The Chicken And The Egg

October 18th, 2010 by admin

The Chicken And The Egg

The chicken and the egg parable comes in handy in describing a lot of the problems we deal with in operating and growing (or attempting to grow) a construction business.

To make more money, I need to turn more business. But in order to turn more business, I need more people to get all the work done. But in order to hire more people, I need to make more money.

The image of a treadmill also comes to mind. But that’s a bit pessimistic. At least with a chicken and egg, you could get somewhere if you had a chicken. Or an egg.

So how do you come up with a chicken, or an egg? Don’t get discouraged. The answer is simpler than you think! It’s the same reason why humans no longer live in caves. It’s called tools!

Humans have always lived in a chicken and egg situation, but we have progressed from one level of existence to the next because, at each step of the way, we came up with a tool that broke the chicken and egg cycle by dramatically reducing or eliminating one of the hurdles in the cycle.

Funny we should mention tools in reference to construction! Can we think of any tools that have made construction work more efficient over time? Well, let’s see… there are electric hand tools like the skil saw, reciprocating saw, and drill. And then battery powered hand tools. And pneumatic nailers, there’s a big one…  And laser levels, and…

OK, you get my point.

So the idea is that the right tool disrupts the chicken and egg cycle by making one of the required elements of the cycle so much more efficient that it no longer limits you from getting to the next level of productivity. As construction people, we are very familiar with the idea with using tools to become more efficient.

Well, ladies and gentlemen, I give you… construction software!

OK, construction software… what does it do? And why do I need it? How is it going to help me get more work done so I can turn more business so I can make more money so I can hire more people so I can get more work done so I can make more money?

There is a lot to discuss in describing how construction software will improve your construction business. But to begin with, it is important to note that making your business operate more efficiently so you can get more work done is only half (or one third?) of what using construction management software can do for you. There are two other crucial aspects of your business that will benefit from using construction software: 1) job cost accounting, and 2) customer relationship management.

Job Cost Accounting

Job cost accounting allows you to accurately track and compare your estimated job costs to your actual job costs, and report this information so you can see where you’re making or losing money; where you’re estimating less than you should be, or where your costs are higher than you estimated.

Job cost accounting is your roadmap to your bottom line. Accurate job cost accounting is absolutely essential for the most important thing in your business: whether you make or lose money.

Customer Relationship Management

This is a difficult issue that many contractors would rather not have to deal with, and so it tends to get ignored. But like it or not, the quality of your relationship with your customers is as important as any other part of running your construction business. Why?

Let me count the ways…

1) Your customers are human.

Psychology research reveals that a new home construction or major remodeling project is one of the most stressful and anxiety producing experiences that people might encounter in life. Most people who have been through it say they would never do a custom home construction or remodel project again. Why?

Major purchases are stressful for everyone. Even when you can see and touch what you are buying – like a car. But a major purchase – the largest purchase of your life – is much more stressful when it is for something that does not even exist yet. Your customer is signing their life away, and putting all of their trust in you… their contractor.

People get anxious when they are out of control and don’t trust the people who are in control.

Yes, hiring a contractor to do a custom construction or remodel project means the customer is not in control – you, their contractor, is in control. But why do your customers loose trust in their contractor?

People fear (don’t trust) what they don’t know.

Your customers loose confidence and trust if they don’t know what’s going on. They reasonably assume that if they don’t know what’s going on, then you may not know what’s going on. How do you build and maintain your customer’s confidence? I will discuss this in detail in later posts, but it can be summed up in two words: Documentation and Communication.

You can build and maintain your customer’s confidence and trust by maintaining complete and accurate documentation of their entire job, end to end, and making that documentation readily available to your customer 24 hours a day, 7 days a week.

How do you do that? With construction management software. Just by using the construction software, you will by default create and maintain complete documentation of the job project. Good construction management software will make it easy to present that information in a personalized and professional manner to your customer, either on paper, by email, or on the web.

2) Your customers talk.

People like to talk to their friends and family about their major acquisitions, right? And they don’t just talk about the good parts… they also talk about what they didn’t like. This is what’s known as “word of mouth advertising”.

Guess what? Your customers talk to their friends and family about their experience with you, their contractor. Do you think your relationship with your customer is going to make a difference in how many referrals you get? You better believe it! Successful construction contractors don’t need to do any advertising or job prospecting because they get a steady stream of new clients from their past clients’ referrals.

So here I have brought up three key areas of your business that can benefit from the use of construction software:

  • More efficient, organized, and accurate estimating, scheduling,  bookkeeping and office management.
  • Accurate and detailed job cost accounting.
  • Improved customer relationships.

I’m here to tell you that these benefits can be achieved without having to hire an army of clerical staff. All you need is one good clerical staff and a good construction software system.

Now, I know you didn’t go into construction because you wanted to use a computer. Well, you don’t need to actually run the computer yourself. In fact, after purchasing construction software, my other most important recommendation is to get someone to run it for you! If you’re reading this, you most likely already have someone doing your bookkeeping, office management, and paying bills. Even if it’s “just your wife”, you know it’s a very important job, and you know you’re glad you’re not doing it alone. But you also know that the system you have in place is not good enough. So you’re looking for something better. Good for you! You’re on the right track.

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