The single greatest attribute of companies that are successful in the restoration industry today is discipline. By successful, I am not referring to the thousands of restorers with $1-2 million in annual revenue and 10% bottom lines. I am referring to the handful of contractors with superior financial performance. This elite group turns net profits of 15-20%, consistently produces current ratios of 4:1 or better, maintains equity positions exponentially greater than debt, and manages accounts receivable turns of less than 30 days.
If this profile sounds attractive to you, you are not alone. Right now, first generation restorers all across North America are faced with the brutal reality of mediocre financial positions and limited options for succession. The good news is there is still time to change and build a company that is steadfast and resilient, providing enviable returns for years to come. The restoration companies that have endured the years, evolved with the maturing of the industry, and survived the test of succession (all while providing outstanding returns on equity) display undeniable characteristics of disciplined behavior.
These observations were forever aligned with successful organizations when author Jim Collins revealed over 15 years of research in his book, Good to Great. While the focus of Collins’ research was on large corporate entities, the similarities to small service-based businesses are the same. Here is what they look like.
Disciplined restorers hire disciplined employees. They actively recruit talented individuals with similar values and behaviors even when a need is not eminent. They create cultures that attract and retain top performers, pay respectable salaries, and provide security for worthy employees, which creates dedication and loyalty. Attitude and work ethic come first and technical competence second. Most technicians and project managers in these companies were brought in green and trained to the industry internally.
Disciplined restorers systematically create opportunities for employees to grow with the company. While competitors are looking to fill voids, these companies are providing career paths for rising stars. They perform formal performance evaluations annually that include professional development goals and plans for every employee.
Disciplined restorers are intolerant of poor behavior. This is observed company-wide at every level. Each employee, regardless of rank or title, understands the risks associated with tolerating a less than stellar work ethic and attitude. They police this at the peer level and force accountability by example. Modeling the way for lateral positions is the product of pride for their organizations. It keeps standards of conduct high and quickly eliminates those that don’t fit.
Disciplined restorers create detailed yearly business plans. Much like planning a long road trip, these organizations go to great lengths to chart their annual pilgrimage that gets them one step closer to their vision. These plans include well-defined and measurable objectives along with the corresponding action items, staff responsibilities, and deadlines. They gather input and feedback from every department, creating buy-in from all levels.
Disciplined restorers are keenly aware of their core strengths and specialize by sticking to them. Knowing that trying to be everything to everyone can be a recipe for disaster, these canny organizations carefully pair their strengths with the ever-changing opportunities in the marketplace. The result becomes a brand image that is synonymous with their flagship service line while creating loyalty and trust among the referral sources that all depend on.
Disciplined restorers have regular and productive meetings. They are hypersensitive to the fact that internal appointments (meetings) are just as important as external ones (with customers). Their meeting schedules consist of daily project huddles, weekly production and sales meetings, monthly management team meetings, and quarterly strategic meetings. These meetings are well run, efficient, and productive where successes are celebrated, failures are recognized, and change is debated.
Disciplined restorers engage in due diligence processing before making decisions. Instead of shooting first and aiming later, these organizations go to great lengths to ensure they have as much of the available information as is necessary to make informed business decisions. They don’t just explore the risks and rewards, but exhaust many “what-if” scenarios to identify risks and unintended consequences of their actions.
Disciplined restorers process and analyze information religiously. They accomplish this with centralized job management databases, production reports, CRM systems, and a host of web-based and mobile technologies that gives employees real time information from virtually anywhere at any time. In a society that suffers from information overload, these organizations have the utmost respect for the integrity of their data. They don’t just seek information; they seek the right information.
Disciplined restorers execute intensely. Their decisions are methodical and their actions deliberate. They stick to the business plan even under adverse conditions, making only minor adjustments as needed to quickly abandon failed initiatives and replace them with stronger ones. Employees know their job responsibilities intimately and take pride in performing every task to the best of their abilities. Focus is an understated value in these cultures, and they demand nothing less than excellence in everything they do.
Disciplined restorers use the right tools for the job. While some companies get caught up with fancy new toys and trendy technology, these companies know that fundamentals rule and “state-of-the-art” does not always mean larger profits. Every capital investment, whether it is software, tools, equipment or training, has a return on investment. These returns must be large enough and sustainable. If not, they are viewed as wasteful where those funds could be better spent in other areas.
For successful companies that have superior financial performance, discipline is a conscience choice, not a byproduct of circumstance. It is evident in everything they do, from the way they answer the phone to the way they maintain their office and equipment to the way they deliver their services - straight to the place where it counts the most, the bottom line.
The restoration industry is changing more rapidly today than any other time in history. In the midst of this change, it is easy to fall victim to quick fixes and short term fads. Regardless of this, the fundamentals of business have not changed. Disciplined companies with disciplined people, thoughts, and actions are survivors. They succeed with order, balance, and integrity. These are the marks of truly great companies. Aim for those, and you can’t go wrong.