EPISODE 91 – Why 90% Fail, And How To Turn It Around

EPISODE 91 – Why 90% Fail, And How To Turn It Around

By mick | March 23, 2022

EPISODE 91 – Why 90% Fail, And How To Turn It Around |

Hey folks, welcome to episode 91, entitled why 90% fail and how to turn it around. This is the Builders Business Success Podcast, the construction business podcast. I'm Mich Hawes, your construction business coach or your builders coach, however you would like to say it. 

And as I said, the topic of this conversation in this episode is why 90% of not just builders, but it is builders because they are small businesses. And the statistics are that 90% of small businesses fail in the first three years. 

It used to be less. It used to be something like around 80% failing in the first five, but recently it's up around that 90% mark fail in the first three years, but there is a style of business, a type of business that isn't the garden variety, monkey see monkey do type business that has a success rate of up around 78%, meaning that 78% of these styles of businesses succeed. 

So we're gonna talk about what that business is and are you doing it? And if you're not doing it, why aren't you doing it? And we're gonna be talking about that business model. 

And I can almost guarantee you're not modeling this business because I speak to so many builders that don't have these things in place. And I know for sure and certainly, when you put these basic things in place, it turns things around. 

So we're gonna show you why you have the problems and what you can do about it. We also got idea of the week, so it can get a shot of our floating light bulb. And it's a super simple process that can increase efficiency and effectiveness super fast. 

And kind of ties in to the business model that we're talking about that has that 78% success rate. Now, before we fly into it, exciting news, exciting news, the book is out, it's called "The Successful Builders Toolkit". 

And if you've been around the podcast for any length of time, what we did a little while ago is we dedicated each episode of the podcast to a different part of the concepts, the ideas, and the business models that we teach our Builders Business Blackbelt members. 

And we opened up to every bit of detail we possibly could. And then we got those podcast episodes and we had them transcribed and lovely lady by the name of Sheridan Morris over in Western Australia edited what we'd said in the podcast to make me sound intelligent, make me sound like I knew what I was talking about. She's done a wonderful job and we turned it into the book. 

So the new book is out. It's "The Successful Builders Toolkit". 

You can get it, we've got a QR code. We're just gonna put that up on the screen. So there's the QR code. If you, well, it all depends. If you are watching on a computer you can just get your phone and put the camera on, hold it up to the QR code that's on the screen now. 

That'll take you to the page where you can get a copy of this book. If you're on your phone, that's gonna be a lot more difficult, but we'll share with you where you can go grab a copy of that. Now, if you want a free copy, because we're selling this for 29.95, that includes your postage. 

So this is delivered to you for 29.95, but if you wanted to have a free copy, I'm gonna share with you at the end of the show, how you can get yourself a free copy. So stay tuned for that. So let's get on with the show. 

Transcription of the show!

The topic of this week's Builders Business Success Podcast, is that what can we do to not be that statistic in that 90% of small businesses that fail in the first three years, and you may have been around for a long time, you may have been around for 30 years and you go, well, I'm not in that statistics. 

And you're right, because you are still trading, but let's talk about what failure and success is, what that statistic is reflecting that 90% of small businesses that start don't make it past a three year mark. 

They just go outta business, disappear, fall off the face of the planet. But in my mind, the reason that you started your business in the first place was so you could have more financial freedom. 

And there are many building businesses around that give their owners a good financial experience. As far as that, the business earns plenty of money. They drive a nice car. They might have a nice boat. 

They live in a nice house, all of that sort of stuff, but many don't, but some do, but that's, to me, not everything in relation to success because what we did, or the reason that we started our business in the first place was to not only have that financial success and be paid more than what we would working for somebody else. Another motivation was the freedom that we could have. 

So we would have more time freedom. We would have more choice to go and do the things we wanted to do when we wanted to do it, because we are in charge. Very few businesses have that sort of freedom, very few business owners rather have that sort of freedom, that they are still very much a prisoner to the business. And then the third part of it. So it's money, time, and I guess enjoyment or meaning. 

So money, time and meaning, or time, money, and meaning. However you wanna put it, are the three things to me that really denote a successful business. And what the meaning thing means is that, are you doing the type of work that you absolutely have a passion for, are you doing the type of projects that you would do for free, because you love 'em that much. 

And are the people that you're attracting into your business the type of people that you just absolutely love hanging around with, or are they perhaps a bit annoying, frustrating, or perhaps even a nightmare and very, very challenging and high maintenance. 

So there are those three parts, I think that make up a successful business, particularly a successful building business. And so whilst statistics are really just talking about whether you're still trading or not. I think we can go a lot deeper and start to look into really what is success for you? What does success mean for you? 

And I would encourage you to take a good hard look in the mirror of truth in relation to this, because I've spoken to, and continue to speak to many, many builders. And what I'm finding is we kind of settle. If that makes sense. 

We get into a mindset that because we are looking around and seeing how other builders operate and we've been around and tried all sorts of different things for many, many years, we settle and start to believe in how it is, is how it has to be, how it's been in the past is how it's gonna gonna be in the future. 

There's nothing we can do about it. And I just don't buy into that. And the reason I don't buy into it is because of Builders Business Blackbelt. It is so inspirational to me that I get to hang around with these really cool people, that when they first came into the group, they had all of the common problems that all builders have.

They had cashflow problems, they had staffing problems, they had client issues, and they just weren't enjoying working with the people that they were working for. And the projects weren't the exact type of projects that they wanted. And that they were only just seeking out a living. 

Many of them were really struggling financially. And then after a number of years that stuff's turned around, they still have problems by the way, they're just a better quality of problem. But they're not worried about the cash flow. They're not worried about the bass stress, paying the bass each 90 days. 

They don't have worries about not having enough work. They work with great people on great projects. They've built a great team and they have a lot more time freedom and a lot my choice. And that's what gives me the inspiration to do this. 

And if that is of interest to you, I want you to pay particular attention to today's episode, because we wanna talk to you about why 90% fail and how to turn that round. And there is a model, a business model that has a statistic of a 78% success rate. 

Instead of a 10% success rate it's a 78% success rate. And what is that business model? It is the franchise style business. I'm not saying it's franchises. I'm saying it is a franchise style business. 

So what's the difference between a standard guard variety business, your business, most small businesses and a franchise style business? The difference is that a franchise style business has procedures and systems at its core. 

A franchise style business, when you buy into a franchise and I'm not suggesting that you buy into a franchise, I'm just saying, let's take what works, because there are plenty of franchise style businesses around particularly builder franchise businesses that we've come across where the builder just wants to get out because the delivery didn't equal the promise when they thought they would get into this franchise building business, they would have all of their systems and procedures given to 'em and the support and all that sort of stuff. 

And I'm sure that that is the case in some franchise style businesses with builders. But I know for sure and certain it's not the case all the time, because there's plenty of people that I've spoken to, that they were really disappointed and disillusioned by joining a franchise because they didn't get what they thought they were going to get. Nevertheless, we can learn something. 

And the thing that separates a successful business and a garden variety also ran business is the existence of systems and procedures, and most small businesses, most builder businesses don't have procedures and systems. And it can make a massive difference. 

But let's talk about the difference between a system and a procedure first, because in many of my conversations and interactions, I'm told that, yeah, we have procedures. 

What that means is we've been doing it for a long time and we do it the same way, or at least we think we do it the same way, that doesn't mean you've got systems and procedures, particularly if they're just up here. I think the key part of this is having written, measurable systems and procedures that are at the center of your culture. 

And your culture is such that everybody understands that the success or otherwise of this business is around, based around the quality of our procedures, how well we stick to them and the constant contribution to the improvement of those procedures. But let's quickly talk about the difference between a procedure and a system. 

To me, a procedure is steps that you follow to create an outcome. So here are the steps. Step one, then do step two, then do step three, bang. It's kind of like a recipe. So you could get all of the ingredients for a cake, but if you just chuck 'em all in a bowl and throw 'em in the microwave, you'll probably end up with just a big bowl of goop. You don't necessarily end up with a nice cake. 

You've gotta do things in a certain order and for a certain amount of time. And there is a process to it. It's not about just getting the ingredients and going for it. So a procedure are the steps and the steps in the right order to get a certain outcome. What use are procedures if they're not followed? 

And this is where the system comes into play. A system is something in my mind, in any case, a system is something that causes you to use a procedure. I'm gonna give you an example of something like that. It's a pretty shitty example, but that's the best I could come up with at short notice. Imagine you're at a shop and your boss says, right, we've gotta start collecting postcodes for our marketing. 

And so he gives you a procedure. Here's the procedure, ask everybody that comes to the counter can I have your postcode to put in our system? That's the procedure, very lame procedure, but guess what? The people at the desk don't do it. And the boss gets very frustrated. How many times do I have to ask you to do it? 

So the boss decides he's gonna implement a system. And what the system is, is a lock on the door, an electronic lock on the shop door. And until a customer that enters puts a postcode into their contact record, the electronic lock won't open. As I said, it's a really dumb, lame example. But what I'm trying to get to is a system is something that causes the people to follow the procedure or the process. 

Often we can't create a system to cause people to follow a procedure. And so the best thing to do is have people that are producing the outcome by following the procedure involved in the creation of the procedure. This is super important folks. 

And I learned this many, many moons ago, I was working for an accountant firm, an accountancy firm, and they understood the value of procedures. The owners understood the value of procedures in a business. And so I was tasked with getting the culture established in the business. 

And one of the first things we did was get the whole team together, talk about procedures and systems and the importance of it and what we needed to do moving forward. And I couldn't believe the negative response that we received and there were even tears in the office. 

And I thought, kind of stopped the process immediately and started to investigate the reason for why there was so much pushback and even frustration and anger. And it was because people saw systems and procedures as the enemy to, or an insult to their intelligence, because they been around doing what they've been doing for years and years and years. And now they have to follow a procedure. 

It's like telling people how to suck eggs. So, number one, don't introduce procedures for the hell of it. And we're gonna talk about that in a sec, how to identify where a procedure needs to happen. So it took a long conversation to help people understand we're not gonna procedurize everything. 

We're not gonna procedurize how to buy the milk or how to turn the alarm off or anything like that. You already know how to do that. What we are going to do is identify areas that cause frustration for the team that cause frustration or negativity for the client. 

We're gonna look at the areas of the business, where there is a problem or an opportunity. So problems can look like frustration, boredom, anger, anytime where a team member that is required to do an action, fulfill, create an outcome by following certain steps. 

And there is a problem with that. They're either bored, they're either frustrated. They don't like doing it, they're pissed off, they're angry what have you, that's a problem. Are there times when customers come and complain because they don't feel that they got what they wanted or they're confused, or they feel let down, or whatever. There's a problem. 

That is a time and an opportunity to create a procedure. And so one of the things we need to do is when a problem, oh no, I forgot to mention opportunities. So if also talking to the team, if there are opportunities that can be seen. If we did this, if we overcome that, it would create a great opportunity for us to either earn some more money or to have some more freedom and flexibility, or to have some more fun while we're doing things. 

That's also an opportunity for a process. And before I get too much further, I just wanna make sure that you understand that the reason for a procedure and following procedures, even if it's not a great procedure in the beginning is we need to have a benchmark as a starting point. 

If we don't have a procedure to follow in the first place, how can we improve upon it? Which needs to be the culture within the business. If we don't have procedures and if people don't follow those procedures, even if they feel that they're dumb and they've got a better way, we need to follow those procedures in the beginning, just to get a benchmark and then start to have discussions about how to improve it, which we'll talk about in a minute. 

But we need to start off by having a culture and an understanding within the team that we need to follow the procedures. And part of everybody's purpose in the team is to be looking for opportunities to improve those procedures. So everybody, the team and the clients benefit from having procedures. 

I've talked about how we make sure they're followed. And I think that the best thing to do is have people contributing to the creation of the procedures, because then they own it. Then they have buy-in. We talk about in Blackbelt, a lot, these things that I learned from Tony Robbins many, many years ago called the six human needs. 

We need to feel certain, but we also have a need for variety, which is kind of uncertainty. We need to feel part of something and we need to be connected. That's the third one. A fourth one is we need to feel significant. 

We need to grow and we need to contribute. And by having a culture of procedures in your business and talking about it with your team on a very, very regular basis, by giving people the responsibility and encouraging them to contribute to the constant refinement of these procedures. 

So we can have more fun, more financial security, and more time flexibility by becoming more efficient and effective. That's what's in it for the team. Everybody starts to enjoy what they're doing a lot more. 

They'll show up with better energy. They'll start to think about solutions to some of the business' problems in their own time and bring them to the discussions. If you have a weekly session that is open to being able to have a whinge without feeling like I'm gonna be shot down, you need to create a culture where it's absolutely not just okay, but encouraged to say, this gives me the shit, I hate doing this. 

This is annoying, this is frustrating. And we can put it on the table to have a reasonable discussion about how that might be able to be fixed by a procedure or a process. 

So when a problem identifies itself through a discussion like this, the first question and we need to ask is, do we have a procedure in that space to be able to deal with this problem? If the answer is no, guess what, it's procedure time. Let's come up with one. 

And in the idea of the week, I'm gonna give you a procedure for procedures. 'Cause that's one of the most important procedures to have. And it's the most missing one. The one that's you'd hardly find anywhere as a procedure to create procedures. 

So the first question we've gotta ask is, is there a procedure? If there isn't, if the answer's no, we create a procedure. If the answer is yes, the next question we need to ask is, did the procedure get followed? Was the procedure followed? 

Because if you don't ask that question, we don't know what to do next. So let's assume that a procedure did exist, but it wasn't followed. So now we need to have a discussion about a system or getting the team involved in refining the procedure. So it is the default way of doing things. It's the way that people want to do it. 

So we've gotta get rid of the frustration or the boredom with that procedure and make it more fun. I mean it might come down to, can we put music to it and dance while we're doing it? I mean, something as crazy and stupid as that, just so it's more fun when we're doing it. So was the procedure followed? Yes. 

Now we need to look at the procedure, the efficiency and the effectiveness of the procedure. If the procedure wasn't followed, we need to get people to follow it. If it was followed and we've still got this problem, now we need to fix our procedure. 

So it's really important to ask these questions when a problem in your business arises, and particularly the ones that keep showing up, we need to ask, is there a procedure? Yes, no? We know what to do. If it's a, yes, we need to go to the next thing. And that is, was it followed? Yes. Okay, we need to fix our procedure. 

Was it followed? 

No. Okay, we need to change our procedure and the perception of our procedure so it becomes an attractive way of doing things. Because the key with all of this and following procedures is creating consistency. 

You've gotta have consistency in your business. Clients love consistency, team love consistency, but they also love the opportunity to contribute and change things. So they feel like they are the master of their own destiny. They can contribute, they can grow, we can make things more fun and change things and they feel listened to. And it's really, really important. 

So just in wrapping this up, build a culture of following and refining your procedures, how you do that is talk about them weekly in your weekly week session, your wildly important goal sessions, team sessions, and then in your daily direction meetings. 

If you dunno what I'm talking about, all this is in the book, we've told you how to get the book. All of that is in the book explaining all of that sort of stuff. 

And so I hope this has got you thinking about systems and procedures, because it is a massive game changer for your business, for your freedom, for your profitability, for the energy and creativity and contribution that your team will make to your business is having a culture of following and refining and measuring the efficacy of your systems and procedures. 

It needs to be the center of the majority of your conversations with your team. So I hope that's helpful. Now, as I said in the idea of the week, which we're going to go to right now, just so we can get a photo of this magic thing here, I'm gonna show you what the, or unpack, outline a procedure for capturing procedures. 

But before I do, because I keep forgetting to do this. I want to make sure that we are doing the very best we can in the tool shed to help you. And as I think it might have been Jerry McGuire, did he say to Cuba Gooding Junior's character in the movie, help me to help you. That's what I want is I need your help so I can be better for you. 

And what that means is I need to know what's going on. Things change. And if I'm guessing what your problems are, guessing what your challenges are, guessing what the hurdles are in your business, I'm guessing, I wanna know firsthand. 

And so if we can have some conversations with you, but that can either be done through the chat, it can be done on the phone, we can do it however is comfortable and convenient for you, but we need to have conversations with you. 

So what I want you to do is reach out to us, jump in the chat, put it in the comment section underneath this podcast, send me an email at [email protected]. 

However you wanna do it, but reach out to us so we can have a conversation with you. I wanna find out where you are, what are your current challenges in your building business, why they are a challenge for you, how you would like it to be. 

I just wanna have these conversations with you guys, so we can go away and find what resources, what tools, whatever we need to be able to put into the tool shed to help everybody else in the tool shed avoid and overcome these challenges. 

And it's as simple as having a bloody conversation, a free conversation, a no cost conversation where we can just get real and find out what your real frustrations are, what your real problems are in your business so we can help you overcome that. We can also focus the podcast on those topics so we can make them real, make them current and make them valuable. 

So it's gonna be really helpful. And I'm not sure whether this is even a word, but implementable. Can someone check for me and let me know if that's a real word, but giving you ideas that you can implement and make a difference straight away.

Idea of the Week

So let's get into this idea of the week. It's real simple. And it is the procedure for capturing procedures. Four steps. Are you ready? Yes, excellent. 

Step one believe it or not is name your procedure. It's really important to name the procedure because you need to have a place where you capture all of your procedures, where the people that need to follow the procedures can find it effortlessly. 

So the name of the procedure needs to make sense. So name a procedure so it can be easily found. Doesn't matter what system you're using, but everything needs to be indexed. And so you can find that procedure really super easy. 

So the name is really important. So think about that. So it can be easily found. The next most important thing is the purpose of the procedure. 

Not only do you need to have a purpose for the procedure, you need to be able to capture in writing the purpose for the procedure. So people new to that procedure can understand why they're doing it. People are far more likely to follow a procedure if they understand the reasons for it. 

When we're a kid, did you like being told because I told you so when you said, why do you want me to do that? Your mom or dad says, go and do that. And you go, why? 'Cause I said so. You don't go well, that makes sense to me and they obviously know what they're doing, so I'll go off and happily do what they've asked me to do. 

You tend to buck up when that is the reason to go and do something. So having a purpose where your team members that need to follow this procedure can see the purpose and can understand the benefit for them, their team members and their client by following this process, they are far, far more likely to follow that process. 

So that's step two. Step one, name, step two, purpose. Step three are the steps, simply capture the steps. Step one, do this. Step two, do that. Step three, do this and capture everything. Step four, if necessary is gather resources. 

So let's say it's ordering materials and there is a process that you need to have followed for ordering materials. 

So here are the steps, but if they need contact details, if they need the phone number to call or the email to send the order through to, where to find the order number if you use order numbers or the person's name they need to speak to and the relevant information they need to give that person that all needs to be captured in a place that is effortless and frictionless to gain access to so they can get it easily and use it. 

If it's over there in the cupboard and they need to walk over there and find stuff, people will just put things off. You need to make it effortless and frictionless for them to gain access to all of the resources they need for the procedure. 

This isn't a step, but I wanna throw this in as an added bonus if you like is test, please test, test, test your procedures and be open enough to get feedback from them. The best people to test your procedures are the people that have no clue what they're doing, because it just needs to make sure that it is explained really efficiently and effectively so pretty much anyone can understand it and be able to implement it. 

The reason for that is it creates backup and creates redundancy in your business, which means that if someone's away sick, someone's away on holiday, whatever, somebody else can step into the breach, follow these procedures quite effortlessly and still get a really good quality result. And that can make a big difference to ups and downs and eliminating unnecessary problems in your business. 

So that is the idea of the week. 

Wrapping Up

At the start of the show I said, the new book is out and we gave you this thing here. What is it called? The QR code. And so you can scan that QR code and you can go get yourself a copy of this book. It sells for 29.95. 

The QR code is up on the screen now, you can scan it with your phone and it'll take you to where you can get a copy of the book for 29.95, including postage. However, at the start of the show, I said, if you wanted a free copy, I would show you how to get one. And all you need to do to get a free copy is participate in what I just asked a little while ago. 

If you jump in the chat, if you send us an email at [email protected] or [email protected] buildersbusinessblackbelt.com.au, get it right, and jump on a phone call, a conversation so we can learn from you, where you are now, where you want to go, what's in the way to help us stay current with what needs to go into this tool shed.

I want the tool shed to be the best place on the planet for builders to hang around, where all the resources, the current resources, the continually updated and refined resources to help builders become better at building their business. Not at building. If you're not already good at building, give it away. 

You should already be awesome at that. But building a business is another story. If you jump on a conversation with Julie and give us that information, where you are now, where you want to go, what's in the way so we can learn from it and potentially help you. We will send you out at our cost a copy of that book. 

So you can get a copy of "The Successful Builders Toolkit" sent out to you completely on us just by having a conversation. So please do that. Whether you're watching us live or whether you're watching the replay, that's all you need to do. 

If you don't wanna talk to us, you can use the QR code and pay your 30 bucks and you'll get one sent out to you. That's okay, too. 

So I hope it has been a valuable thought provoking podcast. We'll be back again next week. Remember the tool shed is the place for you to get your questions answered. And the one thing that we know for sure and certain is the most successful builders are the ones that engage the most. The ones that reach out, that ask us questions. 

You can do that anywhere in the tool shed, you can put a post in there to ask questions. You can reach out out to us in the chat. You just need to go up to chat and find us and start a chat. And we'll be back and forth with you like crazy. You can also go over in the nav section that says there, get personal help. 

You just need to click on that. It takes you to a form, tells us a little bit about your business. We jump on a call, find out how we can help you and point you in the right direction and away we go. The last thing is in the chat. And if you're watching the replay, it's in blurb, in the description there is a link for the builders tool shed. 

I would really, really appreciate it if you would email it out, text it out to other builders, to get 'em in here to start to get 'em exposed to these ideas and how to build a better building business. That way we're gonna be able to change the industry together. I want you to help me to be able to do that because I am on your side. 

I wanna make the industry a better place, a more enjoyable place, a more profitable place for you to run your business and get rid of the unnecessary problems that most builders deal with. So let's get your team in here. Let's get your subcontractors in here. Let's get other builders in here. 

Maybe even your suppliers get 'em in here so we can all understand together what we need to do as a team to make the whole industry a better, better industry, a more enjoyable and profitable industry. 

So please share the link. Please show up next week. We'll be here at 10:00 AM next Tuesday. That's Sydney time 10:00 AM for the next episode, episode 92 of Builders Business Success Podcast. I'm Mick Hawes, that is it for this episode. Bye for now.