Planning for Success

We hope your day is going better than your wildest dreams,

Well we crossed another hurdle April 15 is behind us and perhaps now we can think of new ways to get into tax trouble for next year. We have another piece of news to report – if you have not yet heard it, last night on the news I heard that our government indicates that the recession is coming to an end. Apparently the jobless rate will soon decrease and as everyone can see Wall Street is doing better-that is better today. How many of you electrical contractors are seeing an increase in prospective projects? How many are seeing projects with fewer than 10 or 12 electrical contractors bidding on each project? From conversations I have had with contractors across the United States as well as a few in Canada and Caribbean region, work is as scarce as most have ever seen. A correction in the economy is often a healthy dose of medicine that is good for everyone-it can weed out some of the riff raft and improve conditions for the vast majority. What we are living in today is not a healthy correction anything but a healthy condition. Work is just one is a climate that we are in today. Don't misunderstand me I am not telling you that work is easy right now because it is not however there is a significant amount of work available to those who look beyond the obvious.

Who's to blame for this mess that we are in, is that the Republicans or is it the Democrats? I believe they both have more than their share of blame. The real blame is the system or the lack of a sustainable system. Our governments - bless their souls - only system seems to be whatever meets with their present agenda. The problem is the agendas change continually. The comparison between government and contractors is really very simple and has very definite similarities between the two entities. As I see it some of the major similarities are;

Lack of any kind of plan.

Lack of any planning and or training.

Lack of follow-through, a surefire deathblow.

The failure to listen to their clients wishes and needs.

Lying about the numbers and then distorting the true numbers.

Tracking your results on an ongoing process from the start of a project all the way to its completion. Is there anything that you can do to help solve these problems whether relating to the governments problems or our problems as contractors? The answer to both questions is remarkably simple and it is again a one-word answer – yes!

What you have to do in relationship to the governments problems is to become informed, and this is not the venue and I am certainly not the person to inform you. But the bottom line is we better become informed and become active in our government and let them know what we want and how we want our country run. The culprit at least for me is complacency as far as the government is concerned. Actually you can almost say it's complacency as far as contracting is concerned also we get so comfortable and doing things in the same manner over and over and over again and we loose sight of our cost, whether this was labor or material of our overhead and labor burden expense and most importantly what kind of profit do we want to make? The question of profit cannot really be answered between one contractor or another, each contractor is different. You do have to know what a project should cost and whether you can do that particular project within a particular area cost wise. Putting in profitable levels that increases your bid costs beyond the competitive range just doesn't make sense. Now can you get to where you need to be and still be within a reasonable profit level, only your hairdresser knows for sure! In truth you must know whether you can do this from not..

The answer to contractors problems are significantly easier, again you've got to be informed and a surprising number of contractors are not. We need to have a clear direction as to what type of work, what size work and what our goals are as a company. This certainly seems easy enough doesn't? Well it's not! We need to take time to decide which direction we want to head, the owners must decide where their passion and desires are in order to know which direction their companies will travel.

Suggestion number one,

We need to either update or in most instances write out our business plans. A surprisingly few electrical contractors have taken the time to even write a plan, sadly we have seen a few contractors actually put a plan together and then not periodically update it, follow it or even occasionally read it. A well-thought-out written business plan can and should be the rudder that directs your ship. This plan should be reviewed periodically at least twice a year to make sure that the goals set forth in it are being accomplished and that the direction that you're taking your firm coincides closely to what you originally planned on.

Business plan formats are available from many bookstore, libraries, and websites. We also make several formats available from our company JDE & Associates, our formats were pulled from an SBA website and are free for the asking. These are relatively simple plans often keeping things simple may be the most efficient, keeping things simple may make it understandable and keeping things simple may actually induce you into completing the business plan. An initial business plan - and I do mean fairly rough can be drafted in a matter of a few hours depending on your situation. Do not make the mistake that yours truly made when putting together my first business plan I spent almost 18 months of Saturday Sunday and evenings putting together a masterpiece that when completed sat in a bookshelf and collected dust, this was a waste of 18 months and however many dollars I spent on consultants fees you do not necessarily need to start off like I did.

In time as the plan begins to pay dividends many contractors may begin to bring in more advanced features such as advanced marketing strategies, break even analysis, expense estimates, forecasting, goal planning, startup expenses, a three-year and a five-year projected business plan, not to mention current trends (this list could be endless). Please do yourself a favor and start simple in time more advanced items may start to filter into your business plan as the need arise - and this need will arise.

A business plan is extremely important however like so many other tools remember it is but one tool. In the past few weeks alone while working with various contractors I have seen two electrical contractors lose their businesses unnecessarily, neither felt that it was worth the effort to put together a business plan. One of these contractors had this information five years ago, we supplied it to him and he elected to continue without a plan. As early as 18 months ago this contractor appeared to be doing great, the problem is he was heading in to you and I are in I wrote you a you and John are you okay is it one of the zoo your eyes at your funeral on me and he a known this is your BFG and I am not sure where I'm those seasons in Dallas and the one in business over in a many different directions and not enjoying any of them and worse making extremely slim profits from the majority of his projects. The second contractor had this information not quite three years ago while working with him recently I asked if he hadn't put a business plan together? He indicated that he had as I thought he had but that he'd gotten so busy they just didn't have time to review or update it. This was a contractor that needed another 20 arms to be able to work on all the different areas that he had commitments. A business plan could've helped him avoid this problem.

Suggestion number two,

Many contractors spend far too much time in a reactive mode, now we work in a reactive business so to say that we are hundred percent even 75% proactive would need to be proved I just don't believe in the majority of electoral contractors offices that we can attain even 75%, in my opinion if we can get the average contractor to a 50-50 mix we probably have a winning combination. Now 50% proactive work habits doesn't seem like that much does it, be cautious as it is a lot more to seating than it appears. An outstanding book called “Eat That Frog” by Brian Tracy is an outstanding short book is subtitled “21 ways to avoid procrastination”, maybe that should have been the original title but I am rather fond of his title ‘Eat That Frog” one of his 21 items is an action list which is updated daily and is prioritized to five levels. Now I hate to disagree with someone that I just gave me an endorsement to I personally believe three priority levels is more than adequate.

This is a habit that we try to get our project managers and estimators to follow. It is our hope that when other employees in their offices see how much more efficient these people operate that they will ask the question what are you doing differently what's making you seem less stressed? And the answer is that I seem to be getting the work completed and I need to have completed in a timelier manner. This fact is reducing the number of problems that I have because I'm not always trained play catch-up because I didn't complete various tasks when I needed to complete them. If contractors would give this option an honest 30 days it would change their lives! The only type of dominoes I know how to play is where you set the dominoes and sitting on one end or the other with the follow following being set just close enough that when the, no behind it falls it will tip the next domino over. This is not a game that makes a lot of sense to me as I hate to knock things down I would prefer to build it so if I could figure a way to do this in reverse perhaps dominoes would be a game that I would play. My hope is that this actual log spreads across your office and ultimately into your field where not only your project managers and estimators are getting benefit from it but that your journeyman and even your apprentices are benefiting as well.

Think how efficient it would be if your material lists for material were to be sent in two to three weeks before the material was needed in the field, instead of the day before it was needed? If you can get your supervisors, electricians and apprentices to look ahead of themselves this is a definite possibility. Imagine that the long lead time quoted materials were on hand when needed instead of not even released when it is needed on the jobsite. I hate to broadcast this as a large percentage of our income comes from helping contractor’s expedite material that had fallen in the bottomless hole. A simple item like an action list can make a significant difference to your business. This can and should make an impact on many contractors’ lives.

Suggestion number three,

Look for options that are outside your normal methods. Several weeks ago perhaps as much as six weeks ago we posted a suggestion that could benefit smaller contractors. The suggestion was to put out a newsletter very similar to our newsletter but to direct it towards your clientele, residential, commercial and perhaps even industrial - industrial may be a stretch. I have a contractor that has about 60% residential and 40% commercial work that was absolutely convinced that this could not generate work. You must have e-mail addresses and the service that I use this service called constant contact and they offer a free 60 day trial, for up to only 100 e-mail addresses. What could be better than free, I’m sorry but I can not pay you for helping yourself with our suggestions.

We put together a short little newsletter with free tips as to how homeowners could spruce up your house on budget, not really that difficult a task you just need to put some thought into it. As we were putting this newsletter together the contractor came up with 75 e-mail addresses for residential customers. As we posted this newsletter the last words out of my contractors mouth was this will never work, my answer - nothing ventured nothing gained. The following morning at about 10 o'clock I received a phone call from my contractor and an excited voice he said to you know that I have had 42% of my e-mails opened? An hour later a second excited phone call Jim him up to 52% and I've had two phone calls. Before the end of the day he actually had two small service calls he's actually been using this technique for little but over and over the 3 to 4 weeks now and the last I talked to him he was considering hiring two new electricians just to service this type of work. I forgot to mention on the side of the newsletter we put out several specials, wink - wink. The specials were we will come in and install a timer for your basement in your garage lighting so that the lighting is left on for 2 to 34 weeks till someone goes back down into the basement door into the garage for X. number of dollars, a second special was we will install a setback thermostat for X. number of dollars (for newer furnaces only), a third special was we will install a whole house fan in your roof to help exhaust hot attic air during the summer, we teamed up with a local roofer that would actually repair the roof. I believe we also put in a fourth special and that was to install a Tele data cable for X. number of dollars up to X. number of feet.

Now I have several contractors across the country that are getting decent results in the cost for this service once you get past the two months is $15 a month for up to 500 e-mail addresses, you probably spend more than that a weakened coffee I know I spend more than that in soft drinks per week. And it's fun! You're not going to get rich from this but some work is better than no work while you're waiting for larger projects to come in. And if you have enough of the small work might it not take off some of the pressure that you've placed on your shoulders to keep your employees working? I know it would relieve some of my pressure if I were contracting at this point.

I have a second opportunity that exists for smaller contractors this opportunity is not free it will take some manipulation - legal manipulation, and it will take a change in attitude for many of you. But this option may allow you to get out of the rat race of bidding projects with 10, 15 or perhaps even 20 other electrical contractors and perhaps be able to bid against one or two other electrical contractors with the same capabilities that you may currently have. If interested either give us a call or e-mail us via our website contact form we will spend some time telling you this option and see if it might be right for your firm. As I indicated this is not for everyone, when I was contracting it would not have been for me, but I'm a stubborn individual and the fact that it wouldn't of been for me is sad. If I decided to contract today Mark my words I would do this in a heartbeat and again this could change your life. Sorry about being vague but obviously I have my reasons and as this is a free newsletter hopefully you'll understand.

Suggestion number four,

This suggestion is, in my mind, the most important and I made reference to it earlier in this newsletter and that's passion. Where is your passion? Is it in the estimating (If so you’re as sick as I am), the project management of various projects, the ownership of an electrical contracting business, what is your button? You see I've been fortunate enough to teach many people over the last decade and while it's easier to tell in a classroom environment you can still judge if a student is into the class completing a webinar class. And if you don't see that passion in a student I always wonder why are you in this class? I've been teaching this for years and still can not answer that question.

Passion is something that I've been stressing for years, in my opinion, if you don't have a passion for what you are doing your going to be often times looking for an excuse to do something else. I've been extremely fortunate all of my career, well maybe not my entire career, while working for my father while still in school, I really didn't think estimating was all that fun the test of time has proven that to be wrong, for me. Estimating can be a blast if you treat it properly. Perhaps I'm sicker than I think but work to me has always been a game, a serious game no doubt but a game nonetheless. A question that I regularly ask my students is do you prefer Saturday and Sunday's maybe holidays over your typical Monday through Friday? And the vast majority of the time the answer is yes they prefer Saturdays Sundays and holidays over the typical Monday through Friday. My question to those people is if that's really how you feel then why don't you find a career in a profession that will allow you to do whatever it is that you're doing on Saturday or Sunday as a profession? Many people will tell you that this manner of thought is unrealistic my response to that is in a word - rubbish! Work is what you make it if you act as though it’s fun and attacks it accordingly it is going to be a lot more fun. Does this mean I never have a bad day, I wish this to be the case obviously I have bad days now and then. Now I cannot say that I relish the bad days because I don't, however I will tell you this the bad days make the good days all that much better - that is a fact!

We see a number of contractors that first don't understand two very important numbers the first are overhead percentages and the second is labor burden percentages. Now calculating overhead, in my opinion, is at the very best an educated guess. To really know what your overhead percentage are you must know how much you will sell and what it will cost you to keep your office open during the time you're using that overhead percentage. This is a daunting task and I don't envy anybody that has to keep tabs on that percentage is at.

At JDE & Associates we can not give you the passion that we are referring to above, what we often can do is show you a method either in estimating or project management techniques that can make your life less stressful. This reduce stress may allow you to find your passion which will often spur on greater results within your work efforts.

We would like to help you achieve this goal. Contact us and we can discuss items where you may benefit from our efforts.

Any input to these ideas are more then welcome.

Thank you for reading ours.