EPISODE 77 – Why Most Building Businesses Don’t Work

EPISODE 77 – Why Most Building Businesses Don’t Work

By mick | December 15, 2021

EPISODE 77 – Why Most Building Businesses Don’t Work |

Hey folks and welcome to another episode of Builders Business Success Podcast!

If you’re new to this, if you’ve never listened to one of these podcasts before, the purpose of it is to address as many of the common and very costly mistakes, problems, issues, challenges that we experience or you experience running a building business.

There are many of them. And the good news is, is the big majority of them are caused by the business model, the thought processes, the beliefs in what you can and can’t do in a building business.

In other words, you have complete control over the improvement and the growth of your building business. And they’re the sorts of topics that we’re going to be talking about.

How we normally do it is, there’s a specific topic that I’m going to cover.

And in this particular episode, I’m talking about the number one reason why building businesses struggle and often fail, the number one reason.

We’re also gonna do the Q&A to a question that we get asked a lot and it’s generally about, how do I get off the tools?

I hear what you’re saying, I need to implement all of these things but I’m on the tools, how do I get off the tools?

So I’m gonna be answering that question and also gonna be sharing with you as usual, a personal productivity hack so you can get more done in less time and feel good about it.

And I say that because more often than you would believe when we teach particularly our Builders Business Blackbelt members, the techniques to be able to become more personally effective and get a whole lot more done.

I often have calls to say, I’m getting what I used to get done in a whole day, I’m getting it done by 11 o’clock in the morning. And I spend the rest of the day feeling guilty which is a bit bizarre, but it’s the reality.

We sort of hypnotized into thinking that we’re doing the right thing if we’re working hard. And you’ve heard it all of the time, don’t work harder, work smarter but what does that actually mean?

So that’s the whole idea of the personal productivity hacks.

*Transcription of the show”

The topic of discussion today is the number one reason why business owners of, building businesses struggle and often fail.

And I guess we should start by talking about why did you bother in the first place?

Like, why aren’t you working for somebody else? And the reasons generally are money, time and choice.

And what that means is that most people start their own business because they believe they’re gonna make more money than working for somebody else.

They believe that they are going to be able to have far more free time because they’re calling the shots, they’re their own boss. And the third thing is choice.

I will be able to choose who I can work with and the sort of things I focus on, and the direction that I wanna go in and all of those sorts of things.

So they’re generally the three things that people who decide to take on any sort of small business really, not just a building business are motivated by. So it’s money, time and meaning we might say.

Now, in most cases, when I speak to builders in any case, when I speak to a ton of builders every week, in most cases, many builders, the owners of building businesses are earning less than the people that they employ.

And if we unpack that, so you might think, well, I pay myself X and I only pay my guys Y which means that I’m getting more, potentially.

But there’s a thing that we like to use in Builders Business Blackbelt to measure your progress and your success with your business and it’s called the effective hourly rate.

And basically what that is is you calculate all of the cash that your business gives you. So that’s any sort of profit, as well as your wage and any sort of benefits you might get.

You know, a car that’s paid for by the business and you calculate how much money the business is putting in your pocket every 90 days or 365 days but a period of time.

Then you calculate, give it your best guess as to how many hours you work.

But you’ve got to count everything when you’re in the office late at night doing invoicing and quoting and planning and talking to customers on the weekend and getting up early and traveling and all of this sort of stuff, calculate all of the hours that you put into your building business and then divide the cash into the hours or the other way around is probably the best way of doing it.

But basically, by doing that calculation, you find out what your effective hourly rate is, how much you’re being paid per hour for every hour that you’re putting in. And when you do that, you will be very, very surprised.

And I’ll guarantee you that for the most of you, you will be earning significantly less than the hourly rate that you’re paying your team members.

The second thing we talked about was time. The case for most builders is that they have very little time for themselves, for their own pursuits, for family time, for holidays. I can’t count how many builders I’ve spoken to that said I haven’t had a holiday for two years, three years of any sort of length to speak of.

They may have had a long week in here or there but they haven’t had the two, three weeks off at school holidays and a month off at Christmas and things like that, which is the whole idea. They haven’t had the time to work on the business. WOB, work on business.

They haven’t had the time to work on the business because they’re always working in the business. And then of course, the choice. And again, the feedback that I get is that you’ve got to make hay while the sun shines.

Sometimes we have to do jobs we don’t wanna do, you’ve got to take them on when you don’t want to take them on, you’ve got customers you don’t particularly like but we have to do that. Have to means that you don’t have a choice.

So what I’m finding is with the money, the time and the choice, which is the three reasons that people start their own businesses, very few, if any of those three are ever experienced in the way that motivated you to take your own businesses in the first place.

So, INTA, Michael Gerber in “The E Myth” or now it’s called “The E-Myth Revisited”. And I think, there’s this spinoff books also for different types of businesses but I think just reading the standard “E-Myth Revisited” is a great place to start.

And the E in E-Myth stands for the entrepreneurial myth. That’s really what the title of the book is. And Michael Gerber explains that the reason he wrote the book is because there seems to be this mythical belief out there that all small businesses are started by an entrepreneurial personality.

And the fact of the matter is that they are not. Very few small businesses are started by a true entrepreneurial personality. In the book he talks about for a business to be successful, you do need three people or three personalities.

So if it’s just you and you’re running the business, you need to split yourself into three personalities. The first is the entrepreneurial personality and that personality is all about the direction and the purpose of the business.

Getting very, very clear on that. And again, I speak to a lot of builders and ask that question, and I really don’t know the direction or the purpose of their business.

They kind of just fell into it. The second personality Michael Gerber talks about is the manager. And so the manager’s purpose is to ensure things get done. So the entrepreneur is that that personality is talking about the direction that we need to be going in.

And the manager’s job is to figure out what are the actions that need to be taken to make sure we’re heading in the direction that the entrepreneurial personality has identified and making sure those actions are being taken.

So making sure it’s getting done. And then the third personality is the technician. The technician is the person who does the technical work.

So in a building business it is the carpentry business, it is the bit organizing all of the sub-trades. If you’re a hairdresser, you are doing the hair, cutting the hair and styling and perming and all of that sort of stuff.

If you’re a motor mechanic you’re servicing, motor cars. Motor mechanic servicing the motor cars. That is the technical work.

And Michael Gerber, once you understand that there’s that the entrepreneur, the manager and the technician, he then goes on to talk about the number one reason for small business failure. And by the way, I probably should have mentioned this upfront. I’ve been doing this for a long time.

I’ve been talking about business success and helping people with business for a long, long time.

And when I first started, the statistics around on small businesses starting, how long they lasted was around about 80, sorry, yeah, 80% of all small businesses that started failed within a five-year period.

Well, that means only there was only a 20% success rate. Currently, the most recent information that I’ve been given is it’s a little worse. It’s around 90% of all small businesses fail but in the first three years.

So it used to be 80% fail in the first five, now it’s 90% fail in the first three years. And then if you are in one of those businesses that ends up going for longer than three years, you still struggling.

So in my view, you’re still, I don’t know whether I should use the word failing but if you’re not succeeding, you’re probably failing or at least struggling because success to me is having and understanding the direction that you wanna go in. What’s the purpose of your business?

Actually going in that direction and succeeding in moving the business in that direction and having the time, the financial freedom and the meaning, like feeling good about what you’re doing rather than feeling stressed and under pressure all of the time about what you’re doing, to me, that’s success.

Anything other than that is a work in progress. You’re not succeeding if you’re not hitting all of those three things, in my view, just my opinion.

Now, Michael Gerber, as I mentioned, he talks about the number one reason for small business failure. And he says, it is an assumption. And he says, it’s a fatal assumption.

And the fatal assumption is this, that because you are good at doing the technical work of a business.

So if you’re a hairdresser, you’re a great hairdresser. If you’re a motor mechanic, you can make the motor sing. If you’re a builder, you do fantastic product.

Well, fantastic homes, fantastic extensions, your workmanship is absolutely top-notch.

And the fatal assumption is because you are good at doing that technical work, you assume that you will be good at building a business that does that technical work.

And he says that assumption, that assumption that thinking that you’ll be good at building a business that does that technical work is the fatal assumption.

The assumption that causes most of small business failure. And so, what he suggests in his book is, the best thing you could do if you were a motor mechanic would be buying a hairdressing salon.

And if you’re a hairdresser the best thing you can do is buy a motor mechanic business. And the reason he says that is because it’s impossible for you to do the work.

Like a hairdresser probably wouldn’t be able to do the mechanic work and the mechanic definitely would be rubbish at cutting hair.

So they can’t do the technical work, which means that they have to figure out how to build their business and employ people, get other people to do the technical work.

And to be able to do that, they need to learn how to a business out as profitable, and it is sustainable to be able to sustain the entrepreneur, which is the person who owns the business and potentially a separate manager as well but not necessarily.

Like you can be the manager and making sure things get done and you can be the entrepreneurial personality as well but you cannot get stuck 100% of the time doing the technical work if you think that you’re going to build a sustainable business.

If you get stuck on the tools doing the technical work, what you have done is bought yourself a job.

Basically you are working for wages and you’ve got so much more pressure, so much more risk, probably less income, less free time, less choice than somebody who is working for a boss. And so what do we need to do? We need to change the mindset. We need to make sure that we’re prioritizing the work on ourselves.

So our leadership, our communication skills and what we call the WOB, the work on the business. So work on yourself and work on the business. And those activities need to become the priority.

They must become the priority. And again, sound like a bloody broken record but speaking to most builders. And that’s speaking to us because they want to know about our programs, our support, our coaching, our help.

Yet many of them don’t take that step because I’m too busy. I’m too busy to spend time learning how to do these things. By the time I get home I’m spent.

Well, at some point, at some point you need to decide that if I keep going the way I’m going something is going to break. I don’t know how many people have said that. Even at young ages like mid thirties, their body just won’t take it anymore.

They have bad backs and bad necks and all of this sort of stuff because of the physical work. So there will become a point where you just can’t do it anymore and think about this as well.

There will become a point if you haven’t reached it already where there are just no more hours that you can do. You can’t grow your business because there are just no more hours that you can do. You’re either working or you’re sleeping, you’re definitely not working on your business.

That is a finite solution to your business. It’s going to stop somewhere where if you start to work on the business and you figure out ways to automate things, to outsource things to delegate things, to get them off your plate so you can work on the business, work on the direction, work on nurturing and building your team, so they can run your business for you to give you more time to be working on more effective things, better approaches to your business, more resources to help your team become more efficient and more profitable, getting better clients, all of that sort of stuff.

Super, super important. But it will never happen until, and unless, you decide to prioritize that work on the business. So I hope that makes sense.

Q & A

It was a bit of a coincidence but it was, it just worked out perfectly that the question that was posed to me to put into this episode of the podcast was how to get off the tools which is probably maybe what you were thinking just then when, you know, how do I make the, how do I make the work on the business the priority?

So that’s the question I get asked all the time. How do I get off the tool?

My back shot, I can’t do it anymore. I never get time to myself or work on the business. How do I get off the tools? Now this may challenge you. The answer may challenge you, but there’s never any growth unless there is a challenge. So here we go.

The very first step we need to take is to schedule at minimum a half day, if not a whole day in your office with no other purpose, other than to work on systems, procedures, and get things off your list.

That’s the first thing you need to do and it needs to be a priority.

So fundamentally you can only work, if you work five days, you can only work four and a half or four days on site. So that’s how you need to schedule your jobs, that’s how you need to price your jobs that you are in the office and you need to be paid to be in the office.

So you can build your business property to give you more freedom, more effectiveness, to figure out ways to give your customers better experiences, more value, all of those sorts of things ’cause then you can charge more, you can be more profitable, you can be less stressed, all of the good stuff.

But you’ve gotta start, you’ve got to start with a minimum of half a day in it and it just needs to be blocked out.

No if, buts or maybes, you can’t say, well, I’ll come and help because you’re a bit short.

No, you have to be completely disciplined and start with that half day. But you can choose a day that has the least impact on your week but it needs to happen, it needs to be regular, it needs to be scheduled. Second step, you need to build goals for your business improvement.

You need to know what you need to be doing.

Don’t just get in the office and do invoicing and all of that sort of stuff, ’cause all you’ve done is gotten off the physical tools on site and gotten onto the administration tool. So you’re still working in the business.

So there needs to be a certain amount of time in that half day or day that you’re working on the business and that’s gonna be covered in the personal productivity hack.

How amazing how everything seems to be flowing from one thing to the other in this particular episode but there you go. So second thing is, you’ve gotta have goals. You’ve got to have specific goals for your business improvement.

The third thing you need to do and this is the difference in the mindset between a business owner and an entrepreneurial personality and that is, get things off your list of things to do that reoccur, okay?

So an activity that you need to do at least once a week is put effort into finding ways to get things that reoccur.

That means something that shows up on your list every single day, or at least once a week but it’s every day or every week, we’ve got to get them off the list. And that’s what an entrepreneurial personality does.

They are constantly asking themselves questions on how do I get this activity off my list permanently? And there’s ways to do that, that’s a whole another conversation.

A business owner just takes on more stuff. They just keep adding stuff to their list. I’ll take responsibility for that, I’ll take responsibility for that and their list gets bigger and bigger and bigger.

And so you must have that mindset switch and make a commitment out of figuring out how to get things off your list permanently and that needs to be a priority.

Personal Productivity Hack

Here is a way that you can do it with the personal productivity hack in this episode. You may have heard me talk about it before but it is a simple process, but very profound and it’s called time blocking.

It’s kind of in the name, you block out time, but there’s some criteria for effective time blocking.

I’ll guarantee you that time blocking will be one of the most powerful productivity hacks you will ever, ever implement.

So listen very carefully to the criteria, stick to the criteria, implement the criteria and it will work for you.

First thing with a time block is, you’ve got to have a start time and you’ve got to treat that start time like it is a plane taking off.

Like it is a meeting with a VIP, and it is, you are a very important person, you are a critical person to the success of your business and this appointment is with you, don’t be late. Be there, prepare to be there on time if not early for your time blocks. Absolutely critical.

The second thing is you’ve gotta have the right environment.

If you’re having a very, very important meeting with somebody, you’re not sitting in an environment where things are going bing and alarms are going off on your computer and your phone and all that sort of stuff, and people are knocking on the door and saying, oh, you know, you said you didn’t wanna be disturbed but like, you’ve gotta put yourself in an environment where there aren’t things going bing and people knocking on your door and things like that.

You’ve got to be in a quiet, focused, non-distracting environment.

So number one, start time. Number two, the right environment. The third is duration. So how long is your time block? Well, it can be five minutes.

You can get metric shit ton of stuff done in five minutes if you’ve got the right environment and you approach it correctly. Except could be five and could be up to 50. But I would suggest to you that the time blocks should never be any longer than 50.

That should be your maximum but it could be anywhere in between. So you’ve got to have a finished time, that’s the duration. And then the fourth thing is you’ve gotta have a clock.

You’ve gotta have a countdown timer, hopefully, a visual one, maybe even a noisy one. You can get them online.

You know, the old egg timer that go tick, tick, tick, tick when you turn… It’s good to have that tick, tick, tick going in in the background, it creates a sense of urgency and focus, believe it or not. And it creates that sense of urgency because the time is disappearing, the hours are falling, the sound is falling through the hour glass.

If any of you are old enough to remember days of our lives would reference, but the older people. So that clock is very important, so it’s counting back.

And be most important part of a time block is this, it is the reward because what we’re doing when you do a time block is creating a neuro association, a link, an anchor in your nervous system to having done time blocks for pleasure.

So what I suggest is just do anything at all. Immediately after the time block finishes, let’s say you’re doing a 50 minute time block, I would suggest you schedule 10 minutes where you just do whatever makes you happy.

Don’t do work, unless it’s really, really super happy work but just make sure you’re doing something that makes you really happy, that you’re excited, that you’re interested in, that you have a passion for and it backs right up to that timeline.

So you’ve finished the time block, don’t go over. If you haven’t finished what you meant to do in that 50 minutes, bad luck. When the clock goes, you’ve gotta stop and go to reward because what’s happening is it creates that neuro association.

And what that will do is cause you to feel like doing more and more time blocks. And the more time blocks you do, the more you will get done, guaranteed.

So there you go, personal productivity hack, the time block, use them, wear them out.

Takeaway & Jump On A Call

So what’s the takeaway for this episode?

I just think from everything that we’ve covered is, business successes is 100% completely in your hands. It’s not in the hands of external circumstances.

Yeah, I know stuff happens like COVID happened and the market shifts and all of that sort of thing.

But if you are running your business as an entrepreneur you will be out in front of those sorts of things.

I know that when COVID happened for us this time, last year, we had lots of discussions with our members about what was going to happen.

There was massive uncertainty and we pivoted their focus, their message. And most of our Builders Business Blackbelt members over 2020 have had the best year in the history of their business because they were out in front of it.

The things were changing, they were looking at what was changing and they were adapting to those changes very quickly. Your success is completely in your hands.

Start time blocking, start becoming an entrepreneur, start giving priority to work on the business that puts success right back in your hands.

So have you got a question about any of this? If you have, all you need to do is book a call.

And so we’re more than happy to talk to you, point you in the right direction, learn about your business a little bit so we can point you in the direction. There’s resources to help you all over the join.

And all we need to do is have a real quick call to find out what your hurdle is, what you need to overcome to get moving, and we can point you in the right direction really quickly. There’s often something in a business that is a roadblock and it’s a little bit like a dam wall.

There’s a crack and if we can find what that crack is, and just poke at it, the dam wall, sort of brakes. And it was probably a bad analogy to use right now with flooding and all of that sort of stuff but that’s what’s going to happen.

One problem in a business often will, when it’s fixed, will get rid of an absolute heap of other problems. And just this call can help you figure that out.

So how do you do it? Well, multiple ways. You can just click the button underneath this video, that’ll take you to a form, fill it out, tells us a little bit about your business then you can schedule a real quick call. And it will be quick, it’s like seven to 10 minutes, something like that. And you will be pointed in the right direction.

If you’re just listening to the audio only version of this podcast, all you need to do is navigate to buildersbusinessblackbelt.com.au and there are schedule a call buttons all over the website.

You can even ask questions in the website. A little pop up thing will come up and we can point you in the right direction there as well. But schedule a call so we can learn a bit about your business and point you in the right direction, it’s the fastest way.

So if anything I’ve said in this episode is something that you would like to implement, you would like to experience, you would like to integrate into your business and you’re not sure where to start, jump on a call, we’ll point you in the right direction.

So I hope you have enjoyed this episode of Builders Business Success Podcast. I hope it’s got you thinking, I hope it’s challenged your thinking and, I hope it’s inspired you to do something a little different than what you’ve been doing ’cause as Zig Ziglar used to say, if you keep on doing what you’ve been doing you’re gonna keep on getting what you’ve been getting.

So we need to change what been doing, change what we’ve been thinking. We’re here to help you do that. So we’ll be back before you know it with another episode of Builders Business Success Podcast.

You can also come and join us in Builders Business Success Forum. Just get on a Facebook and search for Builders Business Success Forum. Jump in the group, ask questions.

There’s a ton of resources going in there as well. So we’ll be talking to you again in the next episode of the podcast.

I’m Mick Hawes from Builders Business Blackbelt. That is all, bye for now.