When most of us hear the words “taking inventory”, we typically think of reviewing physical assets that a business has for sale to determine their true value and see which ones have become obsolete. A similar review can be periodically done on a company’s “intangible assets” or key operating areas like field operations, business operations and financial management to ensure they still hold value and meet the company’s needs now and as it continues to change in the future.
When setting strategic plans, many small businesses forget to incorporate all the key functional areas of a business into it and generally end up reacting as situations come up rather than proactively identifying things that will need to be strengthened in order to hit the company’s objectives. Even in those rare occasions when companies take a holistic view, they often forget to periodically update them as the business’ strategy evolves.
There are various ways that contractors can seek to make assessments about their key areas of operation. Two well-known firms that consult to the construction industry are FMI and Family Business Institute, both of which have a variety of programs available, including one-on-one consultations to peer groups.
Peer groups can be a particularly powerful way for contractors to get feedback on their operational strengths and weaknesses. These groups typically involve 10 to 12 contractors from around the country in similar construction fields that don’t compete against one another. They get together a few times a year to discuss best practices, and in some groups, evaluate a particular group member. Getting insight from people that have “walked in your shoes” can be a very powerful way of finding reliable areas to improve.
Construction consultant and expert, Dr. Thomas Schleifer, recently came out with a free self-analysis program that contractors can use as an inexpensive starting point to review their business. He created this assessment based on his study of thousands of contractors that failed and the ideas that were outlined in his book Managing the Profitable Construction Business. As Dr. Schleifer puts it, “A common error is to evaluate construction enterprises on their profitability, which fails to consider stability, potential and risk. For example, we would not call a profitable enterprise that is unstable, lacks potential and/or is at great risk, a world-class firm. The truly accurate evaluation is whether the enterprise is ORGANIZED for success.”
Dr. Schleifer’s free tool can be found at:
https://simplar.com/wp-content/uploads/2019/05/Self_Analysis_Program_0.1_final.xlsm
Conclusion
As the strong construction market continues, it can be easy to get caught up in the mound of work in front of us. Putting the time and energy into assessing all functional areas of your business can pay major dividends in ensuring you get the most out of the remaining years we have left in the cycle. It can also help prepare your company for future cycles. However, much like the benefits of eating healthy and exercising quickly wear off after they are stopped, it takes an ongoing commitment if you want to keep your company in great shape.
