For any business, what your clients will come to you for is your work, your product, your craft and your service. After all, you’re in the business of providing value to others.

Yet, beyond your product, what are the top 10 components that will make your business valued, sustainable and consistently profitable year after year?

Over 37 years of building www.giffinandcrane.com into a powerhouse custom contracting company with my business partner, Geoff Crane, here’s what we found worked for us...

The Value of an Enterprise
1.    Outgoing, aligned and energized leadership
2.    Key, trusted associates
3.    Organizational health – 8.5 or higher out of a score of 10
4.    Competitive advantages strategically marketed
5.    Brand
6.    Goodwill
7.    Market Share
8.    Know your numbers – job costs and monthly financials
9.    Return on Operations
10.    Intangible Assets – Experience, Expertise, EQ Expressed thru Product, Wisdom, and the Process

For example...

1) Outgoing, Aligned and Energized Leadership is the first requirement to lead any company. 

2) You need Key, Trusted Associates who are capable of effectively owning their work and taking care of their responsibilities. Your company is more than you.

3) Your Organizational Health needs to be at an 8.5 or higher level. This means that your people enjoy coming to work. They know you care about them. That you’re interested in their future, beyond what they’re doing by working for you. 

So just like a coach assessing all the players on their team, it also means that you rate every person in your company on a scale of 1 to 10. Like school, a 6 is a D, a 7 is a C, an 8 is a B, and a 9+ is an A. 

Then add all those individual scores and divide them by the number of people in your company. You’ll end up with your overall Organizational Health score. Your goal is to get your entire company up to the highest level you can. 

Why is this important? It’s a lot more fun and less work. High performers relish working around other high performers. They enjoy showing up. They look forward to seeing what’s going to happen today with those around them. If you’re not creating that kind of atmosphere in your company, you have some work to do. 

That doesn’t mean that there isn’t a role for 7s in your company, but if the majority of people in your company are at that level, it means you have to recruit higher performers to be a sustainable business. By the way, you’re always recruiting higher performers. 

Notice how the first 3 components have nothing to do with your craft or your finances. The people you surround yourself with are the most valuable components of your enterprise.

4) Your company has Competitive Advantages that you can strategically market. It’s your job to figure out what those advantages are. Then you need to strategize where you can market those advantages to stand apart from your competitors. 

It’s challenging at first. After all, everyone touts their “quality”. So what makes your company different? What are the reasons a potential client would select your company over another? Once you know that, then the question is how do you market that effectively?  Like in places where your competitors don’t. Then articulate that message over and over again, ad infinitum.

5) Develop a Brand. Your company name, logo and identity needs to stand for something. It then needs to be promoted and fostered. Cowboys talk about riding for the brand. It means they are proud to be riding for the ranch they’re working on. Are your people proud to ride for your brand?

6) Goodwill has tremendous value, potentially millions of dollars of value. What is it? It’s an accounting term. It’s also an intangible. 

What it means is how good is your reputation? Is your company sought out? Is it well regarded in your community? Does your team have expertise, experience, energy and enthusiasm? 

That’s all goodwill. It costs you nothing, yet takes years to attain. It’s also what makes your company valuable.

7) Market Share – Are you the market leader in your niche? How much of your market do you command? How do you increase that without sacrificing profits? 

The classic story of failed contractors is growing too big too fast and going broke. You don’t need to get big overnight or in a year or two. You need to grow steadily as your organization can profitably manage it.

8) Know Your Numbers – This is the score keeping part.  The points are determined in dollars and cents.

You’ll want to job cost every job, win, lose or draw. Which line items did you make money on? Which line items did you not? Do this at least monthly on all your jobs so that you can make adjustments before negative variances get out of hand. Face the cold hard facts of the score, see what you can to correct the course of the job that’s going on, and then adjust your future bids accordingly. 

Construction is a tough, low margin business, so don’t take unprofitable work. Find a niche where you can make a profit. To that end, create an annual budget. I know, boring, right? But would you start building a house without a lumber list? Only a fool would. 

The annual budget is your game plan for the year. So follow up by doing monthly financials, quickly, after the end of each month. How did you do? Compare it to the budget, year-to-date. Is the game plan working? Or will you need to make adjustments while there’s still time?  

By the way, you can’t make up lost profits on volume. That’s a losing game.

9) Return On Operations – By implementing points 1 through 8, you’ll start seeing a Return on Operations, also known as pre-tax profit. Congratulations! Just remember to share some with your company of great people. Never forget that your silent partners, Uncle Sam and your local governments, are going to get their share too. Then take 10% of whatever you made and invest it in something outside of your business. That’s how you grow wealth.

10) Lastly, Intangible Assets – Every company has them. What are yours? Over time, ours became Experience, Expertise, EQ Expressed thru Product, Wisdom, and the Process. 

EQ stands for Emotional Intelligence. It’s like the difference between listening to someone who’s played guitar for 25 years compared to someone who’s only been playing for 3 or 4 years. When you build project after project, especially custom homes, you start to see things in the plans that with a simple twist would make a world of difference in the end product. Again, like Goodwill, these Intangible Assets all have tremendous value. 

Your intangible assets will be different than mine. If you’re new in business, it’s going to be your enthusiasm. If you’re mid-career, it might be your willingness to take stuff on that others won’t. 

The failure rate for contractors is extremely high. Never bet the farm. You’ll want to survive some “learning experiences”. You’ll certainly end up with an advance degree in higher education from the School of Hard Knocks. 

So to build a company based on these 10 components takes time. It’s a discipline.  Like any athletic endeavor, you have to keep training and honing your game. However, if you’re in the trades for the long haul and want to build a valued enterprise, following these components diligently will make you successful. 

As Geoff and I grew the company, I measured these components weekly. If we were falling short somewhere, than it was my job to see how we could make improvements. And we never stopped making improvements. 

Today, Giffin & Crane General Contractors, LLC continues on in the hands of the next generation of builders. They’re taking it places far beyond what I accomplished. To see them continue providing value to our community in so many ways while doing well is extremely satisfying.

Of course, they always still have to use their craftsmanship to deliver the product that their clients seek them out for. Just like you. Deliver on the promise. That’s job 1.