What a successful building firm owner is doing with their business

So what does a successful building firm look like? Of course every construction firm is different but let’s build a picture here of a building firm that is getting it right. The pointers you’ll find below are based on conversations we have day in day out with various business owners, and the accounts of success stories from Simon Lazarus, Managing Director of the Better Business Group (BBG). For info, Simon is a long-standing partner of HBXL and you can find out more about BBG and his mentoring service to builders, here.

Meet Harry Bloggs – our successful building firm owner

Fictitious Harry Bloggs is the owner of fictitious HBXL Design & Build. Harry started the business from scratch in 2013 having worked for a couple of other building firms prior to that. Harry went from having a building firm that was barely in the black to enjoying real success. He has an office alongside a storage facility. He has an accountant who he meets with every six months, he employs a part-time book-keeper, a part time administrator, and has a right-hand man, Steve, who’s his site manager and estimator. Everyone else who works for Harry is a sub-contractor.

So how does Harry measure success?

  • He’s no longer on the tools
  • He’s not estimating into the early hours
  • He’s working from an office rather than his home
  • He no longer asks his wife to unscramble his paperwork
  • He doesn’t have cash flow issues
  • There’s money in the bank
  • He has a pension
  • He has a decent work/life balance
  • He has a plan for the future.

So we’re not talking sports cars, second homes and drinks all round – who knows what Harry’s got parked in the garage. This story is all about the solid business he’s created that will withstand financial problems (and there always are). And if he carries on with the same approach, he can look forward to a long and prosperous future. Surely that’s success?

How did HBXL Design & Build become a successful building firm?

It didn’t happen overnight. Harry made plenty of mistakes. He kept on under charging. He’d previously made losses on jobs and definitely made some poor decisions. But he knew it couldn’t go on. Fortunately, he had the energy and enthusiasm, he was open to learning new things and he was willing to change. Importantly, he took some good advice.

1. Set goals for the business

Harry didn’t start his own business, with all the risks that go with it, to feel stressed, out of control, stuck, exhausted, earning a minimum wage etc. He wrote down what he wanted from the business, then and in the future. The kind of money he wanted to earn was going to take some work!

2. Choose specific projects – and no deviation

At considerable cost, Harry had already discovered that taking any old job and charging ‘competitively’ or rather (under-charging) to stay busy was a disaster. He was winning 7 out of 10 jobs basically because he was cheap. And there was definitely no money in referrals from people who he’d made ‘next to no money’ from. So he researched the jobs that were the most profitable – and discovered inevitably they were the larger extensions. Those would be his focus going forward. New mindset. Courage of his convictions. No looking back or down. He was looking up. Harry wanted a better future.

3. Include future overheads now

Harry looked at his overheads and worked out what was surplus to requirements, and stopped any unnecessary payments. He then revisited his goals which included an office and staff. He totted up the cost of everything on his wish list. After all, how was he ever going to get an office or staff if there wasn’t enough surplus to make it happen? PLUS his successful competitors already had the desk space and employees and he was supposed to be competing with them on their level. So he started to include future overheads in his current quotes.

4. Charge for everything – every last nail

Harry added a share of the year’s overheads to every estimate. He also quoted for an element of wastage, plus wear and tear. An allowance for inflation was also included.  And he made sure that his estimating was 100% accurate – every detail of each build stage, every hour of labour, every tube of mastic, every day of plant hire. He vowed never to dip into his pocket again because of forgotten costs.

5. Include a proper profit

What margin to put on a job is probably our most asked question. Slapping 10% on top is not going to create a solid business with a long future. That was the biggest lesson Harry learnt and the advice he was given will stay with him forever. Overheads, as explained above, are separate costs entirely. Profit is not a ‘nice to have’. It’s essential for the future of any business. His guy Steve simply puts (at least) 25% into the profit margin field in the estimating software making the process really. And Harry uses the profit to upgrade equipment, bonuses, pensions, and importantly, reserves for quieter times over holiday periods etc. Harry is thinking he may want to sell his building firm in the future or bring it to a close with a decent lump sum to show for it. The profit margin gives him options.

6. Make Customer quotations look the business

Knowing that the jobs he wanted were at the higher end, Harry made sure his estimates looked professional and  detailed. No more two-line estimates in an email or a single sheet of random numbers. Someone spending £200,000+ on their dream extension would need convincing that he and his company were right for the job.

7. Get the marketing right

No one would trust the servicing of their expensive car to a back street garage with a sign hanging off and oil all over the ‘reception’ chair. Harry, well aware of that, had a logo designed, bought branded work clothing, made sure he was presentable when he visited customers and that his pick-up was clean. He bought a website domain name so that he could have a professional email address. Then he thought about his key selling points and paid for a simple website with a portfolio to show off his jobs (not stock shots!). He advertised in local magazines, posted on social media and eventually went on to sponsor a local football team.

8. Know your strengths and when to delegate

Harry discovered that if he got off the tools and focused on the customers and generally growing the business, success would follow. His guy Steve was on site and was in charge of the subbies. Over time he too came off the tools as the business grew to at least two jobs on the go at the same time. Steve learnt how to use professional estimating software and that made a huge difference to the running of the business – and win rates. When he was unable to do all the estimating, he outsourced it to a professional estimating service.

9. Add a second income stream – design

Harry was happy working with customers’ architects for the most part but it often slowed up proceedings when plans needed to be amended. Harry had enough experience to know that he could design an extension. So using easy-to-use CAD software for residential construction he started offering design as well as build. It was a huge success. Customers loved the 3D drawings. And the business could charge for the design/planning permission service. Next step is to employ someone to use the software alongside him.

10. Accept help from experts

As I said at the start Harry is fictional but his story isn’t – Simon Lazarus from BBG has helped many, many building firms make good money by mentoring them and helping them secure bigger budget projects. We’re talking big money. Simon is offering free 60-minute consultations. You can call him directly on 01707 859900 or book your session with him here. And 20+ years in the construction industry has taught the team at HBXL a thing or two about what builders need – that’s why HBXL Building Software is used across the UK by thousands of building firms. So have a chat with us on 0117 916 7898.

Want to grow your business financially?

There could be an 11th point. Stick with the plan. The big profits didn’t really kick in for Harry for a good year or so. But he’d projected this. He just knew he had to hold his nerve, and in the early days, sit on his hands until the right job came along. That one storey extension for a neighbour down the road, was a thing of the past. Embracing technology, being prepared to try new things, delegating… that’s what got Harry money in the bank and a pension for his retirement.

We’re ready to play our part in your own story. Who doesn’t want to be a successful building firm? We can advise on estimating and CAD software. Plus Health & Safety software and Customer Contract software too. Call us on 0117 916 7898, have a short online demonstration of EstimatorXpress or download a free 14-day trial. We’ll support you as you get to grips with the software, and then lend an ear as you go after those larger extensions! Do it this month and you can have ContractsXpert free (worth up to £599+VAT) when you choose EstimatorXpress. It’s all part of the HBXL mission to help builders stop under charging. Cannot be used in conjunction with any other promotions. Promotion ends 31.7.23. Ts & Cs apply.

And check out our Business Management Skills Bootcamp, currently available to builders based or working in Liverpool and New Anglia. It’s a 15-week course that’s FREE to anyone unemployed, sub-contracting or running a small building firm that doesn’t collect staff taxes. If you run a payroll you pay just £350 including VAT – yes you read that right – for 54 hours of guided learning AND a CITB Site Supervision Safety Training Scheme (SSSTS) qualification. Find out more here.

Watch Episode 5: Why you’re under-charging and how to change >>

Watch Episode 6: Simple changes to your quoting that will make you more money >>

What to quote when you estimate a job – the full amount – here’s how >>