7 Deadly Mistakes Construction Businesses Make
3. Bad Business Decisions
A business decision made by any person working in your company must be an informed decision based on the experience and savvy of the person, and the decision needs to include the following four points before acting upon. The absence of any of these four points will undermine the probability of a positive result and ultimately create “anarchy” in the business decision making process, because each person will incorporate their own standards of what “good” is to them. The four points are:
Support the company’s stated goals of profit and sales growth. Whether at the level of the job estimate, service contract, engineering budget, design budget or service call, all employees who make decisions must consider whether or not this intended action will move the company closer to achieving their stated revenue and profit goals as understood at the level of the person making the decision. The absence of this step creates a separate little business within your company, run by each person who doesn’t follow this step. You do not want your financial life created by the uninformed decisions of others!
Be consistent with the “customer promise” of the business. At each level of “customer touch” within your company, each person must know the specific commitments made to the customer. The promise should be written and presented to the customer so that “pictures” or “expectations” are commonly agreed upon and communicated throughout the organization that interacts with the customer. Time/schedule, change orders, follow-up, written communications processes, payment terms, warranty, and intended results should be known and reinforced at each level, with the practical input of each level of employee customer interaction. The promise is simply the agreed upon standard you set with the customer. If the customer perceives it to be different, depending with whom they interact, you can be assured of a problem impacting your revenue, profit, and reputation.
Be consistent with concepts of teamwork and inter-departmental “customer”. Be sure that the decisions you intend to make include the resulting impact upon the other departments affected by the decision. Get their input. The decision may be good for one area and not for another. The ‘bottom line” on this one is, don’t “kill” someone critical to your business by not letting them know what you are about to do.
Ensure that the decision or action meet “compliance” or regulatory requirements of your industry, federal tax code, and state and local standards. This may seem like common sense, however, the issue is to prevent not knowing a potential problem with some regulatory body. Simply get a sanity check where appropriate, within the company. Whether it has to do with taxes, or the hiring of a fake-documented (for workman’s compensation insurance) subcontractor, or illegal aliens, or local/state regulations, simply ask the question to someone who should know the answer. Do not accept “I don’t know” for an answer.
