Business owners in the building industry have had to be masters at adapting and re-scheduling to survive. The industry has always been expert in adapting to challenges however these recent circumstances have tested even the best of the best.
Surviving in business is tough at the best of times but the construction industry brings with it many more challenges to face. Recent years have thrown up COVID challenges, global supply chain disruptions, labour shortages due to covid isolations and lockdowns, record levels of building activity and price increases never before seen in the industry.
Whether you are starting out in the industry or have been operating for many years, the survival of your business will come down whether you have built the foundations correctly. Many businesses are finding that the ‘old way’ of doing business has changed forever. Problems and issues that may have been solved via the ‘corridor chat’ come to the surface more often because staff are working remotely. Businesses are finding that the manual processes they used are no longer applicable or can't be used since pieces of paper cannot be passed from one person to the next. Technology must become an integral part of a business and ensuring the customer is at the centre of any technology solution is crucial. Silos in business can easily emerge when different parts of a business implement technology solutions that only suit their parts of the business. Errors and increases in operational costs emerge that had not been envisaged because the technology doesn’t talk to one another. However, all this will exacerbate problems with a business if the basic foundations have not been thought about and implemented. Running a building business involves hundreds and hundreds of documents/forms and hundreds of pieces of legislation that apply to a business every day. All these have to be created, implemented, understood and managed on a day-to-day basis. As hard as this can be, it still doesn’t help if you haven’t built the foundations properly.
Your Purpose Firstly, you must understand ‘why’ you are in business. What is your purpose and ‘why’ are you doing what you do? Most businesses start with ‘What’ they do and then try to explain ‘How’ they do ‘What’ they do. This approach is not sustainable and when times get tough, you need to have that underlying reason to keep going. Simon Sinek developed hi ‘Golden Circle’ back in 2011 as a way of showing the differences between your ‘Why’, ‘How’ and ‘What’. This is not easy to articulate and will take some time to fine tune your ‘Why’ however don’t confuse your ‘Vision’ with your ‘Why’. In time they can become one and the same if you can get it right. Disney Corporation for example has their ‘Why’ which is ‘To make people happy’. Every person within Disney can easily understand the basic reason why they do what they do. Every person has to simply ‘make people happy’ when doing their job and they will succeed. A recent survey* has shown that 40% of people resigning from their jobs are doing so because they don’t see a ‘purpose’ in doing their job. Gone are the days when staff turned up to work because they had to or just went through the motions. The moral of this is to make sure your business understands and knows ‘why’ it is in business and communicates this to the staff. Key Areas Next step is to focus on the key areas of your business and to understand that you will need to prepare to work towards developing and implementing the necessary strategies, systems, processes and technology solutions to deliver excellence in all these areas of your business. The best businesses are experts and have sound practices in all these areas and will continue to look for improvements in every area. But remember, you will not be able to deliver 100% in all areas from day one or even after 1 year however, identify your strengths and weaknesses, seek help for your weaknesses and improve by 1% each day or week and eventually you will get there.
The key areas are: BUSINESS PRINCIPLES • Purpose and Culture • Leadership Principles • Social Responsibility • Sustainability Principles BUSINESS PLANNING • Business Planning • Marketing Strategies • Pursuit of Excellence • Growth Strategies CUSTOMER EXPERIENCE • Customer Service Systems • Customer Service Documentation • Customer Experience BUSINESS OPERATIONS • Work Systems • OHS Management System • Quality Management System • Environmental Management System • Procurement and Supply Chain Management • Legal Obligations • Recruitment • Recognition • Succession Planning • Performance Management • Professional Development BUSINESS CONDUCT • Financial Management • Compliance • Risk Management • Ethical Conduct
In work that I have done with residential builders, most smaller businesses are around 50% across all these areas, some as low as 10% and some as high as 90% but there is a big gap between the excellent businesses and the majority of businesses which are just doing what might be expected and no more. First Things First But first things first, in my view the following are the steps to take when starting a business or when reviewing a business so that the foundations are built properly. These can be as simple or as detailed as you want but you will need to cover them at some point. Don’t fall into the trap of jumping ahead and think you can come back to it later. In all the business I have helped over the years, at some point they start to question ‘why’ they are in business, ‘why’ things are failing and ‘why’ the results are not occurring as they thought. The foundations of the business will also evolve over time so be prepared to adapt and question the basis on which they were developed in the first place. This will take time. The steps that I believe a business needs to take or to re-create are:
VISION STATEMENT • ‘Why’ are you in business • What’s your vision MISSION STATEMENT • ‘How’ you will do it • Key objectives CORE VALUES • How you will act • Behind every decision USPs • Market Dominating Position • What sets you apart BUSINESS MODEL • The structure to deliver • Drives the business ops STRATEGIC PLAN • Key goals and objectives • Strategies to achieve goals BUSINESS PLAN • Snapshot of the future • KPIs and benchmarks PROCESS MAPPING • Start with a picture • Helps simplify processes CUSTOMER JOURNEY • Customer Touch Points • Match to Process Maps FINANCIAL PLAN • Detailed financial structure • Banks/lenders will need it MARKETING PLAN • How you will educate your customers • How you will reach your customers BRAND STRATEGY • How your customers will ‘see’, ‘feel’ and ‘talk’ about your business TECHNOLOGY PLAN • Roadmap on what you need from software
Let’s look at some of the key steps in a bit more detail. There is much more to discuss with each step, but this is a start.
Market Dominating Position Most businesses are established in response to a market demand or what you might perceive as an opportunity to start a business to meet that demand. You need to work out how to differentiate your business from others. Look at other builders’ websites and you will see most are using the same platitudes to describe themselves and what they do. You need your customers to think they would be crazy to deal or buy from anyone else. People buy on ‘value’ not on price. Don’t try to be everything to everyone. Determine your strategic position and your primary dominating market position and then determine your business model. Business -to -Business clients will be different to Business -to-Customer and your delivery will need to be different.
Business Model Creating your visual business model will help you understand how your business is built and what areas need to focus on. Alexander Osterwalder and others created’ Business Model Generation’ in 2010 and has become a business tool to help businesses create new business models or re-energise existing ones. It breaks a business into 9 separate parts -Target Markets, Distribution Channels, Relationships, Revenue Streams, Resources needed, Partners, Business Functions, People and Costs and allows you to focus your strategies on those key areas. When you combine your USPs and strategy with your business model it becomes a very powerful visual toll for your business.
Business Plan Once you have created your Market Dominating Position and your Business Model, the next step is to develop your Business Plan. Rather than build up a large document that will most likely sit in everyone’s bottom draw, look at using a One Page Business Plan developed by Verne Harnisch. This one page business plan brings together all the parts of the business on one page that is easily displayed to all members of the business and can be communicated easily to business partners such as banks, suppliers, accountants, and others. You will have to develop your Purpose, Mission Statement, Core Values, SWOT analysis and USPs before you start on this business plan as they will help drive the outcomes you want and the KPIs to measure. This Business Plan can be updated every quarter and enable quick adaption as markets and circumstances change.
Process Mapping ‘A picture is worth a thousand words’. Start to build up your processes before you start with any customer experiences as this ‘process’ will identify any issues you may have or be having in your business. Trying to explain your processes in words will become boring and end up in the bottom drawer. Using process maps will reduce the amount of words needed for operations manuals and this will become the backbone of an eventual quality management system. Start with ‘post-it notes or sheets of paper first then convert to professional visual maps once you have confirmed the ideal process. You will most likely amend these as time goes on and you improve your systems and processes. Lucidchart is a good technology solution for creating process maps. See my previous article on Process Mapping.
Customer Journey Mapping Once you have confirmed your processes, you can begin to develop your ‘Customer Journey’ and how to enhance the experience for your customers. Your process mapping will help identify where the ‘touch points’ ate for your customers and using a ‘Customer Journey Map’, you may find other ways to enhance your customer’s experience. This process is an evolving process and each phase will identify better ways to do things in your business and business models, and business plans may need to be updated. Your customer journey map will consider each phase that a customer experiences during their experience with your business from Awareness to Research to Consideration to Commitment to Construction to Handover to Maintenance and then Loyalty and Advocacy. See my previous article on ‘Transforming Your Business Towards a Customer Centric Culture’.
Successful Builders Successful house builders display several common traits and I discussed them in detail in my previous article ‘Seven Traits of a Highly Successful Builder’. In summary these are:
1.Business Principles are Defined and Embedded in the Business
• Owners and staff are clear about the overall vision and culture
2.Market Dominating Position is Defined
• Why will people buy from you
3.Customer Journey is Defined and Understood
• Need to be ‘customer centric’
• No silos
4.The Business is a Great Marketer
• Strategic marketing vs Tactical marketing
5.Process and Systems are Documented
• Clear, Concise processes
6.The Business Knows the Real Costs
• Where are the profit ‘leaks’
7.The Business is a ‘Gun’ Scheduler
• This is not just using software
The 3C Mentor has a number of resources available for house builders to assist with creating, developing and running a business.
The whole purpose of The 3C Mentor is to help create really great businesses in the residential building industry and delivered by our unique ‘Three Pillars to Your Success’ – Business Coaching, Business Consulting ,and Business Resources.
For an overview of these four pillars go to The 3C Mentor here. To find out more about our Business Coaching go to The 3C Mentor here, for further information about the services Alpha Edge can provide go directly to here and to access the many documents and resources you need as a residential builder, go to our Builder’s Business Resource Centre here.
* Microsoft survey
Comments