and settles into that role, more or less, comfortably. The owner whose business has grown to the point that he (or she) has employees doing the various jobs that he (or she) once did exclusively has mounted the on-ramp to success. Maintaining the momentum at this point rests squarely on the shoulders of the boss.

Once a businessman has survived the transition from small, single operator, shop to one where there are multiple field people and office personnel, the delegation of duties becomes clearer to the boss and to his subordinates…one would hope. If not clearly defined, jobs that overlap can create problems that result in turf-wars, antipathy and outright hostility among staff. 

This is why it is very important for the boss to be clear about job descriptions. In today’s litigious society it is highly recommended that when a shop expands to include more employees, a written handbook be produced to cover as many eventualities and procedures as possible. Establishing a hierarchy and command structure is absolutely essential to maintaining good employee relations as well as defining levels of authority.

The ugly thing

Today, the downside of being in an expanding business is the possibility of theft by employees. It is estimated that 1/3 of service shops fail due to embezzlement by employees.  Think about that last sentence; as difficult as it is to go into business, survive the first three years and become successful, you must take into consideration the fact that delegation and expansion claims one out of three businesses through theft. This takes place on almost every level from theft of materials to bank fraud. It is a serious issue. 

Notwithstanding the breach of trust and the resulting bankruptcy of a business that you have worked so hard to build, the net effect of this behavior can cause ramifications far in excess of the actual crime. I recently read about several instances where customers were the victims of fraud and theft by the service people they had working in their homes or offices. If these criminals were at these homes/offices under your aegis, there is a good chance that you will be embroiled in a criminal prosecution as well.

Expanding your business and delegating work is almost inevitable if you are good at your trade. Bear in mind the pitfalls of making that move, however, and always move slowly. Good luck!

The Brooklyn, N.Y.-born author is a retired third generation master plumber. He founded Sunflower Plumbing & Heating in Shirley, N.Y., in 1975 and A Professional Commercial Plumbing Inc. in Phoenix in 1980. He holds residential, commercial, industrial and solar plumbing licenses and is certified in welding, clean rooms, polypropylene gas fusion and medical gas piping. He can be reached at [email protected].

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