The Four Stages of Growth for Contractors
In the home improvement industry, your company’s growth follows a set path. From the struggle of being a one-man-show through the ultimate goal of selling your business or passing it on, you can count on passing the same 4 stages on your way.
The Rockefeller Habits refers to the transitions between stages of growth as "Death Valleys," since so few companies can successfully navigate them. With the right strategy, though, growth is not only possible, but growth can also be predictable.
Here is your roadmap to making the transition through all four stages of growth!
1) The One-Man Show
You have the passion, you have the technical knowhow, but you’re short on systems and resources. Almost every home improvement company starts with the owner as the marketer, the estimator, the salesman, the accounting department, and even the janitor.
If your office looks like this, you're in Stage One.
You know you’re here if:
- You rarely work less than a 10-hour day.
- Your revenue is wildly unpredictable.
- Each paycheck is urgently needed to pay down previous bills.
- Your systems for marketing, accounting, and finances are basic.
- Your lead generation is primitive, and the vast majority of your leads are referrals or word-of-mouth.
Don’t get trapped into working yourself to the bone. To advance out of this first stage, you need to get serious about building systems and delegating responsibilities.
2) The Local Start-Up
Escaping the grind and unpredictable revenue of Stage One requires you to delegate. More often than not, this involves the owner hiring for two key roles – operations and phone center.
Quality hires make your life & your business growth easier!
You are on your way if:
- You have a basic system for delegating simple tasks.
- You have staff answering your phone.
- You have a dedicated install crew or (crews).
- You’ve begun thinking about budgeting for systematic growth.
- Your lead generation is starting to take off.
Once you are no longer installing the jobs and answering the phone, you will have a great deal more predictability in your schedule, and you can focus on the systems you need to grow your business.
Ready to delegate, but not sure how? Download our Predictable Growth Guide for a step-by-step walkthrough on who to hire and when!
3) The Growing Business
If you’re organized, you will hit your stride in this third stage. Growth will be comfortable, systematic, and largely immune to hiccups in the local market.
You’re ready to hit cruise-control if:
- Your major departments have trustworthy delegates who report to you and manage day-to-day work.
- You handle business management, and maybe a small portion of sales tasks.
- Your average workweek lasts about 40 hours.
- Pricing and revenue are steady, with 60% markups and 35% profits.
- You have the lead generation systems you need to continue growth.
The key to getting here (and staying here) is delegation. You build the systems, and then you hire great talent to delegate those responsibilities to. With the right combination of systems and people, your business will operate with only minimal intervention from you.
Our partner West Shore has multiple offices, a fleet of vehicles, and a solid growth plan - all with systematic marketing!
It's especially important that you be systematic in your marketing. Once you have the systems in place to capture leads, sell jobs, and seamlessly perform the work, it’s only a matter of cranking up your marketing.
Digital marketing is one great way to scale your business. With a reliable cost-per-lead that is largely immune to seasonal spikes and market shifts, you can treat your website like a system in your business.
If you’re not sure your current digital team gives you a scaleable solution, we should talk! We’ve taken companies from $40,000 in monthly revenue all the way to $2,000,000 in monthly revenue, so we know the system you need to grow predictably and systematically.
4) The End Game
Your ultimate goal in business is up to you. Whether that is passing on your business to family or cashing out, you want to be ready for it.
You’re on the one-yard line if:
- Everything task from day-to-day work to strategic planning is delegated out.
- The company runs fine if you are gone for a week.
- You’ve trained your successor, whether they are your family or a buyer, and they are ready to lead.
One quick note on selling your business – pricing! The average home improvement company sells for 2.5 to 5 times its annual revenue. If ever there was a time to boost your revenue, it is right before you sell!
So, how do you advance through the stages of growth? First, you need to know where you are right now, and then, you need to know where you want to be. The core skill here, from escaping the 60-hour weeks of a start-up all the way through comfortable retirement, is delegation.
Download our Predictable Growth Guide for a step-by-step process for delegation, telling you who to hire and when!