Hi, Marti here…
and what I want to talk to you today was about the flywheel effect on your business, the builder's flywheel.
The core reason why so many building company owners are stuck working too hard and doing too many day-to-day stuff because they're trying to look out for their team, they're dealing with their clients, and they're working to control the business.
What I want to do is give you a system on how this should really work, to create a flywheel effect, so that you get multiplication in your business rather than an additive effect, and actually frees you up, gives you more time, gives you more energy, empowers your team, and you build a truly professional building company that gives you true wealth by more time and more money.
Most building company owners are dealing with clients, that they're going to do the sales, they're dealing with the clients on site, they're looking after the team. They're putting out fires. They're filling in tax returns, all sorts of regulatory compliance to do with the business.
Here's how the flywheel effect should work.
The owner takes care of the team.
so they take care of the team by doing a few key things. Number one, hire the right people, according to your job descriptions, what you're looking at in your business maturity date. Who do you need to hire next in order to get off the hamster wheel of doing everything yourself?
Next, train them, invest time. Three, have them follow your systems. Four, manage them. With management, we need two key things, number one, one metric on how do we know if they're doing a great job or not. Number two, what are they doing each week? What's the 20% of things that they do each week that makes a massive difference?
The key performance actions that are critical to success in their role, and we'll know how they're going by seeing the one metric each week, whether that's working or not. For your office lady, it might be a percentage of debtors under 90 days or under 30 days. For your salesperson, it might be a number of contracts won. For QS, it might be accuracy to pricing based on labour hours, for example.
All right, for the next step, once we've done that, so the … There's a saying, “You don't build your business. You build your team, and your team, so you hire and train them, you build them up, and your team builds your business,” because no man or woman is an island unto themselves.
The team service the clients.
Well, how do they go about doing that? Well, they build and follow the systems. They do a great job. They have the daily tasks that they need to do, so they have a default diary of what they're doing, so they're following systems. They have a default diary. What do they do each day to service their role and service their clients? Then we measure how satisfied are your clients in terms of coming back raving fans, reviews, etc., etc. Those are the key things to make sure that your team does a good job of looking after your clients, and you obviously want to survey your clients, so you know how well they're going and get our testimonials and referrals from.
Clients take care of the business.
so the clients take care of the business in a few key ways. Number one, by doing profitable jobs. Number two, by ascending them up to get them from being clients to getting them to … Well, customers, to begin with, come back to be advocates, turn them into raving fans, and use a referral system like the 1% TPB referral system, so they bring on more people, ideal kind of clients that are in your top 20% of clients.
We want to ABCD these people, and we want to elevate them up so that we're getting more of the A-grade top clients. You want to know as your sweet spot people who might be doing high-end renos in Remuera, St. Heliers, that are 500 to 800 K and that needs to start work within the next 3 to 6 months. We've got this raving fan system going here for referrals. The next key thing in terms of splitting off that is that these people are going to provide a steady flow of ongoing work, so you get booked out 6 to 12 months in advance at a great GP that's 20% or above.
Then lastly, the business takes care of the owner by doing two key things.
Number one, splitting off time, and number two, splitting off dollars. You create a professional building company that creates true wealth, both more time and more money.
As we do this, we're going to work through our freedom finder, so we're going to move from the $20 an hour tasks, again, define what are those, up to the $100 an hour tasks, and then to the $1000 an hour tasks. As we do that, we're moving through our business maturity date, so who do we need to hire next in terms of an office manager, QS, project manager, salesperson, marketing manager, etc. in order to get nearer to our business maturity date and build a professional building company that gives us both more time and more money.
To do that, we need to look at our KPIs and in particular the four levers that we have at the professional builder, so the number of leads, conversion rate, average dollar sale, and your gross margin to make sure that what are the biggest holes in your bucket, what do we need to plug first, before we can help you scale your business.
There might be a few mindset things that you need to overcome, because quite often there are thoughts, maybe “No one can do it as well as me.” Well, if you were trying to do all of this, office work, QS, project management, sales, then you're spreading yourself very thin. If you include marketing here, you're spreading yourself 20%, 20%, 20%, 20%, 20%. If we can get one person doing the project management, we can now have them dedicate a 100% of their time to that, and if they can follow your system, we can hold them accountable, with the right systems and process', then we can help them to do a better job.
Next key thing, as you go up the builder's ladder and you're getting rid of that mindset of “I can do it all myself,” is people want to deal with me or I need to be on site, so as you grow a great building company, one of the first things to break is the “Clients only want to deal with me” or “Only I can do it.”
We want to train and elevate our project manager to doing our weekly meetings with clients, QS meeting, construction meetings, salespeople as well. This is one of the first things to break so that you go from working in your building to working on it. Working on it, in particular, who are you hiring next, what are the systems that you need to do to deliver a great result to the clients, how are we going to measure whether the team are doing a great job or not as we work towards your business maturity date.
All right, so this is the overall system that'll help set you free. The builder's flywheel will help magnify your results, speed up your progress towards your business maturity date, and build a great company, professional business that gives you more money and more time, true wealth.
All right, that's it from me today. There are specific trainings that spin off from each one of these. This is a great overview to help give you some insight on how to get off the hamster wheel and create a professional building company that serves you and your company and your team. All right, hope you have an awesome day. Cheers.
PS: Whenever you’re ready….
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Founder – The Professional Builder