The business process of construction is broken! You can fix it. Strategic Planning for Contractors is the first building block of the needed change in restoring your business to high profitability while avoiding going crazy at the same time. Why is strategic planning necessary? The answer is simple: if you don't know where you are going, how can you develop a plan to get there? There is no point in improving your marketing plan if you are marketing to the wrong clients. There is no point in improving your construction systems if you are building the wrong projects. It's a waste to improve your leadership and your organizational skills if you are hiring the wrong people.

In essence, Strategic Planning for Contractors provides a process for general contractors, subcontractors, homebuilders, designers, and vendors (from now on simply referred to as contractors ) to define their businesses in ways that are not only profitable, but also defensible. While there is no silver bullet for business success, a properly developed business strategy based on sound business practices substantially increases the chances of success. What the author means by success is not just surviving, but thriving in a business that rewards the business owner commensurate with the efforts and risks involved.

In order to achieve financial success, your company must satisfy two essential requirements: operational effectiveness and a superior business strategy. This program offers in-depth explanations of the concepts necessary to achieve both requirements, along with exercises that guide you through the development of your own unique business strategy.

This process starts by defining your business in terms of your clients' and employees' needs as well as your company's needs. This is an important concept because unless your plan provides a win-win-win situation for all three segments, the one who's left out will sabotage the process. A study funded by Harvard Business School found that companies that obsessively focus on these needs out-perform comparable companies in four critical ways (Kotter & Heskitt):

•  Revenue increases 4 times faster.

•  Job creation is 7 times faster.

•  Owner equity grows 12 times faster.

•  Profit performance is 750 times higher.

The author opens many of his programs by asking a simple question: “How many of you think the construction industry is better off today than it was, say ten or fifteen years ago?” Very few people raise their hands to that question. Those who do raise their hands usually mention safety or technology. The author agrees with them. However, when he counters with, “However, what about the important things such as stress and profitability?” a nervous laugh goes through the room, and the few raised hands drop.

The next question the author asks is, “Whose fault are the problems in the construction industry?” This gets a variety of answers depending on who responds. General contractors complain about owners and architects. Subcontractors criticize general contractors. Owners complain about everyone. The reality is, “It's your fault!”

OK, fault is probably the wrong term. However, you must be accountable for the problems. If you blame others for the problems surrounding you, when do you think they will get fixed? Usually, most people agree, “Never!” Therefore, each person in the industry must be accountable for the problems, or nothing will change.

From the contractors' perspective, the following problems exist:

•  Difficulty in finding skilled workers

•  Difficulty in finding and keeping qualified managers

•  Difficulty in finding and keeping qualified subcontractors

•  Declining profit margins

•  Increased competition

•  Health care, liability, and workers' compensation insurance costs

From the owners' perspective, the list is equally as troublesome:

•  Poor construction quality

•  General contractors aren't doing their jobs

•  Architects/engineers issue incomplete documents

•  Workers don't know what they're doing and don't care

•  Increased litigation

•  Too many and too costly change orders

The author unfortunately agrees with all of the above. While there are some unsavory characters who attempt to exploit everyone else for their personal benefits, the author believes that most contractors and owners are merely trying to survive. The problem is the construction industry has not kept up with the changing times. The result is clients need better value and contractors need reasonable profits. The author recommends that five fundamental changes be implemented:

•  General contractors need increased fees.

•  Subcontractors need increased fees.

•  Design professionals need increased fees.

•  Workers (internal clients) need substantial wage increases.

•  The project cost to the owner must be lowered.

“Wait a minute! You can't increase everyone's pay and still lower the cost of the project.” Of course you can. The above items may seem to be contradictory, but they are actually mutually supportive. When contractors are selected based on the value they deliver and not solely on price, the total project costs can be reduced despite the higher fees. A similar relationship occurs with the workers. Higher wages attract higher-performing workers who produce at higher levels. That helps offset the wage increases. The problem is that in both situations, there is a period of adjustment before the benefits become apparent. However, if the industry doesn't start trying to turn the ship around, it will crash against the rocks. To help, Strategic Planning for Contractors offers the individual contractor solutions to these problems.

Does My Company Need a Strategic Plan ?

The short answer is yes because every business needs a strategic plan. Unfortunately, too many business owners have built-in excuses for why they don't need to develop a strategic plan. Below are some examples of common excuses and the author's answers.

“Our business conditions change too fast.” Actually, if there were no changes, you wouldn't need a plan.

“We have no time for strategic planning.” Planning saves time; plus, a plan doesn't have to take that long.

“We're too small.” Small companies have little room for error; therefore planning is essential.

“We have no resources or people for strategic planning.” In this situation, it's more important to allocate people efficiently and avoid being at the mercy of larger companies.

The Value Revolution

Robert Tucker coined the term, The Value Revolution. He points out that the customer is demanding more value today (Tucker). Those companies that don't get the message will suffer. He claims that today's customer is better informed, more demanding, and has more choices. The author agrees with the last two, but he's not sure about the first one. Often people just think they are better informed, but most of the “information” available is actually misinformation. This is especially true when the issues are complex, as in construction. The point is that today's contractor must educate the consumer. If the contractor doesn't do this, the consumer may make poor decisions and blame the contractor.

After a seminar, an attendee who worked for a large mechanical contractor conveyed the following story to the author. The project was a complex piping project requiring sophisticated pumps. The contractor proposed certain pumps, which the client rejected because of their high cost. The contractor argued, but finally the client prevailed. However, before the project was completed, the pumps the client had selected failed. The contractor was forced to install the originally proposed pumps. The contractor submitted a change order, which the client refused to pay. The contractor was confused since they had done only what the client had directed. When the contractor asked why, he received the following answer: “You didn't make us use the right pumps.” It's critical that contractors educate their clients, and if they refuse, they should consider walking away because they are going to be blamed for the client's mistakes.

When you educate the consumer, the results are amazing. For example, there is an air-conditioning contractor in Florida who works with local builders. He provides them with builders' grade air-conditioners at very competitive prices, but he instructs the homebuilders to have the homebuyers visit his shop before the final contracts are drawn up. When the homebuyers arrive, the air-conditioning contractor shows them what they have already purchased. The contractor then shows the homebuyer a quiet model and asks, “Would you rather have this quiet model outside your bedroom window?” Then the contractor shows them a high-efficiency unit and explains the rapid payback and why that unit is a better value in the long run. During this process the air-conditioning contractor averages $4,000 in additional sales. Who says people care only about price? A majority of consumers would rather focus on value, but first they must understand the value. It's the contractor's job to explain the value. After all, isn't the contractor the expert?

There are plenty of ways for contractors to increase value, but it takes people working together. Strategic Planning for Contractors guides contractors through the process of determining what can best add value for their clients, workers, and their own companies.

One key concept is to work with those with a similar philosophy. Of course, some buyers of construction services will never seek anything but the lowest price. That's OK; simply fire them and move on. In contrast, there are demanding owners who are willing to pay for the value received. Thomas J. Winninger in his book, Price Wars, reports that only 27 percent of consumers buy totally on price. In fact, 17 percent of consumers buy based solely on value, while the 56 percent middle majority buy based on either value or price (Winninger). This middle group buys based on price when they can't differentiate the value; therefore it's the contractor's responsibility to explain the value.

The 73 percent of consumers who understand value offer contractors an outstanding opportunity because they are willing to create a win-win environment. The clients get what they want, and the contractors make higher profit margins. Strategic Planning for Contractors explains how to define and serve these clients. Sadly, few contractors systematically research what clients want or need or take the time to educate their prospects on how they can help them.

Another underlying problem in the construction industry is the lack of loyalty. This is due in part to the finger pointing that only increases the lack of trust. Strategic Planning for Contractors is about taking control of your business and focusing on building client and employee loyalty. While no company, including the author's, can change the entire construction industry, this isn't necessary for your company to be more successful. You merely have to find a few clients or contractors to work with. For example, every time you find a single client who understands the concept of value, you have an opportunity to improve your company's financial performance. First, you have the opportunity to add a more profitable client. Second, you have the opportunity to drop your worst customer. Both of those will improve your company's financial performance. Therefore, Strategic Planning for Contractors is about being proactive instead of reactive. Stop feeling helpless and take action now!

Competitive Advantage

This program is about developing a competitive advantage. When you do this, you virtually eliminate all your competition. Developing a competitive advantage starts by wowing your clients through the management of their expectations. But to create a sustainable wow environment, you must continuously deliver greater value to the client. The keys to achieving this include the following:

•  Understand that true value is what clients are willing to pay for.

•  Identify your client's highest needs and deliver on them.

•  Provide innovative solutions to clients' problems.

•  Define value and service from the client's perspective.

•  Stress value all the time.

“How do I do that?” you might ask. That's what Strategic Planning for Contractors is all about. It explains how to achieve those objectives. It's not going to be easy, but the old systems aren't working, so they need change. The effort is well worth it. The paybacks include the following:

•  You can charge more.

•  You have less competition.

•  You have greater profit margins.

•  You will attract better employees.

•  You will have less stress.

•  You will have more fun.

Strategic Planning for Contractors is about changing the way you think about your business. Instead of chasing work, get work to chase you. Of course, you'll still have to do marketing and seek new clients, but you'll obtain more repeat business and referrals once you change the way your organization thinks about its projects. This process gets the organization to focus on wowing both the internal and external clients by exceeding their expectations.

Instead of trying to win the little battles, focus on the big picture. Delighted clients produce greater profits. Studies have shown that when companies are perceived to provide quality in the top 20 percent, they make more than double the profits of those in the bottom 40 percent. In fact, higher profits correlate better with client-perceived quality than with any other variable, including market share. (Whitely)

Finally, Strategic Planning for Contractors explains how to reduce the stress that many contractors feel from too many things to do with insufficient time. The book explains how the implementation of the 80/20 Principle (20 percent of what you do produces 80 percent of the results) throughout your business can substantially reduce stress while improving performance. The ratio is even valid for the remaining 80 percent of the work. Therefore, if you focus on the most important 20 percent of the remaining work you will achieve 80 percent of the remaining benefit. This means that the most important 36 percent of your work will generate 96 percent of the benefits. This simple concept is implemented into your business planning process for improved performance.

While the book is designed to help contractors develop a company-wide strategic plan, the same process can be used to get divisions or departments within to focus on their own objectives , strategies, and priorities . For example, a division may have the same mission and vision statements as the entire company. However, for the division to reach its full potential, it may have to develop its own objectives , strategies, and priorities . This is more common than people think because regions of the country often have totally different opportunities, and the same is true of different niches.

You are the key; you control your destiny. Strategic Planning for Contractors is designed to assist you in that pursuit.

Developing Your Strategic Plan

The book, Strategic Planning for Contractor is the foundation of the process in developing your company's strategic plan. Further, the concepts in the book can be applied to each project you build in order to create a more focused and successful project, therefore all key members in your company should understand these important concepts. The contractor has several options in developing his business plan:

•  The first option is for the contractor to purchase Strategic Planning for Contractors and work his way through the book on his own. After reading the book and completing all the exercises, the contractor will have a business plan.

•  The second option is to attend one of the author's Take Control of Your Business seminars. This eight-hour seminar is designed for smaller companies. Each seminar attendee receives a copy of the book, a seminar workbook with copies of the slides and extra worksheets, a critique of her business plan, and two hours of private coaching by phone with the author. The seminar covers the concepts of strategic planning and gets attendees started on the exercises. The private coaching allows each attendee to focus on his special company issues in private. (Smaller companies should bring all their key people because their investment is about half of the initial company attendee's. They don't receive private coaching, but they can listen in on the primary attendees' coaching session.) This integrated seminar and book program is more effective for most people because the business coaching customizes the process to attendees' specific needs and answers any questions the attendee may have about the program.

Contact Garrison Associates by phone 800-861-0874 or by e-mail at StrategicPlanning@TedGarrison.com to learn how you can attend one of these seminars or have your trade association schedule one.

•  The third option is designed for larger contractors who might want to participate in a day-and-a-half program where the author conducts planning sessions with the key employees. In this session the author walks the company through all the steps in the strategic planning process. At the end of the session, the contractor will have a one- or two-page business plan. This approach is ideal for larger companies because all key employees can participate in the process for maximum results. This approach increases employee buy-in to the business plan because they helped draft it. It is recommended that each attendee purchase a copy of the book (they are offered at a reduced cost). In addition, each attendee receives a copy of the seminar workbook. The entire seminar is in a business coaching format, so there is no separate business coaching.

To learn how Garrison Associates can help your company improve its profitability and performance by developing a powerful business plan, contact Garrison Associates at 800-861-0874 or by e-mail at StrategicPlanning@TedGarrison.com.

Primary Aim

As an added benefit, the book provides a special appendix to help you craft your Primary Aim. It's about what you want out of your business. The Primary Aim will help you define these requirements. In essence, it is about matching your life with the business's demands and benefits. Many business owners mistakenly develop a business plan that conflicts with their personal lives. This causes all kinds of stress, which negatively impacts the business as well as the business owner's personal life.

It is recommended that your complete the Primary Aim prior to reading the rest of the book. If you invested in one of the seminar options, you will receive a copy of the Primary Aim before the seminar. If you invested in the book, you will find a copy the Primary Aim in the appendix.

Take Control of Your Business—Now !

Take your business to the next level by constructing a sound foundation and installing the first building block of your successful business: your strategic plan. For further information on how Garrison Associates can help you achieve your goals, call right now (800-861-0874)!