Systemize Success: Mastering Contractor Scaling

Scaling a business is often misunderstood. Many believe that simply hiring more people equates to growth, but true scaling involves establishing foundational structures, processes, and systems. This video dives into the critical differences between scaling and growth, emphasizing how having documented procedures can streamline operations.

We explore why relying on untrained hires without a solid system leads to chaos rather than efficiency. By implementing effective training and operational frameworks, we can ensure that every new team member contributes positively to our goals. Join us as we clarify these concepts for sustainable success!

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Transcript

Jim Johnson: 0:00

I think one of the things that we need to look out for as somebody that's looking for this concept of scaling and understanding what that means, I think a lot of people struggle with what does scaling mean. I think a lot of times they believe that scaling means to grow through a group of people. Now, the more people I have, the more revenue I generate and so on and so forth, but truthfully, that's not scaling at all. Scaling is putting in the foundational structures, processes, systems, training, that kind of stuff so that when you do go out and hire folks, you have a system to plug them into. It doesn't matter how many people you hire because you have a system and a process that you can put them into and repeat over and over and over again because you know exactly what it's supposed to spit out. It's the biggest mistake that I see most contractors make. It's their thought process is to see their ability to scale is to go hire a bunch of people that probably do what they do, or they think they can do what they do, and all it does is create more of the problems you're already dealing with by the things that you currently do. You weren't able to get all the work done. You weren't able to get to all of the customers. You were starting to have a bit of fall through and not meeting your timelines and commitments. And now you've got to go out there and hire a bunch more people to do the same thing, because there is no process. There is no system. There is no exact way of doing things. And you can't train them very fast either because there's no process for that. So they got to. Hand, hold, verbally, train the whole time, which what that ultimately does is diffuses your scaling and actually shoots your scaling down, shoots growth down. Scaling is one thing, growth is a different thing, and I think most people would believe those are the same thing, and they are not. Growth is what happens after you scale, after you have your systems, your processes, your structure, your training, hiring processes, everything in place and ready to go. You can generate leads and you can sell them. You got all that figured out. All right, awesome. Now we can grow inside of our scale. Does it make sense? You hear a lot of the whole 10x your business grow and scale your, but they say grow and scale, right? The reality is in order to grow a business, you've got to scale it. And to scale it means that you have documented the processes and systems in every aspect of your business, both foundationally and operationally so that now whoever you hire. You can set them behind a screen, a desk, in a job, and it is fully functional and they can literally just read what needs to be done and do it. That's truly being able to scale. But the idea of being able to put somebody in position and say, here's the stuff you need to know and expecting them to execute that. If you're not there, that means that you are partially. Ready to scale, maybe. Depends on how far you are along in the process. Very first year in, in the roofing business, home service contracting, exteriors, that type of thing. I did really well as a salesperson. I sold 108 jobs in the first three months. I kind of developed some systems and processes for myself to execute. And they asked me to be the sales manager. I'm like, that sounds great. I'd love to. What's the job description? They're like just make people do what you do. And I went, that's not really a job description. Let me put together some things and let's see if we can actually make this work. So I took a couple of months, actually started to develop process and system and started really thinking about, okay, one person, me, Versus a bunch of people doing it. What kind of problems does that create? Because now it's a volume and can you actually get it done? Those type of questions pop up. And so I did a pretty decent job of putting together what I thought the process and system was, and I missed some things. I mean, this is how I know I missed some things. I hired 107 people. Inside of three months is just salespeople. That's not all the support staff and everybody else to come in and sell. Thinking mathematically, if I can get each one of those people to just average 500, 000, that would be a 50 million company. So let's go and brought them all in, did a pretty decent job of training three to five day training program and then ongoing education and training. And all the systems and all the processes were only documented as like what the task was. It was like, create an estimate, turn in an order. There wasn't the depth of it, exactly how to do it, right? Like the next step, how long it should take, what tool to use, all these other things that we help with, uh, building processes around here. And so what I ended up doing is I created a sales team that was high functioning. We did 41 million, which created. Literally a ticking bomb of explosion when it came to customer service. We weren't executing quickly enough. We weren't follow doing much follow through. We weren't even concerned really too much about the production side of things. So we didn't have quality control, final inspections, any of that kind of stuff. And I just, Did not get deep enough into what it was that I needed to cover to create a great client experience. I've learned my lesson since then quite well, and not necessarily about how fast can I hire a bunch of people, but how great can I make the system and what number of people can it handle at a time. So yeah, that's my stories that like the climax 29 years old. Trying to do it all trying to keep customers happy and hold the thing together Not a lot of fun to go through that not exactly the way you want to learn something But I promise you this it's send it home. I learned it. All right I got to do this a little bit better takeaway is be persistent about your processes I mean like get it nailed and then run it and practice it with the number of people that you currently have and see if It breaks if it breaks you're not ready. We actually did an exercise. This is a great exercise for this We do this with several of our clients We will build what we call the ideal process. That it's way that a job is supposed to go from start to finish. And then we'll get all the key players into a boardroom and we'll start where it starts. Hey, this is Jim. I'd like to get an estimate for my roof. And Janie, the person taking in the phone calls, does her script and enters her lead and does exactly what she's supposed to do and then hands it to the sales rep and the sales rep does his part and he's got to walk it through every little step of the way. Okay. And then it gets handed off to production and breaks, right? Like there wasn't the right thing, he couldn't do his job. And that's how you break a process before actually implementing a process to ensure that you have a process that's going to stand up to the test of time. That'll go two ways. One is they, they built out the process the best they could think of. And then it just doesn't work. That's because they didn't test it and didn't consider some of the outside factors that come into play. Okay. Uh, the other is they over process it. They say, Hey, um, this thing happened one time, but it was a big thing. Like it was a problem. I'll give a great example. We had a client that, uh, reneged on a contract. I also knew that my contract wasn't like an airtight contract. Like it was a simple design contract. And so we, when we got involved, the homeowner had like 6, 000. We went to the back to the insurance company, got everything covered for him. It was like 62, 000 windows and doors and all these other things. And they reneged on the contract. Pissed me off. I was beyond irritated with it. I felt like we just lost sixty some odd thousand dollars. That's never going to happen again. I'm going to get an attorney. We're going to write a loctite contract. And sure enough, we did. And we implemented it, trained on it, practiced it, and the whole bit. Cut our sales in half overnight. because we over process something. We said, Hey, we don't ever want to let this happen again. So we're going to do this next step, which then created a whole nother problem. Cause what happens is you go, okay, I'm going to make this move and you make the move. It creates a new problem. So now you have to do a new thing to your process to solve that problem. And there's this downhill flow that comes out of it and you end up becoming way over processed, way too restrictive. You're not agile. You're not flexible. And the whole thing comes crashing down around you. And people are just irritated by it. There was actually a piece of software that came out in 2009 that was competition to the software I was working for at the time. And I got a little sneak preview of it. I went, that thing's never going to last. Because every step somebody had to answer a question, yes or no, yes or no. And most of the questions were no, no, no, no, no, I don't need to do that thing. Don't need to do that thing. And so they over processed something which made it hard to use the user interface. A side of it became garbage. Nobody wanted to do it. So you've got to find this balance and my best advice for that. So my best advice for building a process for a contractor, think of 80 percent of the things that you need to cover. What happens 80 percent of the time, 80 percent of the time it goes like this, and this is the ideal way for it to go get that nailed first, concentrate on focusing on 80 percent of the time. This is the way it's supposed to go. We call that the ideal process. And then every if then thing becomes a new process. If this happens, go do this and follow that process. If this happens, go do this. And that's this process. But get the ideal one down first. If everything went perfectly, what does that look like? Okay, I've got that nailed. We're following it most of the time and now 20 percent of the time something's popping up. Now we build a process for those little things and it's not nearly as hard. Most people overbuild processes from the beginning and it's just a nightmare for them to get out. But