Construction and Contracting Business. Entrepreneur magazine

Profit/loss analysis

      

Employee incentive payments

      

Invoice sent to client

      

Payment to suppliers and subcontractors

      

Receipt from client

      

Bank deposit

      

Bank account reconciliation

       stat fact

      Unsure about the value of incentives? Think again. Consumers are bombarded daily through the media with offers from merchants for “buy one get one free,” “no payments for 12 months!” and “save 50 percent with coupon.” It’s a fact that incentives alter behavior. The trick for employers is to find the incentives that offer the biggest reward to the company at the least cost. Get to know your employees and think about what they want. Money is an obvious choice, but employers have also found that employees want group outings, parties, vacation days, and other perks.

      Since it is highly unlikely that one department or one employee is responsible for all these tasks, it is paramount that each employee who handles a task understands who is responsible for the other tasks. Knowing the sequence of events and ensuring the proper flow of paperwork is the key to an efficient and productive office.

      A variety of software programs now available feature organizational charts, making it simple to plug in names, tasks, and any other pertinent information. It also makes it easy to make changes as they arise . . . and they certainly do arise.

      Because it is quite common to make changes during the course of a construction project, all employees must access the chart frequently. Mistakes once made are often hard to find and, if found, may be difficult to correct. A team approach to organizing and operating your company promotes efficiency and productivity, reduces errors, and creates a more functional organization. Using the right software can put you all on the same organizational page, literally. Hint: Try keeping your organizational chart on one page. Also, you should group people with the same title into one box to save space.

      Lucid Chart (at www.lucidchart.com) can provide you with easy-to-create organizational charts at reasonable prices. A team of five, for example, would cost $20 per month total. SmartDraw (at www.smartdraw.com) is another good choice with some free downloads.

Wrap-Up

      

Managing employees can be a difficult and time-consuming endeavor.

      

Writing an employee handbook is a great tool for both employer and employee.

      

Both state and federal governments have rules and regulations regarding employment; understanding and following the rules will make an owner’s job easier.

      

Written job descriptions help employees understand their responsibilities and assist employers when reviewing employee performance.

      

Caution when hiring minors: Stiff penalties apply if laws are violated.

      

Wages are important, but benefits and incentives are vitally important to employee production.

      

Reducing employee turnover saves money and increases productivity.

      

An organizational chart is an excellent tool for improving communication. Look at some of the inexpensive organizational software options.

       CHAPTER 10

       Errors and Omissions

Typically, successful entrepreneurs are eternal optimists. When presented with a challenge, they generally attack the problem without becoming discouraged. In fact, many consider difficult circumstances opportunities rather than setbacks—a minor detour instead of a train wreck. An excellent example of this is an excerpt from the movie Apollo 13 (1995), which is based on the true story of the ill-fated manned mission to the moon:

      NASA Director: “This could be the worst disaster NASA’s ever faced.”

      Flight Director Gene Kranz: “With all due respect, sir, I believe this is gonna be our finest hour.”

Failure Is Not an Option

      The exact number of business failures among contracting companies is difficult to quantify, and it is even more difficult to know the reasons for failure. In fact, some business shutdowns may not even be classified as failures. In some cases the owner retires or sells the enterprise to another business. However, a general consensus is that roughly one half of all contracting businesses fail to survive more than five years, which is not unlike other businesses. Once they reach the five-year anniversary, however, chances for continued success are higher.

      There isn’t one single overriding reason why contracting businesses fail, but failures generally fall into several categories. We’ve touched on some in the course of this book, but it is a worthwhile exercise to review them. Most often, failure is not caused by a single factor but by several problems working together to sink a company. Among the most prevalent causes for business failures (listed in order of occurrence) are: