I played a lot of team sports growing up.
Soccer, basketball, football.
How to win is pretty straightforward.
Finish with more points than your opponent.
If you screw up one possession, no problem. You can try again next possession.
In many cases, a few big plays can ensure you come out on top.
Then there’s golf.
Winning at golf is a different beast altogether.
You can hit a strong 16 holes, and then undo everything in just two flippin’ holes.
The score is the accumulation of everything.
Golf is part shooting well, BUT also minimizing the bad shots.
It’s not about a few strong plays, but a steady, consistent play and actively reducing risk.
Your contracting business is like golf.
Business is one part making profits and one part mitigating risk.
You have to actively find the balance between making a profit and protecting those profits.
Many contracting businesses are a few sideways jobs from disaster.
And not because their liability insurance is no good, but rather, they don’t have the systems to protect themselves financially.
You can’t buy an insurance policy against low profit margins…
But you have to SELF insure for the continued existence of our business.
And without the right, correct systems, each new job is at risk of wiping out the profits from the previous six.
The best self-insurance you can get comes down to reducing risk in three areas:
Cash Flow Risk – Even profitable businesses that don’t collect cash fast enough won’t survive.
Cash collection should be a priority with every single job.
Many contractors fund current jobs using deposits from future jobs.
That is not cash flow insurance. That’s a Ponzi scheme. Be careful.
Profitability Risk – Knowing the true costs of your jobs matters more than you think.
The profit from your jobs needs to cover materials and labour, but also your compensation and security to grow and protect your business.
Consistently narrow margins put everything you’ve built at risk.
Lead Generation Risk – Having to say yes to every prospective job pushes your business to the edge.
Always be working at generating more prospective customers than you need.
When you have options, you have insurance.
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One of the best ways to help mitigate the profitability risk is by ensuring clear communication and accurate expectations with your team and the customer.
Poor communication at any stage of a project will trigger rework and crappy project margins.
One of the best tools I’ve seen firsthand that helps reduce risk on your jobs is CompanyCam.
I ran a free webinar with CompanyCam this past week, addressing the most common cash leaks that sink contracting businesses.
If you’ve wanted to see how CompanyCam can actively reduce risk in your business, the 50 mins will be a good investment.
Check out the replay for free, as well as the promos offered at the end.
Documentation at every stage of the job minimizes the exposure to you and your business profits.
You can grab a free trial of CompanyCam and save 10% for Life here.
Try it out for yourself and get better at reducing the bad jobs in your business.
