by George Hedley
What do you think it costs to open a donut store? I'll bet it costs at least $100,000 including equipment, ovens, refrigerators, display cases, utensils, cash registers, accounting software and computers. Every business has a minimum start-up cost. Every business must keep up with their competition just to stay competitive. And every business must strive to be better and more efficient than its competition to maintain a competitive advantage.
Do you have the tools for success?
You also wouldn't start a construction company without the tools required to compete. These might include a truck, skip loader, backhoe, scissors lift, compressor, or a Bobcat. What is often forgotten from the list of required tools for success to run a profitable construction company is technology. Computers, software, training, and ongoing support to keep current are required tools to be competitive and maximize your bottom-line. Construction company owners who leave out this important business tool will never make the kind of money they want, attract the best customers, and grow their business profitably.
It's the software that counts
When I present seminars at construction industry conventions, I often ask: "How many of you have a goal to retire before you learn the computer?" Everyone laughs as lots of hands go up. In a recent survey I conducted of 2,000 construction companies, being on the cutting edge of technology is not a priority. Most companies are scrambling to catch up with computerization and are happy doing the least possible.
Companies who don't maximize technology are leaving 25 to 50% of their profits on the table for the computerized contractors to enjoy. It's with "software," not your "hardware," where your money is made.
So you bought a new computer, now what?
As the construction business owner, you must commit to be a technology leader and set the example for those who work for you. This means setting aside a portion of your busy schedule to invest in your future. Yes, you must learn the computer. Learn what each software package can do and decide what you want it to do for your company. You don't have to learn how to operate every program perfectly, but you must be familiar with the capabilities of each so you can manage your company and employees.
I have a great computer consultant who comes into our office every other Tuesday. He is our "I.T." department. Your company budget must include technology and employee training costs. Technology costs money just like your job tools do.
The good news is you don't have to learn what computer or software to buy, how to hook everything together and install it or get it working. Let your "I.T." consultant take the headache off your back. Ask around and find a great consultant you can afford. But don't be cheap and think you can do it alone. Also don't have one of your family members do it at night or on the weekends either - it will never get done correctly.
What is your technology goal?
Technology can be overwhelming, confusing, and too much to tackle all at once. Start by determining what will make the biggest impact on your bottom-line with the least business disruption. It's obvious you've got to keep doing business while you upgrade to a fully computerized cutting-edge company.
Some technology options include:
1. Office Administration
c. Word Processing
a. Accounts Payable
b. Accounts Receivable
c. Job Cost
e. Monthly Financial Statements
f. Monthly Profit & Loss
d. Cost History
e. Securing Bids
f. Bid Presentation
4. Project Management
a. Writing Subcontracts
b. Purchase Orders
c. Change Orders
d. Shop Drawings
e. Job Correspondence
g. Daily Reports
h. Job Photos
i. CAD Drawings
5. Marketing & Sales
a. Customer Data Base
b. Customer Contacts
c. Sales Management
d. Proposal Follow-up
a. Marketing Tool
Get started with estimating
My first technology goal was to computerize estimating. I loaded a spreadsheet software package similar to Microsoft Excel and was determined to convert all of my handwritten estimating and take-off systems onto the computer. I took an all day software class offered at the local computer store and learned everything from how to turn on the computer to creating estimating spreadsheets on my own. Over the next few days, I had transferred my entire bidding system to the computer. This transformed my life and business.
Today there are very sophisticated estimating stand-alone software packages costing from $5,000 to $25,000. Some include digitizers that will transfer your manual take-offs from blueprints and enter the quantities onto spreadsheets. Others are pre-loaded with cost breakdowns and unit prices for you to use and modify. I recommend starting with a simple spreadsheet and take-off system. You can later upgrade as you get more familiar with what you will eventually need.
As you get more comfortable with your computer, you can upgrade to one of the many other estimating packages. One timesaver software program we installed faxes bid requests to our subcontractor database. This simple system saves time calling and asking subs to bid projects. We are now converting this to e-mail to save even more time and money. Last month, we started using new software for on-screen take-offs. This saves estimating time and helps with presentations to potential customers.
Today, with integrated office packages available like Microsoft Office, it is easy to start with word processing, e-mail, calendar, and spreadsheets all at once. Begin by streamlining your letters and forms to computerized versions. This will save you lots of time for your repetitive tasks like proposals, bids, invoices, memos, form letters, contracts, job checklists, and change orders.
Accounting & job-costing
The next important tool for success is to convert your accounting and bookkeeping to a fully integrated construction accounting software package. For the non-bookkeeper, this is the most painful, but will be very cost effective. Think long term. Most good accounting packages cost between $5,000 and $25,000. Don't think a $500 package will serve your needs. You need construction software built to help your business grow.
The many variables to consider before buying an accounting package include: general contractor versus subcontractor, self performed work versus 100% subcontracted, big jobs versus lots of small jobs, multiple office locations, future business growth opportunities, equipment divisions, and service departments.
People always ask me what accounting software to buy. Find what's best for your company by asking similar construction companies what they use and if they are happy. Go to your local construction industry association and ask around. That's where you'll find people actually using the different programs available. Also look at annual construction trade shows and conventions where the many vendors display their systems and you can ask them about your specific needs and budget.
I have a part time construction accounting consultant who comes into our office once a week to assist our full charge bookkeeper. Her services include helping companies select and install new accounting software systems. There are many consultants who can help you, too. Look for them at your local Construction Financial Management Association (www.cfma.org), or ask your construction accountant for a referral.
Marketing & Sales
A must for any construction company who markets to potential customers is a software package to keep track of your customer database. Simple software such as "ACT" (www.act.com) or "Goldmine" (www.goldmine.com) does the trick for a few hundred dollars. These packages are easy to learn and track sales activity, leads, and follow-up action steps. They can create customized form letters and labels to mail out to your sales database.
Do you need a website?
The main purpose for our construction company website is marketing. We show potential customers the type of projects we build, our capabilities, experience, references, and project team. Many companies go beyond just a marketing brochure and use their website as an interactive tool with resources, articles, ideas, product samples, and budgeting tools. Before you build your website, determine its purpose. The purpose of our site is to get customers to call us. You can also use your website as a project central information center. This is a good way to communicate with all of your subcontractors and suppliers regarding job schedules, correspondence, changes, approvals, and specifications.
The last software we purchased was a project management package. The packages offered are comprehensive and best used for large complex construction projects. These packages organize and systemize your paper trail and get all of your project teams doing project management the same way. The many available software modules include: job budgeting, subcontract writing, change order tracking, shop drawing management, request for information tracking, and job meeting minutes. Look for packages that can be integrated with your estimating and accounting and will not require a double entry system.
E-mail now or never?
An excellent technology goal is to eliminate as much paper as possible. Make it your goal to use e-mail for all of your correspondence including sending documents such as schedules, forwarding job photos, sending bids and proposals, invoicing customers, asking for clarifications from architects or customers, documenting field conditions, requesting approvals on field changes, and communicating with subcontractors and suppliers. The more you do over the internet, the less time and money you'll spend on paperwork.
What's next for you?
I can't live without my computer. It was painful to learn each software package, but the agony was well worth it. I do everything myself using technology. Computers have allowed us to eliminate several positions in our company, improve our professionalism, become more productive, communicate better, make fewer mistakes, document instantly, and make more money. What is your technology goal?
ABOUT THE AUTHOR
George Hedley is the best-selling author of "Get Your Business to Work!" As a professional speaker and business coach, he helps entrepreneurs and business owners build profitable companies. E-mail: firstname.lastname@example.org to request your free copy of "Everything Contractors Know About Making A Profit!" or signup for his e-newsletter. To hire George to speak , attend his 'Profit-Builder Circle' academy or find out how he can help your company grow, call 800-851-8553 or visit www.hardhatpresentations.com
3300 Irvine Avenue #135
Newport Beach, CA 92660
Phone (949) 852-2005
Fax (949) 852-3002
Email: email@example.com website: www.hardhatpresentations.com
George Hedley owns a $75 million construction and development company and
Hardhat Presentations. He speaks to companies on building profitable businesses,
leadership, and loyal customers. He holds 3-day in-depth "Profit-Builder
Circles" open to construction company owners in an interactive roundtable
format every 3 months. His "Profit-Builder System" includes proven
tools to always make a profit, build equity, create wealth, win profitable
jobs, motivate your people, and enjoy the benefits of owning a profitable company.