Operating a contracting company requires a mix of skills and knowledge. Control—or the ability to quickly and accurately determine the condition of business—is just one of the skills essential to the success of any contracting operation.
But too many contractors believe that control means involvement in every aspect of business.
“A major fault of many contractors is trying to do too much—wearing too many hats,” says Israel Kushnir, president of the George S. May International Company, a management consulting firm in Park Ridge, Ill., that works with hundreds of contractors every year. These contractors may be experts in their specific trade, Kushnir contends, but they often become overwhelmed by the reality of day-to-day operations. Instead of focusing on basic business practices, they get caught up in the minutia. There are never enough hours in a day, and the owner may sense that the business has become a monster.
How can you tell when a business is out of control?
According to Kushnir, one very visible symptom is when the owner realizes the company is in trouble but can’t point to a specific area that is at the root of the problem.
Modern business issues are so interrelated that it helps to step back and look at each business area or issue, and its interrelationships with others, to know what to target. “Today it is the lucky business owner who has only one problem,” Kushnir says.
May International consultants have identified two typical reactions to business problems.
Some owners dive right in to uncover or solve their problems, but they often find that the tentacles of these problem issues have spread. These owners, not knowing where to start, then throw up their hands in frustration. They muddle through, comforting themselves with such phrases as “This is good enough.” That attitude is not a formula for success and profitable growth.
Other owners make valiant attempts to identify the roots of the problems, but too often are sidetracked from this mission by the continuing need to run the day-to-day affairs of the business. At best, this tactic will delay implementing needed solutions. At worst, these distractions become so time consuming that the owner loses leadership perspective.
What’s the Problem?
Accurately identifying problems, then placing a value on their urgency, helps businesses prioritize concerns. The MAPS Business Alert Checklist (page 99) developed by May International lists four general areas of practical concern for every business: money, activities, people and sales. Under each category are several typical problems. If these specific problems don’t apply to a particular business, an owner can substitute more relevant issues.
Under money are the issues of profits, accounts receivable, overhead, operating costs and budgets. Which of these are concerns for you, and how serious are the concerns?
For business activities consider performance standards, accountability, operations measurements, inventory control and complaints. What areas worry you?
People issues are a constant concern often reflected in the specific areas of hiring and retention, employee productivity, training, evaluation and mission statement. Which people issues worry you?
Sales are a key factor in most organizations with these key areas spotlighting important concerns: sales forecasts, sales volume, ability to compete, your unique selling proposition and customer tracking. How do these rank among your business concerns?
These four general categories and their specific issues are the typical segments that allow most businesses to start grading their overall operations. Put a check mark in the column that best describes the level of concern you as a business owner have about a particular issue. If your specific business has unique characteristics, or you wish to evaluate a specific department, replace these with items more appropriate for your circumstances.
Grade these issues by placing check marks in one of the four problem columns—critical, moderate, potential or not a problem.
- Any check in the critical column indicates a problem so severe it threatens your business. It needs immediate, priority attention.
- Checks in the moderate column indicate problem areas waiting to erupt into business threats. Attend to these quickly.
- Potential problem column checkmarks show trends that need to be investigated and issues solved while they are still easily manageable.
What Do Your Answers Mean?
Checks in the not a problem column indicate you and your people are doing a good job in that business area.
When you have considered all 20 issues, compare the placement of checks in each column. This gives you a picture of the areas that require attention. Multiplying the total number of checks in each column by the appropriate indicated value gives you an overall picture of the health of your business.
If you decide to substitute categories and issues specific to your business, make sure you keep the point values. This “grading” system provides scores to compare and a way to track the status of various issues and the continuing “health” of your specific business.
If your score is 31 or more points, your company has serious difficulties. A score of 21 to 30 indicates your company has issues that need fast resolution. If you scored between 11 and 20, investigate the problems and implement fixes. A score between 1 and 10 means you should stay alert for changes.
About the Author
George S. May International Company is one of the first management consulting firms in the United States. Since 1925 it has been assisting small business owners in improving their operations, profits, efficiency and effectiveness. The company is headquartered in Park Ridge, Ill., with division offices in Las Vegas, Nev.; Montreal, Canada; and Mexico City. The Web site address is www.georges.may.com