Are You Building a Business or Just Working a Job?

A lot of trades workers start businesses because they're good at the service. They know how to run equipment, build, landscape, cut trees, pour concrete, or solve whatever problem the customer is paying them to solve. Eventually, they decide to do it for themselves. But being good at the service and thinking like a business owner are two very different things.

That was the focus of this week's Dirt to Dollars call on Owner Mindset and one of the final pieces of our 12 week series on building a business instead of building yourself another job. The biggest shift is learning to look beyond what needs to get done today and start thinking about what you're actually trying to build over the next five, ten, or fifteen years.  

What Are You Actually Building?

It's an easy question to overlook when you're worried about tomorrow's jobs, payroll, estimates, equipment, customers, and everything else that comes with running a service business.

Why are you building the company in the first place? Do you eventually want to sell it? Give it to your kids? Use it to fund other investments? Create more freedom for yourself? Build something you can continue owning without being involved in every detail?

One time I was attending a scaling workshop and being asked essentially that same question. What surprised me was how many business owners who were there specifically to learn how to scale couldn't clearly explain what they were ultimately building toward. I admit I didn't have a perfect answer then either.

That's what made the question valuable. When you're only focused on operating day to day, you can spend years growing without ever deciding what you're growing toward.  

Build It Like You Could Sell It, Even If You Never Do

You don't have to want to sell your company for this way of thinking to matter. The point is that a business should still be structured so that it could be sold. If you eventually give it to your kids, keep it for the rest of your life, or never entertain an offer, you're still better off owning a company that isn't completely dependent on you. That means looking beyond how much income the business can produce for you right now and thinking about the actual value you're creating inside it.

Your customer list has value. Your brand has value. Your reputation has value. Your team has value. Your systems have value. Predictable revenue has value. Accurate financials have value!!!

BUT all of those things become weaker when they're entirely attached to the owner.

If every customer only wants to work with you, every important relationship belongs to you personally, and every major decision has to come through you, there is a lot of risk tied to one person. The stronger position is building a company customers trust, not just an individual they trust. For example, customers calling your office because they know the company will take care of them rather than needing the owner's personal cell phone to get something done.  

Start Looking at Every Decision Differently

An owner mindset should affect the decisions you're making today. Buying another machine isn't only about whether you can afford the down payment. Hiring someone isn't only about needing another set of hands tomorrow morning and taking on another type of work isn't only about whether there's revenue attached to it. Every one of those decisions changes the business you're building. Owner mindset requires looking further ahead.

When you're buying equipment, hiring people, selling work, or taking on additional overhead, ask whether that decision is actually strengthening the company or whether it's being driven by what looks good, feels exciting, or solves an immediate problem.

That's especially important after the conversation we had last week around ego and growth. More equipment, more trucks, more employees, and more revenue can make the company look bigger without necessarily making it more valuable.

Profitability Starts Before the Work Begins

It's easy for contractors to obsess over production. How quickly can the crew finish? How many jobs can we get done this week? How much more efficient can we become? Those things matter, but you can't produce your way out of a job that was sold wrong!

If the margin wasn't there when the project was sold, the field crew is already fighting an uphill battle. Trying to make the numbers work after the fact can create pressure to rush the job, frustrate employees, or cut corners. That's another difference in owner mindset. Instead of only thinking about doing the work well, you're thinking about the entire business around that work, like how it was sold, the margin it needs to produce, how efficiently it can be completed, and what is actually left when everything is paid.  

How Much of the Business Still Depends on You?

Are you selling every job, estimating everything, managing every crew, handling every upset customer, solving every employee problem, invoicing, collecting, hiring, and making every important decision? That's how most businesses begin. It just shouldn't automatically be how they continue forever.

For example at JCP, the crews can handle the tailgate meeting and production while the office handles collections. I still sell work, which means there's still another level of owner independence I could build by eventually putting someone else into that role.  

The question isn't whether you as the owner still works, it's whether the business requires the owner to perform all of those functions.

Build the Things That Have Value Beyond You

When you start looking at the company from an ownership perspective, some of the things that seem small become a lot more important. One example we dove into in the call was customer information.

We talked about how undervalued something as simple as an email address can be. Collecting a customer's phone number, address, and email creates an asset the company can continue marketing to rather than starting from zero every time it needs another sale.

The same applies to recurring and predictable revenue. If every customer is a one time transaction, the company constantly has to replace yesterday's customer with another one. Contracts and repeat relationships can make revenue more predictable.

Your team matters too. Hiring somebody simply because you're slammed and need help is different from intentionally putting the right person into a place on your organizational chart. The people representing your company affect your reputation and the strength of the business you're building.  

Your systems, brand, financials, customer mix, margins, leadership, and recurring revenue all start fitting together when you stop looking at them as separate business chores and start seeing them as pieces of the asset you're building.

Don't Let Success Create Tunnel Vision

You don't have to be struggling to get trapped in the day to day. The opposite can happen actually. You can be extremely profitable, work 12 to 20 hours a day, and convince yourself that everything is going great because the company is making money. Meanwhile, everything still relies on you.

You have to intentionally get far enough away from the day to day work to see the business from a higher level. When you're constantly buried in production and problems, it's difficult to recognize that you're spending huge amounts of time on responsibilities that could be delegated or handled through better systems. Sometimes you need enough distance to ask yourself, why am I still doing this? Not because the task doesn't matter, but because it may no longer be the best use of you as the owner's time.

Reverse Engineer Where You Want to Be

During the call, one of the guys asked how to create a five year plan that actually means something instead of writing a bunch of random goals on a wall. Well my easy answer to that is...

What does the end of five years look like? Then reverse engineer it.  

You may not know exactly whether you're going to sell the business, hand it down, or own it forever. I'll admit I haven't always known exactly what my own end result looks like either.

But you can still start building toward a stronger company. If you know you want more operational freedom, start reducing how many things require you. If you want a stronger business, start building systems.

Maybe you need more predictable cash flow, look for opportunities to create recurring relationships and revenue and if you want the company to have value outside of you, build the brand, team, customer relationships, financials, and processes so they belong to the company instead of living entirely with the owner.

You don't have to implement everything tomorrow. The point is having a direction so the decisions you're making today move you toward something and don't keep you spinning in an endless cycle.

Think Like the Owner

Owner mindset comes down to changing the way you look at your role. There's a big difference between waking up thinking, “I'm going to work today,” and thinking about what you need to do today to build the company you're trying to own tomorrow.

That doesn't mean you'll never get on a machine again. It doesn't mean you'll never climb a tree, meet a customer, or jump in with the crew. I very much still enjoy those parts of the business myself. The difference is being able to do them because you want to, not because the company falls apart if you don't.  

That's the shift behind having a true owner mindset. Build profitability, the team, the systems, and the customer relationships. Know your numbers, create predictable revenue where you can, and keep reducing the number of things that only work because you're personally holding them together. You may eventually sell the company or you may keep it forever. Either way, you're building something stronger than a job you have to show up and operate every day.

The full Owner Mindset call replay is available now inside the Dirt to Dollars Operator program. This coming week, we’re bringing in guest speaker Brad Anthony, Founder of Excavation Estimation and @teachmedirt. Brad specializes in outsourced civil estimating and excavation cash flow forecasting, and we’ll be talking about how contractors can bid with more confidence, better understand the numbers behind their projects, and make smarter decisions as they grow.