More Of Mark Moore’s Business Principles

The good news is that Moore recently shipped me some more business points to ponder, continuing where he left off, at No. 15. He indicated he would continue to send us his thoughts because he believes he can “help a contracting business become more profitable and easier to manage.”

After reading his second installment, I have to agree with his assessment: What he provided is (again) worthy of note.

So, here is more of Moore, starting with Business Principle No. 15.

— Mark Skaer, Editor-In-Chief]

15. On average, contractors in the mechanical, electrical, plumbing, building controls, and HVAC industry fail to capitalize on $43,000 of additional profitability for every $1 million dollars the company generates in sales revenue. In most cases, this additional profit will more than offset the cost to hire a manager or consultant that can help steer this money into the company’s bottom line.

16. Management is not a popularity contest. Allowing subordinates to participate in the interview process can undermine a new manager’s authority. I’ve heard from numerous managers and have personal experience of subordinates asking for favors to put in a good word and, even worse, make threatening remarks. Also, instead of hiring friends and friends-of-friends to fill senior positions, look for managers that will contribute new ideas and possess business skills that will add value to the organization.

17. For those of you that would like the opportunities that are available to larger companies and consolidations but would like to remain an independent entity, consider forming a strategic alliance with one or more companies. This will give you the ability to share resources in order to increase market share and economies of scale.

18. To avoid complacency during slow periods, do not get into the bad habits of placing blame on the economy for lack of profitability or trying to justify your current condition by comparing your company to competitors that may be in the same position.

19. Bestow common courtesy. Always conduct yourself in a professional manner; keep in mind you never know who you will need to help find future employment or your next customer.

20. Make a decision! Standing still will normally cost you more money, lost opportunity, and the ability to recruit talent.

21. For those of you interested in acquiring other companies but are concerned with the return on investment, keep in mind most companies in the construction services industry were created to generate good wages, not profits.

22. Unfortunately, the longer a company has been in business or the larger the company has grown, the less risk most companies are willing to take. However, somewhere along the way people forgot that someone took a risk to start the business, additional risks were taken to grow the business, and operating a business is a risk — period. Keep in mind that it is the taking of risk that will help grow your company and make it more profitable.

23. The most valuable commodity you can obtain today is information. The more information you have in regards to the future growth of markets segments, your competitors, existing and potential customers, etc., will give your company a strategic advantage over the competition. Also, information needs to be shared and used as a tool to educate the managers and associates in your organization.

24. It is much easier to go after potential customers who are dissatisfied with their current contractor than to waste resources to pursue customers that have a strong relationship with a competitor.

25. The business development process should never stop. It is always better to be in a position to waive off work than be on your hands and knees begging for it. Also, if you are not having success pushing new customers in your direction, try pulling.

26. In order to be more competitive as well as to attract and retain talent, family-owned companies will need to make senior management positions available to non-family members. Also, consider giving up a portion of ownership as an additional incentive.

27. Management must continue to look two to three years ahead in order to determine what must be done today to ready the company for tomorrow.

28. Surround yourself with people who are more qualified than you are and you will find most of the problems that plague your company will disappear. Also, you will require fewer people to accomplish the same amount of work.

29. A difference of opinion is not disloyalty. Encourage and embrace new ideas.

30. Recently I was reminded of an old proverb: “Those who can’t, teach.” However, in recent years some of the most successful business people have written books that have sold millions of copies to those of us looking to maintain or gain a competitive edge. In addition, business professors have helped companies increase profitability in some cases by millions of dollars. The reality is, “Those who can’t, can’t.”

Guest columnist Mark Moore has more than 20 years of experience in the specialty trade industry and has completed his education in business, contracting, electrical, and HVACR technology. He can be reached by e-mail at markmoore56@hotmail.com.

Publication date: 02/03/2003