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Can a contracting business really grow too fast? You bet it can. When I worked at my family’s 70-person plumbing, heating, cooling and now electrical company, I remember waking up at 6 a.m. for the second day in a row after working until 2 a.m. the night before — only to face another day of massive stress and thinking, “At this growth pace, something’s got to change, or I’ll be a rich dead guy.”
That was not my goal, and I bet it’s not yours, either
When I left my family business to consult with contractors all around the United States and Canada, there were two reasons contractors would call me:
I’m going to focus on just the fast-growing shops here because, like me, most of my clients in this position had this condition sneak up on them. If you’re still reading, I’m betting this will resonate with you, too.
You were handling it — somehow — until one day, you just couldn’t. That’s when the wheels started to fall off or, at the very least, began to wobble. It’s as if you’re in a batting cage and the pitches you used to be able to hit are now coming so fast you can’t even get the bat off your shoulder. That’s how it feels when you’re growing out of control and can’t keep up anymore. Sound familiar?
Here are five clear signs your business is growing too fast and you need to act — now.
1. Not enough staff to service customers, and you can’t bring people on fast enough to be effective. When you do hire someone, there is no one there to teach the new employee your way of doing things. And if there is someone around willing to teach them some of the ropes, there is no formal process in place to hold them accountable.
Adding to the chaos, no one has defined the roles in this rapidly expanding company, so nobody really knows who their boss is and what’s really expected of them.
2. The shop is going rogue in that every employee feels free to do things however they want as supervision and standards are being dropped at an alarming clip. Maybe you had to “buy” people as you grew, and those people are now deciding what they will or won’t do. Or maybe you’re losing what good people you do have because they’re overworked and never have downtime or the ability to go on vacation.
If you are a business that already has remote branches, you can multiply this stressor by about 100.
I made an appearance on a podcast by some industry friends who had run a carpet cleaning business before they became consultants. They told me they expanded their business by adding more space next door. However, it might as well have been on the other side of the country because it didn’t operate the same way — at all.
3. Customer complaints and callbacks are increasing exponentially. What problems you used to correct by walking around and scrutinizing each employee is now impossible because there are too many people. Without a thorough orientation process and training, it’s anyone’s guess what they’re doing or how they’re doing it once they get to the customer’s home.
And it’s you that has to get in the truck and go over there to make it right.
4. Chaos and broken communications are everywhere at your company. There is friction in every interaction required to run a stable and profitable business. You’ve hired three techs, a customer service representative and a dispatcher in the past month. They are all relying on people they assume have done their part in that critical “triangle of communications” relay race — but who have not.
5. Gross sales are on the rise, but gross profit is either declining or, worse yet, gone. Know that I’m only interested in what my clients were doing in both gross sales and gross profits and never just one or the other.
So, your cost of customer acquisition is skyrocketing, bringing in top-line sales but losing money in gross profit. You’re putting out so much money for billboards, mailings and digital ads. The phone calls coming in are costing a fortune, to the point that every call is either losing you money or worse — putting you into a vicious cycle of debt.
It might be you’re overstaffed, which is draining all the profits.
One of my clients, a condominium building contractor, had so many layers of management, sequestered on separate floors, that he had no idea how his business was doing. That is, until he fired all his vice presidents and found out what was going wrong so that he and I could fix it. We put in the right systems and the right staff ratio according to the right organization chart (with manuals).
Another client, a multibranch electrical company owner, was growing fast and making money, but the stress of keeping all the balls in the air was killing him. (I could relate.) He was so overwhelmed that he had no clear idea of how he was supposed to be spending his days.
Here’s my advice: Make a commitment to take your life back by adopting the right organizational chart and covering each box with an operating manual covering 80 percent of what goes on.
Then accept that you are now in the business of staffing up constantly and create a repeatable and ongoing process for recruiting, hiring, orienting, training and retaining staff.