EPISODE 67 – Builders Do Not Get Paid Enough!
EPISODE 67 – Builders Do Not Get Paid Enough! | The Biggest Priority For Builders!
Hey folks and welcome to another episode of Builders Business Success Podcast!
The purpose of the podcast, if you’ve never ever watched it or listened to it in the past is well, in a nutshell, we wanna change the industry that there’s far too much unnecessary pain for builders and for their clients.
It’s not all a one-way street. Subcontractors, team members, suppliers. There’s a whole lot of unnecessary frustration, pain and things going on that that are totally fixable. So that’s the good news. And what we do in this podcast is share with you what we have come up with as solutions for these common and very costly problems. And we test them, we trial them.
We’ve got a group of builders, called Builders Business Blackbelt, they’re all over the country. And they are in regional areas and they’re in big cities. So we trial all of this stuff in different areas and different regions, through different types of businesses, big businesses, small businesses, and we are constantly refining and testing this stuff that we can share with you because we are absolutely serious about being able to change the industry.
We’re on a mission to change the industry. Even if we have to do it one builder at a time, that’s what we’re here to do. And we’d love you to join us by changing your building practices, changing your mindset, changing your approach, and getting away from the really destructive building industry norms that we’ve been just accepting as the way that we have to do it for years and years and decades.
So the focus of this particular episode is a measurement, a key performance indicator. I think it’s one of the most profound measurements that is probably not even known about by most builders, let alone measured. And the old saying is, what gets measured gets managed. Couldn’t be any more true in this particular case. So we’ll be talking about, we’re also got the Q and A.
The question in this episode is all about how do you deal with I suppose, a problem team member? And the particular question that was asked was someone who turns up late. But I think that the answer will be able to help you with no matter what the problem is with a problem team member.
And of course, we’re gonna do the idea of the week, just so we can show you a shot of our floating light bulb. Maybe the idea might be useful as well, but I’m still amazed by the floating light bulb.
*Transcription of the show”
So what is this measurement and why is this measurement important? Well, what the measurement is, is it’s called effective, hourly, rate. Why is it important because what we don’t measure, or if we don’t measure certain things, we don’t know whether we’re winning, losing, making progress or not.
And this is kind of important because I believe that this particular measurement can decide whether you’ve even got a business. Like I think that if we, and we talk about this all the time, go right back to the reason that you started your business in the first place.
It was to earn more money than you could working for a boss, have more choice and more time freedom than you would being an employee, be able to choose who you work with and what sort of jobs you do, and all that. It was giving you a lot more choice, a lot more time, a lot more money.
The reality of the situation is for most builders, it’s the opposite of that. And this measurement, this effective hourly rate measurement in my view can give you the answer to the question. Do I even have a business?
Or have I just created a job for myself and many builders I’ve spoken to, that’s all they’ve really done is they’ve created a job for themselves. And not only have they only created a job for themselves, it’s a very stressful job, a very low paying, stressful job. And they tend to be very time poor. They don’t get to do the things that they want to do. They don’t get to enjoy what they wanted to enjoy when they decided to take the leap of faith to run their own business.
So we wanna change that for you. And this is one thing that can help. And how it can help is, it’s kind of like Profit First. How Profit First works, if you haven’t heard about Profit First, that’s a book by Mike Michalowicz, and he’s been a guest on the show. He’s a great friend of ours, and I encourage you to go get the book, but it’s all about how to manage your finances.
And it doesn’t replace the accounting system. It changes how you see your financial position. So it’s an emotional system. And the amazing thing is, and it happened to me. It happens to all of our Blackbelt Builders. When they see the reality of their situation, it changes their behavior. And the same happens with this effective hourly rate. If you choose to take on the challenge of working it out. Now, where did it come from? Well, where I got it from was a man by the name of James Schramko. And he’s a good mate of our business coach.
So our business coach is Taki Moore, and I believe James is a great mate of Taki’s. I’ve never met James, but I have read his book and listened to a bunch of recordings that he’s put out. And this affective hourly rate was one of the topics that he spoke about. And it really captured my attention. And all effective hourly rate is, is the amount of money that you earn from your business.
Now, let’s say it could be over a month. It could be over a quarter. It could be over a year, however you want to measure it. But basically if it’s a month or let’s say a quarter, because if you’re using Profit First, what you will do if you’re using Profit First, you give yourself a director’s dividend from the profit account.
So if you’re doing profit first properly, you will have cash in the bank, and it’s not earmarked for anything other than to put a big shit-eating grin on your face for the risk and the effort and the sacrifice that you have made running your own business. That’s it’s only purpose. And so every 90 days you get a chunk of money from the profit account. So there’s that plus your wage.
So whatever you take from the business, and let me tell you, if you haven’t put a big black line between your personal expenses and business yet, I really, really encourage you to do. I know that there’s still plenty of builders out there that use the business to pay for their groceries and this, that, and the other. Do not do that, get it done professionally.
So all of the business money goes into a business account in the income account. That’s how you do it with Profit First.
And then it gets distributed to profit, to tax, to operating expenses and the owner’s remuneration. And that owner’s remuneration is the amount of money that you can run your life, your personal life with. So the amount of money that your business pays you plus any, and all dividends from the profit account is the amount of money that it pays you. So the reason I went from a month to a quarter is because in Profit First, you only do that once a quarter, not once a month.
So if let’s say we’re measuring this over a quarter, you’ve got the money from the profit plus all of the money that the business has paid you, and you might think, well, that’s a lot of money. So my hourly rate’s pretty good. Well, everyone thinks that until they do this calculation, and that is calculate every single hour where you are doing something in your business.
Now I’m not talking about when you’re in the shower and you’re thinking about things. I’m talking about when you are actually doing things, when you’re on the phone, when you’re doing quotes, when you’re doing takeoffs, when you’re driving around, picking up equipment, when you got the nail bag on. When you’re talking to clients, when you’re on the phone, every single action activity that has to do with your business, I want you to calculate that time.
Now, how much of that time do you put in over that period of time that we’re measuring that quarter? Okay? And you get that time and you’re divide it into the amount of money. And that gives you your effective hourly rate. I will guarantee you, if you go through this process, you will be bitterly disappointed at the number that you get. We haven’t really ever done this with anybody where they’ve gone, wow, that’s pretty good.
When I did it the first time I was bitterly disappointed, but that’s the secret to this. That’s the purpose with this is because it gets you to take a look under the bright white light of your reality instead of living in Lala land and thinking that things are all going well, you understand the reality of the situation. And when you’re jolted, by understanding the reality of the situation, you will change your behavior.
You will change your decisions and you be clearer as to what you’re trying to do. And you will know that if what you’re trying to do currently is taking you there or not. So that’s what the effective hourly rate is, is over a measured period of time, how much money the business pays you, and you get the hours that you put in and you divide that into the money. There’s your effective hourly rate.
The reason that I spoke about this or that I chose to speak about this in this episode was in fact, just yesterday, I was walking around the house and the cleaners were here and there was a gardener outside in the garden. And then we left the house to go down, to do some stuff on a new boat that we’ve just purchased. And I sort of had a bit of a thought that things are going pretty well.
And I was even struggling with what I just said then as to whether I was gonna say it, because I know when you say that sort of stuff, people will say, oh what a wanker. Saying, oh, we’ve got cleaners and we’ve got gardeners and we’ve got a flash boat and all of that sort of stuff. And so I didn’t know whether I was gonna say that or not. And then I thought stuff it.
I’m just gonna say it because the thing is that I have figured out our effective hourly rate. I put into practice, everything that we talk about. We put into practice to make sure that it works and have firsthand experience. And one of the things that really keeps me focused, is constantly measuring this effective hourly rate, because what the bloody hell are you in business for?
If you’re not in business, to be able to be financially comfortable and have more choice and do things that you love doing. Now effective hourly rate doesn’t take into account the things that you love doing, but it’s two out of three ain’t bad. Like, we’ll talk about and have talked about the meaning of what you’re doing in past episodes. And we’ll continue to talk about that.
I think it’s, the most important thing is that you absolutely love what you do, you have a just cause you’re contributing to every day. So I’m not even saying that you’ve got to love building, but I’m saying that you’ve got to have a just cause, and you can see directly that your activity each day, that your contributions to your business is allowing you to contribute to your just cause.
Super, super important. And so, yeah, I wanted to say that that we’ve come from a place where, you know, we didn’t have two cents to rub together and we’ve worked hard to build this business and learn these business principles, and we wanna teach them to you. And so you can use what I just said as a reason to call me a dick or a wanker or a tosser or whatever.
‘Cause I get a bit of that, you know, on Facebook. People say, what would you know, you’re not a builder. Why don’t you pull your head in? You can’t charge for free quotes and all of this other stuff that I get. Trouble is those people are wrong because you can. And we’ve got a group of builders that do this every single day. In fact, funny story. And we will put it out as a bit of a post somewhere.
We were having a momentum call just yesterday and in our momentum calls, we have them four days a week in the group. And quite often we talk about wins and lessons. We share wins and lessons as well as answer questions. And one of the guys who’s only been with us, not even a year, maybe six months, something like that, put in the chat, and we had a conversation with him that he had a win and the win was a paid proposal.
And he sort of had his hands behind his head like this. And he said, yeah, yeah, we got another paid proposal. And I mentioned that you don’t seem to think, you know, you don’t seem to be overly enthusiastic about that win. And he sort of said, yeah, well, it was easy. I said, would you mind if we use that as a post to put out on Facebook or wherever to just oppose, you know the comments that we get that, you know, it’s so hard and you can’t do it.
And if you charge for quotes, you won’t have a business and all that sort of stuff. But it was just a little bit of a laugh that he said, well, but it was easy. Like, yeah, I didn’t ever think it would happen when we first joined. You know, I was skeptical just like everybody else, but I’ve implemented the system, and it’s easy.
That’s what he said. So, you know, the what I’m saying, that the improvement that you can make with your business and what we’ve made, and the reason that life is good at the moment, you can use that as, I say, a reason to call me an idiot and a dick and a tosser and a wanker and all of that sort of stuff, or you can use it as fuel for your own progress and you can go, I want that.
And I’m prepared to do what it takes to get that. And I’ve had this conversation with my coach many, many years ago about, you know, showing the showing publicly the fruits of your labor, if you’ve built a good business and you’re doing okay financially and you’re doing okay time-wise should you show that?
Because many people will think that you’re just being a dick because it’s, you know, it’s the Australian way. You don’t boast and all that sort of stuff. And I’m truly, from my perspective, I am not boasting. What I am endeavoring to do is encourage you to change your mindset, change your approach, change how you do things. So you too can have what you want.
That’s what I want for you. So you can, it’s up to you how you want to take this information on. You can use it as inspiration, or you can use it as ammunition to call me an idiot entirely up to you. But my coach said to me, he said, well, he basically asked me the question. He said, who do you want to be coached, or who would you prefer to be coached by? Somebody who is successful?
And you can see that they’re successful, or somebody who’s really busy, really stressed, works like a crazy person. Doesn’t really get to, you know, have time to enjoy the fruits of their labor and all that sort of stuff. Who would you prefer to be coached by? Someone who really isn’t implementing this stuff or someone who is, was really the question. And so that’s why I’ve said this. That’s why I’m proud of it.
That, you know, we have changed our lives significantly by implementing this sort of stuff. And one of the important parts of that shift was getting clear on this effective hourly rate, because it’s all well and good to say, well, you know, I’ve got a big boat too, and I drive a flashy car and all of that sort of stuff. But if you haven’t got time to use it, if you’re not enjoying it, what’s the point?
So if your business is going well financially, great. Now let us help you enjoy the fruits of that labor. If it’s not going well financially, let us help you fix that. Like, it just doesn’t matter what the problem is. I’ll guarantee you, we have a solution to help you with that business, with your business, because what we’ve found is it’s pretty much what’s going on inside your head and your lack of systems and processes that absolutely work in your industry that is causing the problems in your business.
So it’s entirely up to you as to whether you want to fix it. And all you need to do is reach out Big, long silence. There’s I was thinking as to whether to say this last bit. So I will. Like that with the effective hourly rate money is the focus. But to me, you know, all money is to us is it gives us an opportunity to do more for our members to find better resources for our members.
To be able to contribute to our cause of changing the building industry. So, yes, it is important to measure the money, but I don’t believe that money should be your focus, because if money is your focus, when money gets tight, you lose your motivation. But if you’ve got something that you’re passionate about when money gets tight and it will, you’ll continue on with your purpose and with your mission.
So it’s really about being passionate about your purpose and your just cause. But the more time that you have available and the more financial freedom that you have to be able to contribute, the better your experience will be. The more people you can help with your just cause. So I’d love your comments on this. I’d love to get into a discussion with this. I’d love to help you with this.
So to that end, wherever you’re watching it, they may or may not be a link in the comments or in the description or whatever, but when we’re finished, we’ll make sure that they’re all there. But even if we bugger that up and we didn’t do it, what you can do is you can just go to buildersbusinessblackbelt.com.au.
And there is a book of call button there. And we’d just love to be able to help you. Hear about where you are, where you wanna go. What you wanna accomplish and help you see what’s in the way, because if you can see what’s in the way and it’s different for everybody, and it quite often just takes that third party perspective to find out what’s in the way. You can change things really, really rapidly.
You know, and I’d love you to talk to our man that we were talking to just yesterday, who said the paid proposal was easy. You know, he hasn’t been around with us for very long, but man, has he made some shifts and changes in his life and his business has been inspirational to watch. So let’s get on a conversation, book a call and let’s chat, and let’s help you get on your way.
Q & A
The Q and A. The question was this dude’s always late. How do I deal with it? I’ve sort of extrapolated that question out to how do you deal with a problem team member? So it really doesn’t matter what the problem is.
Many, many, many moons ago, before I even thought of becoming a coach or anything like that. I went through a time management program by Dr. Charles Hobbs, created the program. It was called Time Power and listening to the cassettes. This is how old it was.
Back then he would talk about the I message and I never ever forgot it. And the I message means so, if I’m the boss and I’ve got to talk to the team member, the key with this is you own the problem. Because if you go to the team member and you say you’re causing a problem, and you’re pointing the finger at them and you’re blaming them, guess what they’re going to do immediately?
They’re going to leap into defensive mode. So how Dr. Charles Hobbs suggested that you set this up is using the I message. Meaning I letter I not E-Y-E. E-Y-E not your eye, I. I own the problem. And you go to that team member and you literally say, I have a problem.
And I was wondering if you might help me with it. That’s how you set it up. And that’s, if we use the late example, as an example, my problem is that when you show up late, this happens, this happens, and this happens, and it causes problems for me. It causes problems for these people, this, that, and the, these that are ramifications when you show up late. And I was wondering if you could help me understand what’s going on.
So if there’s anything that we can do to help you overcome this problem, because this needs to stop. Like, it just can’t continue because we need to eliminate this stuff from happening to the rest of your team and me. But so I just wanted your help to understand what’s going on to see if we can figure out a work around.
So using the I message where you own the problem, you’re asking them for help, but you state how their behavior affects you and the other team and all of that sort of stuff, but own the problem. And you will find that the person will be far more open to tell you what’s going on, or even put their hand up for help if you approach it that way, because you’re not blaming them. Think about the law of reciprocity.
The law of reciprocity means that you know, if I push you, you’ll automatically wanna push back. So if I blame you, you will wanna defend. Whereas if I give you a gift, most people want to reciprocate and give you a gift. And if you give people understanding and listen to them and ask for their help to and have a 35,000 foot overview of the problem, they will more than likely want to help. And so it’s just a little leadership skill, a change of approach, and it absolutely works for pretty much any problem if you do it that way.
So I hope that’s helpful. Again, if you’re watching live as a Hugh is, he’s put hashtag live in the comments. So you must be watching on one of the platforms that we’re going live to because we’re not going live to all of them at the moment.
Idea Of The Week
Idea of the week. This gives us the opportunity to show you a floating light bulb, which is very, very cool, but what’s even cooler is this idea of the week. And it’s called the daily direction meeting. A daily direction meeting can be a meeting. It’s a stand-up meeting. It’s every day.
You don’t have to be there live. You can do it on zoom and all of that sort of stuff. You can do it on each side or what have you. But the idea of a daily direction meeting is to give direction for the day, rather than waiting to the end of the week, or, you know, a fortnight down the track where you’re starting to measure how things are going on the job.
If you put an objective in front of everybody every single day, and you talk about yesterday’s objective, and how did we go in relation to that objective? You will find productivity will go up. Problems will go down if you’re having this discussion every day. So basically a daily direction meeting will be, today we need to do this, this, this, this, and get this accomplished.
Does anyone have any inside information or any reason as to why you think we can’t get that done? So you you’re asking for their input. And part of the daily direction meeting is talking about yesterday. So did we get it? If you did, high fives all around. Give people some recognition for their efforts.
If we didn’t achieve what we meant to yesterday, let’s have a quick chat about why we didn’t, what are the lessons that we can learn and put into today and future days, because we didn’t get to our accomplishment yesterday. And then the lessons that you learn from not accomplishing the goal from yesterday can be used as the reason that you recognize people for their contribution to learning, for refining how you do things.
So daily direction meetings, they need to be a hundred percent positive. They need to have a purpose. You as the person running the daily direction meeting must be prepared. You must know what the objective is for the day. You must know what the objective was for yesterday. You must know what the performance was in relation to the objective yesterday.
So you can recognize either the win or the lesson from yesterday. Give them the direction, ask them for their input about what they think about the objective for today. But I’ll guarantee you, if you do this every day, it will profoundly affect your productivity of your team. There will be a lot less problems. There’ll be better communication. Everything will be a lot better with daily direction meetings.
Now, if you want an agenda I’ve got an agenda and some training, just on a PDF about how to run a daily direction meeting. All you need to do is say, go into the comments and go pick me. Put pick me, into the comments.
If you’re not watching it live, you can still do it in the comments. We’ll pick it up later, or if you’re watching it on the blog all you need to do is jump into Facebook, or you can even just send me a message on email. It’s just firstname.lastname@example.org and ask for a copy of the PDF.
More than happy to send one out to you, but it’s just such a brilliant little model for a meeting that can just eliminate so many problems and increase productivity, therefore profitability, just by investing five to seven minutes every day. Small investment, big return, please, please do it.
Takeaway & Jump On A Call
The take away. I think, I feel like I say this takeaway a lot, but I’m going to say it again, that the problems that are experienced in a building business are generally because of the perspective, the belief processes, the procedures, all of which are completely in your control, and you have the ability to change that at any given time.
And so I would like for you to take more responsibility for your business and less blaming the government and the environment and the situation and the circumstances. And if you can’t get past that, please reach out to us. We will help you get past those sorts of things. That’s what we’re here for. That’s what we do.
That’s what we love to do. And if things aren’t going the way, you’d like them to go, please reach out. So that’s the final messages is jump on a call, let’s have a conversation. Now we’re kind of just in the middle of October, almost into the middle of October right now, and you might be thinking, you know, I don’t want to think about any of this right now.
I’m busy, or the Christmas silliness is all underway. Can I just suggest to you right now is the best time. Right now is the best time when you’re under pressure, because I can guarantee you in a very short space of time, we can help you have a much better run in to Christmas, a much more enjoyable Christmas break and help you hit the ground running with a much better business model when you come back and all it will take is a conversation.
So jump on buildersbusinessblackbelt.com.au. Schedule a call, let us have a conversation with this, or let’s have a conversation with you. Find out where you are, where you wanna go. What’s in the way and give you some different options and opportunities that you can choose, which will suit you. Not everything suits everybody.
So there are different pathways for different people in different situations, but we need to talk to find out what yours is so we can point you in the right direction. Love to do that real soon. That is it for this episode of Builders Business Black Belt. Now it’s not, it’s the podcast. Thank you very much, Brian.
That’s it for this episode of Builders Business Success podcast, I’m only thinking about a million things. So that’s it. I’m Mick Hawes from Builders Business Blackbelt was what I meant to say in the first place.
That is, that’s that for this episode, we’ll be back again, live, hopefully going to all of the platforms that we normally go to live, and we’ll see if we can fix the issues and we’ll see you then. Have a great week. Look forward to talking to you next time. Bye for now.