By Ron Pestone
I’ll also explain where excuses are not tolerated. When you’re self employed and you can’t terminate your own employment, you need to learn to be as hard on yourself in these roles as you’ll need to be with any future employee. In short, you should never reward yourself for coming up short, and you should view any excuse you make for yourself just as inexcusable as any that a future employee might make to you. People follow by example. As such, you need to set the standards very high for yourself from day one and expect nothing less from anyone coming to work
You should know, too, that all contracting, especially subcontracting, rests on a “three-legged tripod.” And the legs are Equipment costs, Labor costs, and Material costs. So this “tripod” is ELM. Of the three legs, the biggest gamble lies in labor costs. It’s here where companies either succeed or fail. To not know at all times what your labor costs are in comparison to your estimate is to invite suicide. As a result, a large part of this book focuses on how you can monitor labor production from day one to the final sign off on any construction project. Since almost all the labor in any sizable construction project is supplied by specialized subcontractors, this book is geared toward those individuals, whether the subcontractors are single operators with tool belts and pickup trucks or whether they’re associated with a firm that has a field presence in the thousands.
The other two legs of the tripod, equipment costs and material costs, are equally important, since the most productive men in the world cannot produce anything without a steady supply of equipment and material. If you overspend on material and equipment, you have to make it up in your labor costs—if that’s even possible. Accordingly, another significant portion of this book will explain how you can monitor the cost of equipment and material on construction projects.
While it’s important to monitor the cost of the equipment and material you’re using for your construction projects to ensure your bottom line, it is equally important to have excellent relationships with your vendors and suppliers. You will only be rewarded with success if you treat your vendors and suppliers like members of your own family. This means you need to be willing to help them in bad times; and, like any family member, you need to be willing to overlook their minor faults. While price is important, it isn’t everything. Your final last look to a long-time supplier who’s having trouble meeting the price you want goes a long way. With that look, the supplier knows he has one last shot to meet your price. He can then go back to the factory and his suppliers to ask for the necessary reduction so he can assure himself of your order.
This is not to say that you don’t want your vendors to be competitive with their prices and diligent with their services. In reality, what you want is what they want: a long-term relationship that will endure. There will always be mistakes, like orders that fall through the cracks, incorrect billings, late deliveries, and the list goes on and on. But these mistakes are everyday problems that can be worked out as long as the relationship is based on honesty and integrity. It’s a fool who denies a supplier an order because he’s a few dollars more than the new guy on the street, especially if that same supplier worked with you through tough times and maybe extended you a credit line when no one else would.
For example, I worked as a vice president for a company that used the same suppliers it had started out with many years before, back when the company’s orders were hundreds of dollars. Now, though, the company’s orders are in the millions of dollars. So these same suppliers grew rich in their own right as our company grew to be one of the largest privately owned subcontracting firms in the nation. The owner of the company never wavered in his loyalties to our vendors and suppliers. We not only worked together, we ate together, played together, and laughed and cried together. We always treated them like family, and they responded in the same way. That’s not to say we didn’t have problems with them. When you’re ordering big volume there will always be problems. The owner just insisted we work the problems out, and we did. His thinking was right, and our vendors and suppliers were one of the main reasons for our success. The longevity of our relationships with our vendors and suppliers and the personal contact we shared was and is everything.
So when you start your own company, you need to look for suppliers and vendors you can establish long term relationships with. Look for the companies that see your account, no matter how small or big, as important. Look, too, for the companies that are willing to work with you and help you grow your business. And finally, look for the vendor you can talk to, that has a real face. That way you can discuss your particular needs with the vendor and you can work out a credit line with them. If you have to start with a small credit line and work your way up, it’s okay. It’s a start. All you have to do is pay on time, and if you can’t, then talk with the vendor and work out a payment schedule you can live with. Once vendors and suppliers know you’re solid and that your word is your bond, you’re well on your way. The company I worked for had an enormous credit line because we paid and our word could be taken to the bank. When you find a supplier that fits the bill, you should bring him into your family and treat him like gold. You will never be sorry.
Don’t Forget: We build America