EPISODE 85 – The Fateful 8 Mistakes That Builders Make
EPISODE 85 – The Fateful 8 Mistakes That Builders Make |
Hey folks welcome to another Builders Business Success podcast going live into the builder's tool shed app. So the Builders Business Success podcast, as I always say, is a construction business podcast.
And I'd like to think that I'm your construction business coach, or you could even say your builders coach. And the agenda, or the focus of this episode is that we've identified that there are a number of problems that most builders experience and to wrap it into one major problem, it's the lack of time and the lack of money or cash flow problems in a building business.
And I have many discuss with builders and talk about their efforts to solve this problem. And through these discussions, what we've noticed is that there is, if you can understand, you've got your problem here and your solution here and on the pathway between problem and trying to get to that solution.
There are a whole bunch of mistakes that are made along that path, which make it either impossible or at very best, extremely difficult to obtain the solution to that problem. Basically we've identified, there are eight mistakes.
We've called them the fateful eight, the fateful eight mistakes that builders make along the journey to the solution, to having the amount of money that you want and the amount of time, freedom to enjoy that money.
And so what we're going to be doing over the next eight weeks is unpacking each of those mistakes. In this episode, I'm gonna reveal if you like all of the eight mistakes and just talk a little bit about them.
So you can see if any, or a number of those mistakes are being made by you on your journey, in your attempts to overcome the time and money problem.
So that's what we're going to be doing in this episode. And also we've got an idea of the week. So let's get underway.
*Transcription of the show*
As I said, the focus of this episode is unpacking all of those eight mistakes, the fateful eight. I'm just going to change my screen there so I can see participants. I can see that there's some viewers.
There's a Mitch, there's an Ingrid, there's a Matt and there's a Joel watching, according to my software. If that's the truth, could all you guys jump in the chat. So Joel already has, and Matt already has. Is it me or can I not hear sound?
Dunno, can anyone else hear the sound? We used to always check on that sort of stuff, but we've done it for that long now we just assumed the sound was just fine. If you can hear the sound Mitch or Matt or Ingrid, let us know in the chat.
So Mitch has just pointed the finger at you Joel, pilot error he reckons and Joel says it helps when you hit the unmute button. So there we go, we've solved all of the technical issues of all of the builders on the podcast, fantastic.
All this new technology that's right. Morning Ingrid. So yes, in this episode, we wanna unpack the major problem that exists for most building businesses with this whole not enough time, not enough money. And I have lots of conversation with lots of builders and a common theme is most builders are really under the pump.
There are very few people I talk to that feel like that they've got more than enough time. There is a few, but they are rare birds. And then the money thing is also a constant issue that keeps coming up.
So most builders turn over a significant amount of turnover. In fact, I believe enough turnover to create a successful business from a profit point of view. But very few do have a successful business from a profit point of view. And that's gonna be one of the mistakes that talk about.
But as I said, I found an attempt to fix these mistakes, or this problem of time and money, these mistakes keep getting made. And so I'm just gonna run through the common eight mistakes right now.
I've already mentioned the first one, the majority of not just builders, but small business owners that you talk to think that increasing turnover is going to be the solution to a bunch of problems that they have. And it is a mistake.
And here's why it's a mistake, because if you have a broken model and let's just talk about the financial part of the business and you don't for instance, have a system in place like profit first, profit first will fix everything if you stick with it, but without that in place, without the proper measurements and without the proper focus and priority with how you measure and manage your money, if you increase turnover, you amplify the problems.
So what you need to do is fix those problems first, before you start to increase turnover, because all turnover will do is believe it or not increase expenses, increase problems, increase stress, increase frustration.
That's what will happen when you increase turnover, because more turnover effectively either means bigger jobs or more jobs. So if you've got bigger jobs, there are bigger risks financially. If you make a mistake on a bigger job, it can hurt you far more than making a mistake on a smaller job.
If you've got more jobs, you need more people, more administration, more measurement, more systems, more procedures, more communications. None of those things generally happens.
They just take on more jobs and get more stressed and you end up having less time and less money by increasing turnover if your model is broken before you increase the turnover, we go to fix that before you go increasing turnover. I've kind of alluded to the second mistake. And by the way, the fateful eight aren't in any specific order of importance or how they occur, or which one you need to fix first, I'm just outlining those eight.
The second one in no particular order is builders will employ more people. When they get busy their default position is I haven't got time to get everything done so I will employ more people. The problem with that is that nine times out of 10 isn't the problem. The problem is the inefficiencies that already exist in the business.
And the default position is that I'm working really hard. And I believe you are, but that doesn't mean you're working well, working effectively. It just means that you're working long hours and putting a lot of time and effort in.
But if you employ more people as the solution to that problem, it's a time problem. You end up creating more of a problem with time and money, because you've got more people that you need to communicate with, support with, more things can go wrong and obviously your costs go up.
Your costs go up and your available time goes down as you employ more people. So that is a mistake that people, that builders make in an effort to fix their money and time problems. The third one is they increase overheads.
They start to invest, and it's not really, I'm using the word incorrectly there, cause it's not an investment. They start to spend money for all sorts of bits and pieces, machinery, vehicles outsourcing all of these sorts of things incorrectly in an attempt to become more efficient and more profitable.
But all I tend to do is increase overheads. Again, because many of the systems, processes and mindsets in the model that they're using for their business are fundamentally flawed and throwing money at it by increasing your overheads, doesn't fix it. Mitch says preach it, brother. Is this resonating with you, Mitch?
Are you gonna be able to put your hand up for making any of these mistakes, but wait, till I've finished all of them, we're only up to number three, I've got another five to go.
So let me know in the chat, point one he says, increase turnover. Point two. Just hold on. Cause you know, you could just say instead of writing point one, two and three so far, you could just go all eight, but hopefully that won't be the case.
The fourth one, and this is one that gets me going up on the soap box so I'll endeavor to keep myself calm with this and that is compete on price. Just wait until we do the whole podcast episode on that.
And I will launch into the full fury of why it is just a race to the bottom by competing on price. And the mindset is so fundamentally flawed and it is one of the biggest reasons why the building industry has these challenges.
This competing on price is bad, bad, bad for the builder, but it's also bad for the customer as well. So if you are competing on price, you are creating a massive problem for your business. There needs to be a different focus.
So that's number four, Mitch so far so good. Number five is they pay the bills first or they don't pay themselves first. The profit first system, there's a bit of a clue in the title, profit first. So whenever any income comes into the business, that income is dealt in a specific way where the profit portion of that is taken out of that revenue. And it is put aside and it is guarded with your life and angry dogs and armed guards.
So you can't ever get it again until the appropriate time, but it has to happen first. The mistake that most builders make is that they pay themselves last. Now I'm not talking about your wage. I'm talking about profit because that is a mistake that's not in the fateful eight, that some builders do pay themselves a wage that is not sustainable for the financial health of their business.
So they pay themselves to much putting pressure, financial pressure on the business, the business isn't ready for that sort of wage expense. So by implementing the profit first system, you will get a percentage goal for what they call owner's compensation. And you will either be exceeding it. If that's the case, you need to bring it back to allow your business to breathe.
But if you are not paying yourself an appropriate percentage of the real revenue of the business, you need to get your act together in other areas to be able to lift up your own remuneration. There is a formula for it, there is a process for it. Where are we up to? Number six, six, no systems.
Okay you started as a carpenter. You thought you could do better yourself. So you've moved out into your own building business, and you've basically flying by the seat of your pants. And there aren't systems in place for targeting the quality projects and the quality customers that you dreamt of having in your business.
You still want them, but where are the systems and procedures and the measurement for that sort of thing, where is the procedures and the systems for converting a lead into a quality client and the standard garden variety process is, yeah, mate, I'll come around, have a look and give you a free quote. That has got so many bloody flaws in it, it is unbelievable.
And so we are definitely going to be addressing that, but you need to have systems. Mitch says, number six has stabbed me in the back. No systems, you've gotta have systems, even if they're crappy systems or procedures. If you've got them, they are a place to start. Okay, you need a place to start. And if you haven't got systems, one day you'll do it this way. One day you'll do it that way.
One day you'll do it a different way again. And sometimes it works and sometimes it doesn't, and we've got no idea what works and what doesn't, but if you have a system and you follow that system and you make slight changes and improvements to that system, you have a line that you can test from a benchmark that you can test from that any changes that you make are either working in a positive way or are not working.
Aren't making any changes the way you want. But until you've got that baseline, which is a procedure or a system you've got nowhere to measure from.
And again, we're doing random things and we don't have any way of knowing what works and what doesn't and capturing what works, that now becomes our benchmark. And then we can start to make changes to that measuring whether it works or not, and keeping the things that work and throwing out the things that don't.
Which stickers are you talking about Joel? Joel says, don't you just want to get out and rip them stickers off. I'm not sure what you're talking about there. So we might need a bit more information. Number seven of the fateful eight is builders do it on their own. Oh, the free quote stickers, yes. Yes I do wanna rip them off.
I want to deface them, it's just so many, too many builders use that as their advertising, free quotes and it's like, talk about starting off on the wrong foot, it's unbelievable.
Joel says, especially when they're bigger than their logo.
So number seven, they do it on their own. Okay, one of the philosophies, and I believe that we have established this culture in Builders Business Black Belt is your best asset to help you build your business is the builder down the road from you. If you can get together and help each other, that is the best way for everybody to win.
And there is this philosophy, this thought process in the building industry that you keep your cards close to your chest. You don't share, you don't communicate with other builders and share your secrets.
Because I want to maintain the advantage. The Latin root of the word compete comes from to conspire together. If you wanna get into competition, that's actually what it means. And we work hard in Builders Business Black Belt, to create that culture and talk to anybody in Black Belt.
And they will tell you that it is the most sharing environment out. And what that does is it allows everybody in that environment to improve their businesses faster, because somebody like Joel will create something and share it with the group. And then Matt will grab it and put it into practice.
Mitch, obviously hasn't because he's basically said that all points spoken about so far are still a challenge, but, don't do it on your own. You need to be part of a group, opportunity for a little ad here about the app that we've created.
And I realize as I'm talking about this, that this part of the podcast can only be heard if you're already in the app. But what I want you guys to do is to share the link.
There is a link in the chat that I put in right at the top, share that link and get your subcontractors in here, get other builders in here, because the more people that we can have exposed to these conversations and start to understand that these little shifts are going to help their business, but it's also gonna help the industry.
The better off we'll all be. So I want you guys to get out there and start to get as many people into the tool shed as possible so they can hear and participate in these discussions and hear these messages.
And then number eight. And again, it's not the biggest, it's not the worst, but it is important. And that is most builders are selling the wrong product. They're focusing on the wrong product. They think that the building, the extension, the renovation that they're doing is their product.
A builder's product is how you make your customers feel, end of story. Everything you do outside of that just should be contributing to your product.
So how you communicate, how you listen, the conversations that you have with your team, whether that be subcontractors or directly employed team members and suppliers, those conversations all need to be focused on what are we trying to do here?
We are trying to do everything we can so your client has a memorable experience for all of the right reasons, because that is so, so helpful to your future business, it's unbelievable. And there's a whole lot to that.
So if you believed that if you bought into this, that your product isn't the building, your product is the customer's experience, the quality of their experience.
You can continue to deliver your product well after you've handed over the project, that means that you keep your past customers in your marketing team.
If you are continuing to have conversations, either whether it's digitally or physically, and doing things that continually give your past clients a great experience and make them feel good, they are gonna be out there bird dogging for you.
They are gonna be telling everyone who'll stand still long enough, how great you are. They're bumping into people all of the time that are looking to potentially do a building project. And the beauty of it is that they already have a relationship with that other person.
There is already trust. And by recommending you in an enthusiastic and passionate way and telling all of the stories of their experience, when they show up on your front door, they already have a connection and a feeling of trust because of what a person they already trust has told them.
And so you need to know what your product is, and that needs to focus all of your conversations with your team, with your suppliers, everybody. That's what we need to be doing. How can we improve that every day, every day, every day.
So they're the fateful eight. And as I said, I'm going to unpack each of these mistakes over the next eight weeks, we're gonna get into detail with all of these, each of these mistakes each week. The one I think if I was to pull out one, that's gonna make the biggest difference.
It was in the order that I presented. It was number seven, doing it on your own, getting involved in a group of people who have been there, done that bought the t-shirt. I think is the fastest way. That's the fast track to fix most of these other issues.
For the reason that I said before that, for instance in Builders Business Black Belt, people bring problems to the group. We talk about them, we have a momentum call from Monday to Thursday. They bring problems to the group. There are suggestions that are being shared.
And what that means is only one person in the group fundamentally needs to make that mistake. If they've got a solution, or if other people have ideas for a solution, the solution then exists for that problem that gets shared throughout the group. That means everybody doesn't have to make that mistake to learn the lesson.
They can just grab that lesson, implement the solution into their business and prevent that problem from happening in the future. And that's why, I've been doing this a long time.
We were just normal business coaches many, many years ago before we narrowed our focus just to building. And then we created this grouping environment and the pace that people make changes in this environment, in this group environment where they're helping each other is somewhere between 400 and 600% faster than our old standard one to one coaching model.
And what that means is there's no way in the world that I am a 400 to 600% better coach since we shifted. The one thing that is responsible for the increase in people's implementation and therefore results is being part of a group.
So that's the one problem, instead of doing it on your own, become part of a group that's gonna hold you to a higher standard. And that is very sharing and caring. You will learn, you will improve. You will change in the right manner, but you'll also get the opportunity to contribute. And it's all about out that contribution that makes the difference in Builders Business Black Belt.
So if you wanna have a conversation about that, you can just hit me up in the chat, and we can have a chat about how that might work or look, or you can over in the navigation section in the app, there's a place where it says get personal help, and you can just fill out a form and we can organize to help you with your specific issues.
And we'll point you in the right direction for where you want to go, where you are currently and how you wanna do things. Black belt or blueprint might not be for you, but we've still got solutions.
So it's really, really worth having that conversation. So that's the fateful eight. We're gonna be unpacking those over the next few weeks.
Idea of the Week
We are going to go to idea of the week because we've got a floating light bulb and we like to get a shot of it. I still like the floating light bulb. It amazes me, look at that.
Oh, I made it wobble. So the idea of the week, and we spoke about this just the other day in, I think it might have been a blueprint to Black Belt group conversation.
And there are a bunch of problems that occur in a business that can be avoided by doing one thing. And then it's just taking a moment to figure out what my purpose is for this next interaction.
So if you're about to walk onto site and have a chat with the team or some subby's or whatever, just stop for a moment and go, what is my purpose here? What is my purpose with this conversation?
Only takes about a moment and then figure out am I in the right mindset and am I bringing the right energy to help me get that outcome? So have you ever walked on site and started talking to a client or started talking to a team member and it's all turned to shit and it ended up in an argument.
The reason that that may have happened is how you brought yourself to that situation. You didn't have the right purpose in mind, and you didn't bring the right energy to get the outcome. Unless the purpose of walking on site was to get into a shit fight.
Then job done, you did it perfectly. If that's not your purpose, stop and think about what's my purpose and what is the best energy that I can bring, the best emotion that I can bring to this conversation to gimme the best chance to get the outcome I want.
So if you're gonna be talking to a client and a prospect, what they want, the thing that creates the connection between you and they is that subconsciously they just want to feel understood. They want to feel good, that's your product, okay? They wanna be supported and guided by you, but for that to happen, they need to feel understood first.
So if that is your focus and purpose, when you walk there, what's the better energy to make that happen. You will find that you'll have much better discussions, far less problems, better quality clients. It's all gonna be good.
If you're going on site to talk to a team member or a subby or whatever, they need to feel appreciated, even if they've made a mistake or whatever, they need to feel supported and safe and appreciated.
That needs to be your focus as you're having this conversation, whether it's on the phone face to face, whatever. And we've gotta remember, particularly if they are team members, that the conversation is vision focused.
So you need to have a vision for the team, and they need to be made to feel like they are part of a team. And if you've got the right focus before you start every single conversation, whether it's face to face or on the phone, you'll eliminate a whole bunch of problems. So that's the idea of the week for this episode.
Wrapping It Up
So I hope you've enjoyed this episode. I hope it's got you thinking. I know it's got Mitch thinking, he's put one, two, three and six. He hasn't made any comments for the other two or however many there are that he hasn't mentioned, other four, there's another four there.
But what I'd love you to do to, to get the most out of this app this builder's tool shed app is I need you to post, I need you to engage, ask questions, share your experience, jump into suggestion box, there's a suggestion box in the tool shed. What would you like to see more of? What would you like to see less of? What would you like added to it?
What would you like to see change? What are your suggestions? And as always say, make the suggestion doesn't mean that it'll happen but at least we know about it and if we can make it happen and it makes sense, and it's gonna help everybody else, we'll absolutely do it.
And just a reminder that if you wanna have a chat, reach out to us on the chat or jump into the navigation where it says personal help, just over there, click on that, fill out a little form, we'll be in touch and away we go.
So, and the last thing that I want you to do is there is a link in the chat. If you're watching this as a replay inside the builder's tool shed, there will be a link in the description.
And I want you to share that link. It just makes so much sense to me to get other builders and subcontractors, your subcontractors involved in this information, exposed to this information, involved in the conversations that happen in here, because then on site and with your businesses, you're all singing off the same page of the handbook. It makes sense.
And you don't need to be constantly managing the problems that your subcontractors and your team members are creating, because they're not exposed to this sort of stuff. So let's get 'em in here. Let's get 'em involved in the conversations. Let's get 'em engaged.
So I hope this got your mind thinking. Hope we've got some questions happening, reach out to us if we can help you with absolutely anything in relation to your building business, we'd love to do that.
And we'll be back here again live next Tuesday at 10:00 AM unpacking one of the first of our fateful eight mistakes. So I'm Mick Hawes from Builders Business Black Belt, we'll see you in a week. That is it, bye for now.