10,000 hrs of learning in a 5 minutes:
For the past two decades, I have been operating trade contracting businesses. Either at the helm as an owner or employed as a CEO and COO.
I’ve taken 20 years of success and failures and created a framework to help you grow and run your trade business and avoid costly mistakes that I and many others have made.
Unfortunately, many trade businesses end up in a boom-bust cycle or chaos as they scale. Nothing seems stable, and as soon as you take your eye off the business for a moment, it’s headed for trouble.
The number one reason for this is:
They don’t have a system to operate your business.
Some of the other reasons business owners fail to grow profitably:
- Can’t find the right people
- Dependent on 1 or 2 key clients
- Lack of accurate numbers
- Learning from your mates
- Can’t let go of any control
- Too busy to get organized
- Burnt out
You would never start building a house without the architect and engineers’ plans, yet often, a tradesperson starts a business without a framework or a system. That’s OK if you’re happy with a business dependent on you and don’t want to scale.
This system is for two types of business owners. The experienced owner is trying to step back and let others run the show and the young entrepreneur who is trying to grow their business and ensure they don’t become the bottleneck.
Here’s the 6-part framework:
You must have the base of the pyramid working first. Have the right people (1) doing the right things (2) to the right customer (3)
Part 1: People
Your people are everything in your business. The only way to grow is to have good people on your team. You soon learn it’s not enough to pay them a reasonable rate; you have to offer more and create a culture that will attract good people and keep them.
Culture – it’s not what you think
Attract – recruitment funnel.
Train – the only thing worse than training someone and seeing them leave is not training them, and they stay.
Retain – you need to get creative about how to hold on to your best people.
Part 2: Operations
This is where you make your gross profit.
Minor improvements here can have a massive effect on Net Profit.
Operations usually start well, but as the team grows, so does complexity, and before you know it, things get messy.
Every business needs to keep tight workflows involving planning, scheduling, safety, quality, and meeting client requirements. This is crucial as it not only helps deliver quality service and thus build client trust, but also in being more efficient and driving gross profit.
- Tech stack – systems
- Workflows
- QMS
- Safety
- Materials
- Plant & Equipment
- Subcontractors
Part 3: Customer
Who you are working for is more important than what sort of work you do. We all know there are good and bad customers. You get to choose the type of customers you work for.
The biggest mistake I see trade businesses make is ignoring sales, marketing, and client relationships. Nurture your customers, do a great job, and they will reward you for a long time.
- Selecting the right customers
- Building Relationships
- Sales and estimating
- Marketing and Branding
- Sacking customers
Part 4: Execute
This could be number 1. The core competency that every team needs is to be able to make stuff happen. To move from hobby horse to racehorse, you need to get traction as a team and reliably deliver on what you say you will do. To leverage the compounding effects of incremental change (getting a little better every day), you need to have a system in place for getting things done that operates without you having to be there. Imagine deciding to change your business, knowing your team will execute it until it’s complete. No more half-baked improvement plans or good ideas not implemented.
- Rules of the game
- 90 Day Plan
- Objectives and Constraints
- Removing Road Blocks
- Daily / Weekly / Monthly Meeting Rythym
The road to failure is littered with good intentions. Don’t be a hobby horse.
A word of warning on execution: when your team is brilliant in making change happen, you need to be careful because now, if you point them in the wrong direction, they will get there quicker than ever.
Part 5: Navigate
Navigation is all about knowing where you are and what course alterations you must make to ensure you stay on track. This is about knowing the numbers and having a dashboard and reporting rhythm that gives your team constant feedback that can’t be argued with.
With timely data, you can make tiny course changes more regularly and avoid the big swings that stress everyone out.
- Types of data: employee, customer, financial, industry
- Lead versus Lag measures
- Objectives and Key Results (OKR)
- Building a Dashboard
- Financial reports and reporting rhythm
- Non-financial KPI’s
With our modern systems, we are never short on data. The challenge you will face is ensuring you have an accurate source of truth. The team needs to be disciplined in keeping the data accurate. Online business systems such as Simpro provide valuable information if set up correctly and maintained.
Part 6: Plan
You may be able to get away without having a clear plan initially, but as soon as your team grows and your business expands, you will need a simple document to ensure all team members are working towards the common goal.
Do not worry if you don’t have a clear vision; many don’t. You can work backward if it is easier. Create a list of all the things you don’t want your business to be. This will help you describe what you want your business to look like so that you can make a plan to get there.
There are many ways to create a business plan. Broadly speaking, there are 4 types of plans, and they all have some things in common:
- Simple
- One – two pages
- Tell a story
- Easily understood and retold
Planning is at the top of the pyramid and ties everything together. It’s crucial, but it doesn’t come before the foundations are laid.
Your business has the right people (1) doing the right things (2 Operations) to the right customer (3)
Summary
The Trade Contractor Operating System is a concise, six-part framework designed for business owners in the trade industry. It provides essential tools and insights for assembling a dedicated team, optimizing operations, and cultivating valuable customer relationships. With a focus on execution, data-driven navigation, and strategic planning, this system ensures stability and profitability, guiding experienced owners and young entrepreneurs toward sustainable business growth without the common pitfalls.
Using any framework or system does not guarantee success. Building a sustainable business is tough, and many fail. It can be done and there are many examples of trade business owners living their dream. Owning a trade contracting business can be rewarding, providing money, time, and freedom.