187. Managing Time & Efficiency With Russ Stephens

Welcome to another episode of Professional Builder Secrets. We recorded this episode live at the International Builders show in Las Vegas, but the content is still highly relevant for builders around the world. Today I interview APB Co founder Russ Stephens on how to grow your building company without working evenings and weekends. It's all about time management. We discussed the biggest time wasters that keep builders stuck in the day to day grind of their business. How to shift their focus to the tasks that actually move your business forward, the role of delegation and automation in freeing up your time and the first step we recommend builders should take to start reclaiming their work life balance today. I hope you enjoy the episode. This episode of Professional Builder Secrets is brought to you by Apparatus Contractor Services. Apparatus provides full scope end to end QuickBooks, Precision Construction accounting and and CFO services for residential builders. If you feel like you can't completely trust your weekly and monthly financial reports or you feel like you're flying blind, Apparatus will rebuild and operate your QuickBooks accounting system and give you precision construction accounting capability you can trust. Learn more@apparatusteam.com or on the APB Rewards Partner directory.

We really have to move beyond micromanagement. We've got to accept that 80% is good enough. No one will work as hard as fast as you, the owner of a building company. However, if you can bring in one and a half or two people and get to 80%, that is good enough for you to scale. One of the absolute worst things we can do when we're growing a company is to delegate by abdication. And that happens when we get so busy we just need a solution. So we wait until it's almost too late. We bring someone on board that's a great supervisor. We've got to avoid that. And the way we avoid doing that is by.

Professional Builder Secrets Live last session of the day. Appreciative to have you on. Russ Stevens, co founder of the apb. Welcome to the show.

Thanks Will. Excited to be here.

Yeah, awesome. So it's a big issue we're talking about today because it's about managing time and efficiency for builders. Talk to me about why that's an important topic.

Well, I think for a lot of builders, as they grow, they never quite get out of the startup phase. In startup for a residential building company, the owner's influence is quite large so you end up doing the vast majority of the work. And as you scale up, that influence diminishes. So the work you do is a lower percentage. But there comes a point where a lot of builders struggle to make that transition and actually let go and delegate, actually free their time to work on higher leverage tasks. So that becomes a bit of a glass ceiling, I would say, for a lot of builders.

Why do you think it is that so many builders feel like they don't have enough time to work on?

Oh, look, I think it stems from that belief as business owners that a lot of people can fall into this trap of feeling that no one can do it quite as good as they can. And that's probably true in the vast majority of cases. But we really have to move beyond micromanagement. We've got to accept that 80% is good enough and no one will work as hard as fast as you, the owner of a building company. However, if you can bring in one and a half or two people and get to 80%, that is good enough for you to scale. And if you're not able to do that, it normally highlights that your margins aren't strong enough. So it's this belief that can really hold builders back.

It's not an easy thing to give up control, though. So how do you start doing that?

You got to follow a process, really. It's probably quite good if you can be held to account on the process. But there's something that we use, which is, dad. So delete, automate, delegate. We have to look at everything we're doing and ask ourselves, first of all, does this even need to be done? Because what happens a lot of time, and not just with building company owners either, but even your employees, they'll be stuck doing things that maybe don't even need to be done anymore as the business grows. So delete. First of all, does this need to be done? Can this activity actually be deleted? If the answer is, well, no, it can't, it does have to be done. Well, the next question is always, can we automate it? And we have to be careful not to automate everything just because we can. Because we can spend a lot more time automating stuff than actually takes to do it. But if something can be automated and we can invest an hour now to save half hour a week for the rest of time, that is a good investment. But of course, there are things that have to be done they can't be automated, in which case they have to be delegated. And we can't be tied into this belief that I'm the only one that can do this job. The painful truth is that everything that you do can be done by someone else. Maybe not as hard as fast, but it can be done by someone Else. And we have to provide the systems, the processes and the accountability in the form of exception reporting to allow that delegation to happen.

What are some of the biggest time wasters that you see builders wasting a lot of their time on?

Look, it's low value tasks. So we have to look at what we're doing first of all. And it really does vary for all different builders. And even what we get builders to spend their time focused on, that is retaining, that varies from builder to builder. Because what we have to do, we have to identify what are our strengths, what is it we actually enjoy doing in the business? Because that's our zone of genius, our area of genius, and we don't want to let that go. So, yeah, when we're coaching builders, we can't just give across a template or a blueprint and say, this is what you give up, this is what you carry on doing. Because it is different for everyone. We all have our own strengths and weaknesses. So you got to identify what it is you enjoy, what it is you're good at, and then look at what you don't enjoy doing and what they're the things that can easily be delegated. And the beauty is when we start getting rid of the stuff that we dislike first, work becomes a lot more enjoyable. Yeah, we can spend a bit longer working on stuff we enjoy doing, but man, that stuff we dread doing, that kind of mounts up and it takes longer as well because we're just not motivated.

What if things you enjoy doing are actually working on site? Because obviously that limits your ability to scale the company as well. Right?

I'm working on site. Look, and this does happen. I mean, it is possible to get around it, but it means you've got to bring in a general manager. If you've got a vision to grow a building company to a larger size, that is something you've got to let go of, because working on site, that's the definition of being a technician. And technicians cannot run multimillion dollar building companies. So unfortunately. And a lot of builders are passionate about working on site. You would have heard it a lot, wouldn't you, on the podcast? It's why builders get into building. It's because they love what they do. They love building these, these luxury homes. So it is a hard thing to let go of. But you cannot scale a business to $10 million a year working on site unless you're prepared to take the role of that technician and bring in the gm. But, yeah, that's going to be pretty difficult. That will require one hell of A leap of faith. A lot of good luck as well, really. Because bringing in the right person.

Yeah. Which is hard in itself. So, I mean, how do you go about finding the right person that you feel confident you can delegate those tasks to?

Yeah, I think before you find the right person, you've really got to have the right culture in place, especially if you're bringing in someone in a leadership position. You've already got staff, haven't you, at this point? They will do things a certain way, they'll be used to a certain culture. If you bring in someone from the outside to manage them and lead them, they've really got to be part of the culture that you've established. Otherwise you're going to have friction, you're going to have people leaving. So that's one of the most important things. And to do that, you've got to have core values. You've got to live by those core values. But having those in place, it makes it a lot easier to bring people in. And it doesn't matter if it's a leader or an employee, a technician, they've all got to buy into those core values. It's one of the things you kind of interview for is to test and find out what they feel about your core values.

I'm interested to hear a bit more about how you determine the tasks, which actually will move the business forward as well. Because you mentioned the dad concept of delete, automate, delegate. But how do you know whether the tasks you're even looking at are the right ones?

Yeah, well, I'm. I guess I'm a numbers person. I'm quite analytical. So for me, it all comes down to numbers. You got to put a value on the task that you're doing. So, number one, you got to start with a time audit to see where your time is going. Yeah, that can be quite a challenge. So a simple way would be to try and categorize what you're doing and try to put things in no more than five categories to kind of group up. That will help give you an understanding of where your time is going. And then if you're working 60, 70 hours a week, then you can focus on where you want to be. Now we have builders running $15 million building companies doing 30 hours a week. You know, some builders might be happy doing 40, but, yeah, that's what's possible. But when you know what you're doing and you know where you want to be, this is when you can start figuring out, well, what's going to give. And you can Identify the categories. Now, I like to do it by looking at the tasks that you're doing and putting a value on the hourly rate and then, of course, valuing your own time with your own hourly rate. So what you can do there is you can look at what you're actually paying yourself in terms of a salary. You can look at how many hours you're working a week on average, including weekends and evenings, all that time quoting. And you take your salary and you divide it by the amount of hours that you work in each week. You then divide that number by 48. Now you've got an hourly rate for yourself. Invariably, you might look at that and you think, well, I'm paying everyone else in the company more than that, or I'm paying my subcontractors more than that. But you got this starting point. Now you can look at the tasks, and when I say value the tasks, you're looking at what it would cost to bring someone else in to do those tasks. And not forgetting with the opportunity we have with offshore nowadays, huge opportunity to bring people in to do those tasks. And anything that's coming in below our hourly rate, we really should be offloading it because it's costing us too much money to doing it ourselves. So that's a. That's a good starting point.

I've seen you do that hourly rate calculation with builders live in a room before and a lot of faces drop when they see what they get.

Yeah. Who's paying themselves what they're worth?

Yeah. Not many put their head up, unfortunately. I guess that's the nature of running a business as well, though.

No, but it's good as well. Because before that point, a lot of builders maybe wouldn't have had that realization that how little they are really paying themselves. Because we can look at the dollar value that we're pulling out the company at the end of the year. But when you correlate that to the hours that builders put in, it's really is quite a low rate and. Yeah, something they need to be aware of.

Right. So you've got an understanding of the tasks, which are important, and you've got a cultural system in place in terms of values and hiring and all of that kind of stuff. How do you then go about delegating to the people that you do bring in?

Well, we got to put these systems in place before we can delegate. Because one of the absolute worst things we can do when we're growing a company is to delegate by abdication. And that happens when we get so busy we just Need a solution. So we wait until it's almost too late. We bring someone on board that's a great supervisor and the first thing we do is like, I'm too busy, like, just like, here's your jobs. Just go and have a look and sort out what you can. That is complete application. And it happens not just in supervision, but happens in a lot of areas of different companies. So we got to avoid that. And the way we avoid doing that is by first having systems and processes in place that someone new can follow. We got to onboard them correctly as well. So not just with their role, but they got to understand the company they're joining, how we do things. And we've got to be prepared to invest a lot of time up front. And that's not easy when you're already working 60, 70 hours a week. But the reality is we've got to work even harder to get past that hump and then start buying back our time. So it might seem like a massive ask, but it's something we have to do. But that is a great investment of time because the more time we spend upfront onboarding people and giving them a process to follow, they're not going to leave after a few weeks thinking, I'm not coming here to sort their problems out when they turn up on site and see what a mess they are. The other thing is we got to have exception reporting in place. So KPIs as well. Now we don't need to micromanage people, we don't need to look over their shoulder and look at everything they're doing. We just need to put reporting in place that's going to highlight things that are not working correctly. So anomalies in our data, and we look for those and they will highlight that maybe a process isn't being followed. So very important that we onboard them correctly, we get them the process to follow. But we have some kind of exception reporting in place so that we know when the process isn't being followed.

What would an example of an exception report for a builder be?

For a builder? Well, it depends kind of where you're looking. But as a builder, you might have a proactive process, I would hope, in terms of your communication with a client. And this is where to avoid clients coming on site proactively. You would have your supervisor reach out every week with an update. You know, they want to be telling the consumer what has happened in the past seven days, what is going to happen in the next seven days, and a couple of photographs of the site. Now, when you do that, you actually keep the clients off site because all of a sudden there's no new information to be gleaned by rocking up on site on a Saturday. Now, as a report, you could easily just adapt your CRM to count these emails that are going out and then an exception would show up if a certain count wasn't reached within the last, say, four weeks or six weeks, and then that's when it would alert you. So you don't need to be copied in, you might want to be copied in in this example, just to kind of see what's going on. But if you didn't want to be copied in, then you just want to be alerted when that didn't happen.

You mentioned abdication before and I want to go back and dive into that just a little bit more before we move on, because it's something we've seen a few times now with builders that might outsource to a marketing agency or hire someone and not provide the onboarding they need. Or maybe they're outsourcing to an accountant and they think, oh, I've outsourced that, it's done and dusted now, which could actually, like bad things start happening in 612 months time and they didn't even know it was happening. So can you talk to me more about how they can overcome that?

Yeah, look, it's a good point because leading by application, that doesn't just apply to your own staff or even your subcontractors, it applies to all aspects. So like you mentioned accountants and marketers, these are two key areas for builders where a lot of time builders might not have the necessary knowledge to challenge their accountant, to hold their accountant or their bookkeeper to account on the accuracy of their financials in terms of work in progress, for instance. But we do have to put different control measures in place. What I would say, and this is just from our experience working with builders, we never trust accountants or bookkeepers with the work in progress accounting adjustment, which has to be done at month end or within a few days, a month in and the system locked immediately. Now, what tends to happen, and we see it all the time, is even when a bookkeeper or an accountant's been trained how to do this calculation, they still go, they get an invoice in that's backdated for the previous month. And although the calculation's been done and the month has been locked, they go back, they unlock the month and they backdate the invoice and that throws future calculations out. Now, one way a builder can cope with this and know it's going on is to set their budgets for the actual amounts when they come to month end. We do this in our company as well internally. That way when you come to do the next month, you look at your budget for the year to date, for the previous month onwards and if the actuals don't meet the budget, you know someone's changed something. Now that's something I would urge all builders to do because it happens all the time. So that's an example of an exception report. You know, the process hasn't been followed but we're looking at something entirely different. Yeah, we don't double check what they have done. We're looking for something different in terms of marketers avoiding this whole abdication with marketers. A lot of builders will bring in a marketing company and because they maybe don't have the expertise, the marketing knowledge, the marketer can come in, they can really blindside the builder talking about what they're going to do and how it's going to be great. And the builder hands over the money and they're waiting for results. Now the first mistake we see is that the marketing, the agency is reporting on clicks or views and really the builder is spending his budget to get marketing qualified leads. They might even report on leads, but not marketing qualified leads. So as a builder you cannot take the information that the marketing agency is giving you as your report. You've got to report separately. So you'll look at the money being spent and you'll look at the leads being generated in your CRM that are marketing qualified and then you'll divide the amount spent by the leads generated for your cost per lead. Now if you know your numbers, you'll know how many paid leads you can buy, what your conversion rate is and what you make out of that contract. You'll know how much you can afford to spend per lead in order to make this strategy viable. But that's information that you've got to understand and report on yourself. You can't rely on the marketing agency because that is just abdication.

Well, that's my follow up question. With technical topics like understanding marketing qualified leads and cost per lead and your WIPA and your accounting numbers and all of that kind of stuff. How do builders get knowledgeable enough about those topics so they can hold third parties accountable?

Yeah, look, builders come into this industry, yeah. The typical path is left school, became an apprentice apprentice carpenter, run their own carpentry team, became builders almost by default with no training. So first of all, no one expects you to Know this stuff when you haven't been shown. We don't get taught this stuff at school. You know, there's no kind of like standard government course where we have to understand this stuff to get our license. So you have to learn from somewhere. So all these things that you mentioned, work in progress, how you actually calculate costs that you can spend on marketing, you've got to learn from someone that already has this knowledge. So that invariably means you got to pay for that information because you've got to learn from someone that's prepared to train you. And that's obviously that's what we do at APB. It's what we've been doing for 11 years, is sharing that inside information that enables builders to scale profitably.

I think we kind of touched well on the two Ds, the Delete and the delegate. What about automation? Is there any advice you'd provide in terms of automating tasks?

Yeah, I mean, I guess the one thing I'd say there is the opportunity to automate is exploding right now. I mean, we've had CRM systems, for instance, that have given us a great opportunity to automate large parts of our marketing through autoresponders and that enables us to educate the market at large on steroids. Really. Because if you don't do that, if you don't send out emails automatically, you're having to educate verbally one to one. I had a build ad like just call me up last week saying how do I switch the automation on? Because I am fed up with talking to clients one on one. It just takes me too long. So that is one part, but the other part is with the AI now coming in, there are a lot more opportunities. I'd especially urge people to keep an eye on agents that are coming out through ChatGPT later in the year. We which is going to automate huge amounts of tasks by simply monitoring what goes on on a computer and then it will be able to automate what a human operator is actually doing. So the agents is the next leap forward in AI and that is going to change the game for a lot of businesses.

Yeah, we had Morgan Molitor on the podcast earlier talking about AI with John from buildertrend, who's their cto and she was talking about how a lot of their lead qualifying process is actually handled by AI now in their business, which I thought was quite interesting.

Yeah, look, AI is touching on so many different areas for a building company. I mean, marketing is the most popular, but we've seen 38% of building companies are now using AI and it's moving at such a pace, they're using it in all areas from design, the construction process, the sales process, even just sending out an email. Yeah, you get an email in from someone. Yeah. You don't want to be replying with what you want to say. You want to put that through a filter that is ChatGPT, come back with a non emotional filtered response. So it's having a huge impact on builders, which means if you're not aware of these changes and keeping up, you're going to get left behind pretty quickly.

All right, so for builders that are feeling a bit overwhelmed and they want to manage their time and efficiency better, what's the first thing they should do?

Well, look, the first thing, like we always suggest, being a member of APB obviously gives them access to a lot of different information, but obviously you can't implement this stuff if you're already working 60, 70 hours a week. So you start with the first course, which is time management inside the APB portal, which is going to go through a lot of what we just spoke about in terms of how to prioritize, how to delete, automate, delegate, but there's a lot more besides as well. So value your time. So that would be the number one course because once you free up just five hours a week of your time, you can invest that five hours into working on your business with the next area that needs fixing up and you start to grab back more time, you start to automate more and things do get easier. It's not a fast process, it's not an overnight process. We've had builders that have been very successful, but they were working flat out doing long hours and they solved the problem by getting up an hour earlier in the morning to work on their business. So it will get harder before it get easier, but if you are prepared to put in what it takes, then you will reap the rewards.

Great advice, Russ. Well, any further thoughts you want to leave the audience with before we wrap up?

No, I just say if there's something you do not know, do not be embarrassed about it. Do not be afraid to ask. There is no such thing as a silly question. Ask that question, seek out the information and then take action.

Great. Well, thanks for coming on Professional Builder Secrets live at ibs.

Thanks so much, Will.

For anyone that's interested, you'll be speaking live tomorrow in the education sessions as well.

That's right. 8:30 tomorrow morning and 12:30 talking about pricing for profit. So if you are currently adding a percentage to your cost of materials and labor and then hoping to cover your fixed expenses, we will go through with the help of Jim Schneider, one of our coaching clients. And we'll be going through a process that enables you to price your jobs in a different way that adds a net profit. So make sure you catch us there. 8:30 sharp tomorrow.

Perfect. Sounds good. Thanks, Ross.

Thanks, Will.