The Problems of Success

By Al Trellis and Paul Sharp

These have been good years for the building industry. Housing starts are up, and the growth in the stock market has meant that more people have had the means to indulge their housing dreams. Along with that success have come reports of the typical problems of success shortage of subcontractors, and not enough hours in the day.

The problems of success are more enjoyable than the problems of failure. For one thing, you can cry all the way to the bank. For another, you have more resources to devote to solving your problems. However, the problems of success can be aggravating and even fatal if left unattended. Todays small and profitable company can become tomorrows floundering corporation with unfocused management, bloated overhead, and burned-out employees.

Here are some of the major ways problems of success manifest themselves:

1. Not enough time

2. Lack of management control and focus

3. Difficulty in finding the right people

4. Employee burnout and high turnover

5. Inadequate support systems

6. Inadequate capital

If youre experiencing some of these problems, here are some suggestions on what to do about it.

1. Manage growth

Though you hate to turn down revenue, if you find yourself running out of control, the first thing to do is to put a limit on growth. Be more selective in your clients. Raise your prices. Say no to projects that are marginal. Limit yourself to a particular market niche. Its better to be a small successful company than a large unprofitable one.

2. Find the right people

In a tight labor market, this can be difficult. Start by retaining the people you already have. Talk to your subs. Find out if they would be able to shift additional crews to your work in exchange for quicker pay. Retain sub loyalty by paying on time.

3. Improve your support systems

If you're struggling with inadequate management systems now, it will only get worse as you grow. Start with the money management systems. Are you getting the financial reports you need, when you need them, in a format that is quickly understood?

Replace your obsolete equipment. When we moved our offices, we bought several new Pentium II computers. Theyve already paid for themselves through increased productivity.

4. Secure additional capital

Increased growth leads to increased capital demands. Youre buying more land, purchasing more materials, hiring more subcontractors. Managing cash flow becomes ever more critical. Talk to your banker ahead of time and secure extended lines of credit. Find some outside investors to finance spec homes and land deals. And make sure you dont fall victim to creeping overhead.

By managing growth and watching cash flow, you can transform the problems of success into greater profits.

Al Trellis has 25 years experience as a custom builder, speaker, consultant, and columnist. Al speaks to over 6,000 builders a year. Paul Sharp is a writer and marketing consultant and, along with Al, one of the founders of Home Builders Network. This article was reprinted from their bookBuilding with an Attitude - published by Home Builder Press.

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