Tuesday 13 October 2020

HOW I BUILT A $5 MILLION BUSINESS IN EIGHT YEARS

Posted by at 8:28 AM

As a contractor, I was always interested in how others did it and built successful businesses. Perhaps you will find insight and encouragement from learning how I did mine.

First, the what … and then the how.

What did I do …

  • I started as a mitigation-only company. In my third year, I breached the $1 million revenue mark. I could see that it was unlikely that I could get to $2 million doing mitigation only. So, I looked around to see what could fuel my growth – rebuild was the logical next step.
  • I got my GC license and learned how to capture rebuild on every mitigation job I did. We eventually did 400 mitigation jobs per year and 400 rebuild jobs. The former produced $1 million in revenue while the latter produced $4 million.
  • Beginning my second year, I joined my first TPA. I developed a relationship with the local claims manager for USAA, with whom I was a member. They requested that my company be added to their Contractor Connection program. What an experience! I became sold on the high volume and sustainable work provided through TPAs and began identifying them one by one. There were seven TPAs at the time. I chose to be on five of those programs and rejected two others. Today there are nine TPAs.
  • Rebuild opened up other avenues of work. I found two grant programs through the Veteran’s Administration and one through Medicaid. Those programs eventually were producing revenue of $750,000 annually.
  • I found that some of the larger restoration companies in Colorado Springs were making a lot of money in roofing. So, I became a Haag Certified Residential Roofing Inspector, and we began roofing in earnest. One example of the outcome was a June 6, 2012 hail storm in North Colorado Springs that produced 200 claims and well over $2 million in revenue. By this time, we were doing $5 million annually.
  • I was really into VA work and doing handicap retrofits for Disabled Veterans. To do the best job possible, I became a Certified Aging in Place Specialist (CAPS). This is a certificate program sponsored by the NAHB. Local chapters provide a lot of valuable training options and several certificate programs.

This was achieved in a population base of 1 million persons.

In retrospect, this is what I think …

  • Mitigation only can get you to $1 million
  • You need to add rebuild to get to $3 million
  • You need to add roofing to get to $5 million

This is a possible road map for anyone who wants to grow their business to the next level. It will likely require an additional service offering or two and some additional training.

What have I learned …

  • TPAs will grow your business faster than any other marketing strategy. I learned this in my experience and now share this with others.
  • Rebuild is the next big step beyond mitigation. Get some training in Construction Management (licensed) even if your state doesn’t require it.
  • Roofing is huge and not hard. With an average $10,000 invoice and an entire summer and fall to complete your portfolio, this is an excellent service.
  • I don’t need to collect every nickel from every invoice or from every relationship. All successful relationships give a little to get a lot. Just look at your marriage ??
  • The key to growing your business is your personal ability to adapt and change. If you can’t, you get stuck early on and will go no further. You don’t have to be a superstar, but you must be adaptable.
  • You must be a good manager and have a competent management team. Mitigation is pretty simple. 3 – 5 days in and out. Rebuild, and roofing is much different. You manage the work and subcontract the labor to professional tradespersons. You must learn to manage well and manage a lot of volume at one time.
  • Replace underperforming employees. If, after training, coaching, and redirecting, performance doesn’t improve, replace them. If you don’t, this will slow your growth and increase your stress.
  • Achieving customer satisfaction is the single most IMPORTANT goal. I have given up money, provided services, gone overboard to communicate regularly, done work for free, hired and fired personnel, and more to ensure that in the end, my customers are satisfied with my company and its performance. When customers aren’t, they will hurt you in innumerable ways with a complaint to a TPA, to an adjuster, to a friend, they will write awful Google reviews, and withhold payment, and more. Their satisfaction, at whatever the cost (within reason) is the most critical task of all.
  • You must master industry standards, norms, and performance metrics. You must be among the very best in your area if you are going to maximize your opportunity. If you aren’t a dominant, let alone an elite contractor in your area, if you suck at what you do … heaven help you! You don’t have to press the boundaries of what is acceptable or what you can get away with. Just do an excellent job within industry standards and norms, and you will excel!

What are the rewards …

  • Others will honor you for your excellence
    • 2011 Golden Hammer Award Contractor Connection
    • 2012 America’s Top Remodeler
    • 2012 Forbes Magazine Best in Business Colorado Construction
    • 2013 Colorado’s Fastest Growing Minority-Owned Business
  • You will make a lot of money
    • 8-year average annual growth rate of 50%
    • Annual net profit above 20%
    • $5 million annual revenue
  • You will sell your business for top dollar.

Looking back …

I want my story to inspire you. What I did, you can do if you follow a road map that will get you where you want to go.

Always want more!

Always do more!

Always be the best!

Always put others first!

Be kind and generous!

Never say no, when you can say YES.

That’s my story. It can become yours!!

Set your goal … set out on the journey to achieve it!