Can a contracting business really grow too fast? You bet it can.
I remember waking up at 6 a.m. for the second day in a row after working until 2 a.m. the night before at my family’s 70-person plumbing, heating, cooling and now electrical company 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 USA and Canada, there were two reasons contractors would call me:
- Either they were small shops whose owners were spending all the hours in the day working in the business who finally realized they couldn’t clone themselves and that they needed systems to stabilize the business and scale.
- Or they were fast-growing shops that had already gotten very large through great marketing, smart acquisitions, or both. The problem is every time the phone rings it was like gasoline on a fire that was already out of control.
I’m going to focus on just the fast-growing shops here because, like me, most of my clients who were in this position had this condition sneak up on them, and if you’re still reading on I’m betting this will resonate with you too.
You were handling it—somehow—until you one day you just couldn’t and that’s when the wheels started to fall off or at the very least began to wobble. It’s like 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.
- 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 what the roles are in this rapidly expanding company, so nobody really knows who their boss is and what’s really expected of them.
- 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 rate. Maybe you had to “buy” people as you were growing 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.
Some industry friends who had run a carpet cleaning business before they became consultants told me in their podcast that I was making a guest appearance on, that they expanded their business by just adding more space next door and they said it might as well have been on the other side of the country because it didn’t operate the same way—at all.
- Customer complaints and callbacks are increasing exponentially. What problems you used to be able to correct by walking around and scrutinizing each employee is now impossible because there are just too many people. Without 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.
- Chaos and broken communications are everywhere at your company. There is friction in every interaction that is required to run a stable and profitable business. You’ve hired three techs, a CSR, and a dispatcher in the past month who are all relying on people they assume have done their part in that critical “triangle of communications” relay race but who have not.
- 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, and the phone calls that are coming in are costing a fortune, to the point that every call is either losing your money or worse, putting you into a vicious cycle of debt.
It might be you’re way over staffed and that is draining all the profits.
One of my clients, a condominium building contractor, had so many layers of management, who were all sequestered on a separate floor that he literally had no idea how his business was doing — until he fired all his vice presidents and found out what was going wrong so that he and I could fix it by putting in the right systems and the right ratio of staff according to the right org chart (with manuals).
Another client, the owner of a multi-branch electrical company, was growing fast and making money but the stress of keeping all the balls in the air was literally killing him. (I could relate.) He was so overwhelmed that he had no clear idea of how he was really 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 that covers the 80% of what goes on. And 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.