By Lauren White, RCS Reporter.
Ryan Groth, founder of the Sales Transformation Group, recently went fishing with Captain Brian Sanders in southwest Florida. After a very successful day fishing, and catching almost 100 fish, Ryan asked Captain Sanders, “what are the variables that you can control that make catching fish so predictable for you?” Ryan enjoyed the answers and believes they can help contractors make their businesses more predictable.
Why is predictability important? Ryan shares five reasons to make your business predictable:
First, a company’s valuation depends on the growth patterns over multiple years, which is important if you eventually want to sell your company. Ryan explains, “The more ‘up and down’ the top and bottom line, the less valuable your business will be.”
Having a predictable business makes it easier to “[build] teams to deliver the work and [move] people into salary…” Ryan reveals. This also helps with appealing to and maintaining quality employees and talent.
Third, it helps you feel like you’re more in control, instead of constantly worrying if you’ll make payroll.
If the goal is to hand the business down to a family member, everything will already be in place, making it easier for the business to grow and getting the family excited to be a part of the growth.
And lastly, “You move from survival mode into a thriving mode,” Ryan shares. For many companies, it’s difficult for them to get out of survival mode and they “...can never dream of giving back to their community, creating a happier workplace, taking more family vacations, buying toys, etc.,” according to Ryan.
When it comes to fishing, Captain Sanders, has five variables he considers to ensure fish will be caught. They include: moonphase, wind, tide, bait, and skills. The fish will be more hungry the larger the moon is. If the wind is blowing, fish will typically move in the same direction as the wind. According to Captain Sanders, “Fish don’t want to swim against the incoming tides, so we want to fish when the tide is coming in and go where they live.” The type of bait, and whether it’s alive or dead, or small or large, all influence how the fish will behave. The final variable is skill. Having the other four elements won’t guarantee that fish will be caught if an angler, “...can’t cast, set a hook, know what lead to use and why, [has] the wrong equipment, can’t drive a boat, doesn’t prepare, etc…” Ryan explains.
There are five fundamental concepts to adopt in order to create more predictability for your contracting business.
First, find work that is steady. It can be problematic for your business to chase storm damage and rely on the new construction market. “Repairing, restoring and replacing systems on existing buildings is how you play the long game and create predictability,” Ryan explains.
Second, “have a sales vision, goal and gameplan,” Ryan suggests. It’s difficult to predict how much work there will be, and many contractors plan to get as much work and do as much work as they can, which isn’t always predictable. Defining targets will allow contractors to backwards plan and determine what needs to happen daily in order to reach those goals, and puts their future in their control moreso. Ryan shares, “This gets exciting and the best just stay focused on what I call ‘leading indicators’ of success, like attempts, conversations, meetings, proposals, sold deals, etc.” Other companies focus on what Ryan calls “lagging indicators of success,” which include backlogging, bottom line, and dollars sold.
Utilizing Customer Relationship Management (CRM) to track analytics is the third concept. Ryan reports, “I have data on over 200 contracting companies and what’s shocking is that only 34% of them are CRM savvy, which means 66% of the industry doesn’t utilize a system to track.” Ryan further explains, “If you’re not doing this then you don’t have good analytics to help make objective decisions, you’re not following up and I guarantee that leads are slipping through the cracks.”
Fourth, it’s important to understand “where your skills stack up,” according to Ryan. “...When athletes work on getting better to compete, there’s some sort of player evaluation that gauges where they stack up against elite,” Ryan discloses. In business, predictable outcomes are determined by a person's ability to sell. It’s important to have or be working towards the right mindset and sales competencies. “When the human beings I work with have awareness and then close the gap on these selling competencies, their ability to forecast and predict outcomes improve rapidly,” Ryan points out.
The last concept is pipeline optimization. Consistent activity provides contractors with feedback that will help them optimize their business. Ryan informs contractors that, “The most contractors with the most predictable business models are relentless when it comes to improving their pipeline quality, quantity and consistency.” It’s better to have continuous growth in this department than having a shrinking backlog. Ryan challenges contractors to think about, “Would you rather have a high performing sales model first, then figure out how to tighten up operations? Or, would you rather have your crews in place but not have consistent and high-value contracts being signed, then they leave?”
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