63. When To Scale A Building Company With Russ, Sky And Andy

In some way, we all know what we should be doing.

It is dangerous to scale an unprofitable building company.

Really, what's got to change before anything else can change is the leader's mindset and attitude.

There's a massive fear, I think everyone has, of failure.

Important to remember that what does not grow, dies.

It's going to come down to growing your team, scaling all of your systems, but of course, scaling your financials.

You've got to know what the end goal is, and that goal must obviously be achievable.

This is Professional Builder Secrets, the number one podcast to help you grow your building company safely and securely, brought to you by the association of Professional Builders. Join us every week as we talk to industry experts and your fellow professional builders on everything you need to know to generate more leads, more sales and higher margins while improving the building experience for your clients.

Hello and welcome to the Professional Builder Secrets podcast, a podcast by the association of Professional Builders for building company owners, general managers, VPs and emerging leaders. Here we discuss all things running a professional building company from sales, processes, financials, operations and marketing. It's time for another exciting episode from the Professional Builder Secrets podcast. Joining us today are Sky Stevens, co founder for the association of Professional Builders. Lovely to have you, Sky.

Thank you, Bosco, how are you?

I'm doing well. And we also have Russ Stevens, co founder again for the association of Professional Builders. Great to have you, Russ.

Hey, Bosco, great to see you again.

And Andy, head coach for the association of Professional Builders. Andy, thank you for joining us today as well.

Good day, Bosco. Nice to be here as usual.

Well, it's a new beginning, a new year, and I just wanted to start off with when is the right time to scale a building company?

Yeah, I think that's a great question because I think typically it's something a lot of people in business tend to look at at the beginning of the year and start thinking about, okay, we're going to scale this year, but there's a few things that have got to be done before you reach that point of thinking about scaling. And this is so important for every business, but especially for residential home builders who are dealing with new construction. And that's simply because they, they're cash flow positive. So really the, in terms of the right time, they've really got to have a few prerequisites in place before they can think about scaling. And number one is understanding their financials because it is dangerous to scale an unprofitable building company or a building company that is maybe Profitable, but will become unprofitable once it's scaled because scaling is not linear. Yeah, there's a few things to take into account. So understanding financials is a prerequisite, as is setting the company up for correct margins, bearing in mind that as the company scales, the fixed expense ratio could change as well. And the fixed expense ratio is the fixed expenses divided by revenue. So that's another thing to keep in mind. You have the margins in place place to allow your company to scale and remain profitable. So I think really it's a case of getting those things in place first before you think about scaling.

Now, why should builders want to plan for their business to scale in the first place? What are some of those critical impacts to the business?

Well, I mean, why wouldn't you want to plan? Would be my first question. But why wouldn't you want to plan to scale as well? I mean, scaling any company, let alone a building company, growth sucks cash. So if you don't plan to scale, if you scale and it's not planned for, you are going to run out of cash. You're not going to have the systems that can handle it. You're not going to have the infrastructure in your team to handle all this extra business that you're taking on. And this goes for, by the way, maybe you're not trying to grow your revenue, maybe it's just growing your margins, maybe it's growing your team and then your revenue. You know, you've got to build your infrastructure, you have to plan it. If you don't, you're literally flying by the seat of your pants. And it's not. I think it's just a much less enjoyable journey because you're so just putting out fires. It's very much a lot more reactive rather than being proactive and knowing exactly where you're going and exactly what you need to work on next.

Sky do you find that builders are sometimes hesitant to grow or do you notice, is there fear or hesitation sometimes when it comes to planning for the future?

Oh, definitely. And it's not the same reservation for every building company owner, I'd say, because some guys have done it, they have scaled and they have grown. But there's an apprehension or fear potentially to go to the next level. On the other side of the coin, you've got guys who just have so much tenacity, they're not afraid at all of doing it. They're quite excited by doing it. But there's a massive fear I think everyone has of failure. So there's a fear of what? If, what don't I know? What could go wrong? And if it goes wrong, how is that going to look?

I think it's important to realize as well that, I mean, there are some people out there that don't want to scale their business, but it's important to remember that what does not grow dies. So, yeah, there's a lot of people that think, yeah, I just want to stay the same, same size. But that is a knife edge. You know, you are doing one or the other. You're either growing or retracting. So, yeah, if you're not growing, you're.

Actually dying slowly and literally growing. And we have this conversation all the time with new members and even new private clients. Growing doesn't necessarily have to just mean your revenue. We can be growing our margins. You know, we can be growing our whole audience, but a lot of the time it's revenue or margins or both. But look for growth personally, professionally, in everything you do.

What could possibly go wrong? I guess it's my favorite question to ask.

What could possibly go wrong? Everything would be my simple answer to you. I think Russ and Sky have touched on the fundamentals already. I think the word that I'm going to jump in on that sky used is planning and proactivity. If you do this without doing those, you could get yourself into all kinds of trouble. We have a very simple mantra here at the APB that you don't scale an unprofitable business. So Russ has already touched on the fact that that's important. But I think in all of the things we've discussed so far, scale by definition is the conglomeration of all of those things. In other words, if you're going to scale your business, you are going to end up with more revenue, you are going to end up with more people, you are going to end up with more profit. And therefore, you need to make sure that all of those things are ready to go before you push the go button. The worst thing you can do is to have one of them in place and think it's time to jump and then make that jump and find that you don't have the infrastructure in place to not only support that initial growth, but the real thing in terms of planning it, is to make sure that it's sustainable. Because the last thing you want to do is to commit to people and maybe technology and possibly even equipment and then find that six months down the road, you actually can't sustain that growth to the next level.

I think in terms of what can go wrong as well, one of the things that is always underestimated is what we call owner's influence. And that's simply a fact that no one is going to come in. Anyone that you employ is going to come into your business and work as hard and as long as you do. So when you look at the tasks and the roles that you're doing within your own company and you're looking to delegate and bring people in to do those roles, that can easily get underestimated and that changes the whole fixed expense ratio as well. So that's definitely something that can go wrong when scaling a building company.

Now we talk about profitability as a key requirement for scaling in marketing. We love using the word Personas or avatars. What type of builder Persona should consider scaling a company outside of profitability?

Well, I think like mentioned earlier, all businesses really do need to grow because if you're not growing, you're dying. But I guess in terms of scaling, you know, it is possible to grow and outpace inflation and kind of stay about the, the same size. So if we're really talking about scaling properly, taking things to the next level, then I think the type of builder needs to have a hunger and a desire and the right mindset because it isn't easy. You know, there, there are challenges. You know, you will be putting in a lot of extra work just coping with those unforeseen challenges. You know, it can involve working a lot longer hours to take your business to where it needs to be, dealing with those problems as well. You know, there will be reactive things coming up, bottlenecks appearing in different parts of the business as it scales. So you've really got to have that hunger and desire and be willing to do that. Because you know, let's be honest, not everyone is, not everyone really wants that. And the right mindset as well is really important. And probably the thing I'd add to that as well is that anything custom is very difficult to scale beyond a certain point. So when you talk about scaling a residential building company, high end custom homes is quite difficult to scale beyond a certain level. And that's because of the decisions that need to be made because these homes have never been built before and it's, it's similar with renovations as well. You know, it's very difficult to scale beyond a certain point, you know, and you can take that to other industries, you know, websites, very difficult to scale up customers, custom website company as compared to a company that kind of replicates websites from templates. So yeah, we see this in a lot of different industries, anything custom is quite hard to scale. So in terms of, you know, the type of builder, there is the attributes of the person themselves, but they, they also need to think about their business model and can this scale to the level that I really want to grow, because you might have to reconsider your model.

Now, what goes into scaling a company? What are some of those key ingredients or essentials that you need to consider?

There's a lot, obviously, but I think if you were to boil it down to three key components or three main things you need to seriously think about and plan, or planning to scale, it's going to come down to growing your team, scaling all of your systems, but of course scaling your financials and your finances as well. Because if you look at your team well, if you scale your company, that means you're taking on more projects, potentially a different caliber of project as well, maybe higher value, bigger, larger, more complex, who knows? You have to be able to scale your team and still deliver such an exceptional service or make it better, but by adding more people to that. So you need to be able to replicate the types of people that are on your team. So your team members and caliber have to scale, as do your systems, because the more you do, you're going to have to have a very systemized company to churn out such a high quality output regularly. But then of course, you've got to be able to scale your finances because as your building company scales, you have a much bigger operation. Your reserves are going to have to increase because you've got a lot more people to support and, you know, much higher monthly outgoings. So you got to look at those three key areas and proactively plan to increase and scale and work on those three key areas so that it, it doesn't fall over and it's not a spectacular failure. You know what I mean? You've got to be able to think ahead and it really is problem solving. I think building company owners are some of the most creative people because all you need to be able to do is look forward and look ahead and think what could go wrong? How is this going to break? And can I fix it before it breaks? Can I break it now? Right now? And if you can fix it, make it better. You want to be constantly trying to break your systems, break your own business, so that as you scale and honestly, there's a lot more pressure that comes with scaling, you're supporting a lot more people in payroll, you've got more clients, more contractors and more staff than ever. You got to Be able to have quite a robust company.

And don't forget to scale your salary either, because you're running a bigger business. So your salary should reflect that.

What key metrics should you review when it comes to scaling? We talked a little bit about financial awareness and profitability, but what are some of the metrics that you look at close attention to when working with builders?

I mean, Russ has said it already, it's financials as a whole, but it's obviously profitability is the. If you're going to pick one that is critical, that's the one you've got to watch. And there's a couple of reasons for that. Number one, all of your financial reports are a window and a reflection of everything that is happening in your business. You know, we deal with a lot of builders who have an aversion to numbers and an aversion to spreadsheets, etc. Etc. But the truth is, when you understand what those numbers are telling you, you can literally look at any part of those numbers and see exactly what's happening in the business. If you do not have a big enough revenue figure, as an example, what that's really telling you is you're not building enough. And if you're not building enough to be able to invoice to that revenue level, is that because you're not selling enough? And literally you've got this cascade of things that you can work through systematically, really just by looking at your numbers that are going to tell you where the issues are. So when it comes to the key metrics around scaling, sky has touched on the system side of things, and that's going to include your financial management systems. Accuracy is going to be critical in terms of knowing that those numbers that you're looking at are correct and up to date. And then secondly, really understanding what they're telling you before moving to the next step.

Now, we talked about profits, people and systems. Just to clarify, for people, are we looking at capacity? And for profits, are we looking at gross or net profit?

My answer would be all of the above.

Okay.

Because it's going to be highly unlikely that you can scale on any of the other two without the first one being in place. So you might be looking to add more people, but if the systems that those people are working to are not where they need to be, adding more people is simply going to push up your overheads, which is now going to reduce your profit. And depending on where in the organization those people are, it will reduce either your gross or your net profit. But at the end of the day and hoping that Russell nod at least at this comment. We're always going to measure a building company when we talk about the company on its net profit. Obviously to get to net profit, it's got to be producing the gross margins that will deliver those net margins. But our eventual measurement is going to be around net profit.

Okay, what is the process? And take me through, I guess the step by step guide here on scaling. Let's say we look at the numbers, they look healthy and we can make a decision to effectively scale. We're looking at these three areas. Where do we start?

Well, and you might disagree with this, you might say no, no, no, that's back to front. But I would say especially with residential building companies doing new homes, start with the goal. Always start with the goal. Get a clear idea of where it is you want to get to. And then the very next thing you got to get a clear understanding of your financials because you need to know where you are before you can plan on where you, you want to go. And when I say get a clear, clear understanding financials, I'm not talking about those financials that your accountant gives you at the end of the year because 95% of those are wrong anyway because they don't include the correct calculation for work in progress. So you've got to get a very clear, accurate understanding of your financials. And the reason I say do that second is because if you do that first, you might want to give up and not even set a go in the first place. Because it can be a very grounding and sobering experience. When a building company understands their financials correctly for the very first time. In a lot of instances, there can be a lot of equity that disappears that they thought they had and they're quite honestly they're just not as profitable as they thought they were. But the thing they don't maybe always realize at this point is it's a lot easier to get a lot more profitable than they, they probably realize, but good to get that goal first, get that excitement going and then we get the, the reality check. But when you got those two components in place, then it's time to plan. So we got kind of a three step process and the plan, this can be a lot of complexity to it because you've got to plan your resources. You know, if you've got this growth plan over a five year period, what does that plan look like over a year? What resources are we going to need? Are they incorporated in the fixed expenses? What targets have we have, we've got to hit in terms of sales. Not just sales revenue, but what we need to be generating sales. That's what the plan will include. And what margins do do we need to make this work and what margins are we ultimately going to get to? Where are we at the moment and what can we realistically get to in the next 12 months in terms of cash flow? For a company doing new construction, cash flow will generally take care of itself because it's cash flow positive. But if you're doing renovations, then you've got to grow within your cash constraints as well. So that's another important factor to think about.

No argument at all. I mean, it's straight out the playbook. And I think that the piece there that I'm going to reinforce is exactly where Russ said you need to start. Where are you trying to get to and why? If that piece isn't in place to start with, then there's no point really in doing any of the other stuff. You've got to know what the end goal is, and that goal must obviously be achievable. It must be relevant to what's going on in the market at the time, etc. Etc. You can't just suck something out of the sky and decide that's my goal. It's going to take a lot of planning. And where. I'll reinforce what Russ said 100%. Once you get into this process, there are a lot of moving parts because essentially what you've got is this almost this spiral method of planning that takes you through. That's where I want to end up. I'm going to do this. When I do that, it has a ripple effect into three other things. How do I deal with those three things? So it's literally making sure that all of those things are in place. The analogy, I know that you love them, Bosco, that I always give my clients is it's a little bit like when you learn to free climb. You've kind of got two hands and two feet, so you've got four points of contact. You always want three points solid before you move one. So you make sure that those other three things are locked down and then you work on the next one to take you to the next step in that planning process.

Andy, I suppose I should tell you now that I have a fear of heights, but we'll say that for a different analogy.

So do I.

But he knows how to get up.

There, though, that's for sure.

All right, let's talk a little bit about either blind spots or best practices that aren't usually spoken about or considered when we're scaling a company.

Well, hopefully enough, I think we have covered them. I'd probably say there are two. So first and foremost, as Russ and Andy have just gone into detail of, it's creating a plan. You've got to know where you're going, what you're aiming for and how you're going to get there. It's like, you know that book, Michael Masterson's book, Ready, Fire, Aim, they're talking about? Like, you just got to get in, you just got to start and have that traction. Everyone listening to this episode right now, you're already doing, you know, you've already started, you have your building company. So it is time to aim. And this is why sitting down and doing a formal, proper business plan is going to be so important. It's so important that our most successful members do what we call a business planning workshop when they first join us as a member. But our most successful ones redo it every single year. And it's literally, it's doing a business plan for your building company, but it's with the accountability of an executive business coach. And this leads into what I would say is the second most important point that's probably not as often considered. And it's having some sort of accountability because in some way, Bosco, we all know what we should be doing. It's not really like, it's not necessarily like brand new information. We know we need to plan, we know we might have a goal, we know where we need to go. Okay, so that means we need to sell this many new building contracts. We've got to start marketing and advertising. That means I need to do this and update that. And we know some things that, that we need to do now. Yes. Working with someone else can maybe focus us, which is great. But whenever you get started on a plan, even forget business for a second, think about if you have a goal with the gym. This is why people get personal trainers. It's not necessarily even like the most fit, like bodybuilders, they have trainers, they know how to train, but they get a trainer for the accountability. Someone that checks in with them so that if they miss that check in, it's, hey, what's going on? They need a little bit of a smack. Get back in line. Come on, focus. We've got a plan. We've got 11 weeks left to the finish line or whatever. And I think that's the most underrated thing when anyone puts together a business plan. You've got your plan in place, but who's there to really keep you accountable to it? Because as a business owner, as the owner of a building company, you've got a lot of other stresses coming into your life. You know, this isn't the only thing you're doing. I'm sure you're a husband, you're a wife, you're a parent, you're a son or a daughter, you're a sibling, you have a lot of other pressures and responsibilities. So on this one part of your life, your building company, what if you could have someone hold you accountable and make sure, yeah, you actually live that plan, you run that plan and you achieve those goals? I think it's seriously underrated, but, you know, it's exactly why when we talk about it in. What we've got is private mentoring, we just talk about it. Just. It helps you achieve your goals faster. It's like a fast track because you have someone to check in with who's there supporting you, who wants you to achieve that goal, but questions you and keeps you accountable to. Well, what did we do to achieve that? Have we done this yet? Why or why not?

I think.

Can I just jump in?

No problem. I just want. Because it'll, you know me, I'm getting old, so I'll forget what I was about to say. What sky mentioned there is critically important from two perspectives. Having somebody, number one, who has done it before, as in, has worked with other building companies to help them achieve this is huge. But the piece that we find in our private mentoring program that really makes the difference is not just knowing what we should do, but knowing the best sequence in which to do it to make sure that it gets us to that end goal quicker and safely and securely. That sequencing is critically important in particularly in this process.

Took the words out of my mouth, Andy. Taking direction from. Taking direction from people that have been there and done it before, as our team of executive coaches have, you know, handpicked from over a thousand applicants, we only brought on people that have been there and done it before. But I guess the, the other aspect that's been really powerful for our members is the members group because as they are scaling their own businesses and hitting challenges, it's great getting advice from us and our coaching team, but getting advice from other builders is just such gold, isn't it? And we see it all the time in the group. Yeah, these builders, they're coming up with a particular challenge on scaling and any challenge really, and there's always another builder that have been there, done it and solved the problem. And are now wearing the T shirt. So yeah, that's absolute gold.

Yep.

It's literally the power of a mastermind, isn't it? It may not be just having a coach. It's not just have knowing one other builder, it's having a collective group of other professionals that can share their stories and their experiences with you and you can do the same and we all raise up, we can all grow.

That's the power. And this has to be the biggest group, doesn't it? 560 members online, all with the same mindset, all helping each other. That is such a massive, powerful group of builders.

I think I'm part of this group because when I was doing my research for the podcast, I would say, oh.

Yeah, 561, 560 builders in you and.

I, and I do see a lot of questions and I do see a lot of conversations and I do see a lot of resources being shared in the comments. It's a very welcoming, opening and supportive group. It's not one of those groups that are competitive, that don't want to share knowledge, which I have to say, from an outsider's perspective, is pretty inspiring to see. How can a builder ensure that they're maintaining a healthy, scalable transition once they start to scale? How do they stay accountable and ensure that maintenance is healthy?

Well, I'll go back to what sky said earlier because she summed it up for you. It's a four letter word for a change and that's plan.

Different. Four letter word was on my mind.

Literally, if you know what you're doing. I mean, Russ spoke about a five year horizon depending on, you know, we work with our clients at different sort of horizons, but we never do less than three years as the long distance horizon. We always bring that back to what do we need to be doing in the next year in order to get us there. And then we bring that back to what should we be doing now. But we're really with this thing. When you talk about scaling, you're into the realm of strategic stuff. This is not tactical. This is really that big picture thinking. It's that important to us that we take a bunch of people away every year to a remote location in order to make sure that they can distance themselves from the tactical stuff, get out of the weeds and really let their minds go in terms of where they want their business to end up. The thing that springs to mind when I think about the people that have done this well is they have been able to use experience and convert that into expertise. Now here's the best analogy I can give you. I worked out the other day that I've been playing drums for 50 years. Have I ever earned a living out of it? No. Could I earn a living out of it? Probably not. At the height of my career, I would say I'm mediocre, which means experience in this context counts for nothing. Literally. I would be the skinniest, hungriest, bad drummer on the face of the earth if I went out there today and tried to live off it.

I think they call them starving musicians.

Well, there you go. Okay. But if you're able to work through the strategic planning and most importantly, the strategic thinking process carefully and take the nuggets, take the things that have worked well and convert that into standard operating procedures for the future. Take the things that have been really been bad, that have broken, as Skye spoke about earlier. Why did they break? What could we have done to avoid them breaking? What can we do in the future to make sure they don't happen again? It's the principle, if you like, is called insight. And it's essentially taking experience through insight to get you to expertise. So in terms of how can we ensure that the transition is healthy? Make sure the strategic planning is in place based on really solid strategic thinking. And if you really want to do this without doing my normal plug for the apb, the truth is, to do this on your own is going to be very, very difficult. You're going to need to be incredibly disciplined to work through a 5, 6, 7, maybe 8 year transition without any kind of external objectivity and accountability. I think to do this properly, you need a coach.

I think that's a good point. It's long.

Absolutely.

This is quick. Yeah. To scale a building company, it's not necessarily quick. Well, actually, you can do it quick. You can do it very quick, but that does not mean it's safe. And that's the kicker, isn't it?

And you know, we've shared. Sky, you and Russ have shared the story about the marketing guru's live event you went to where, you know, he was crowing from the stage about how he grew a building company so quickly that they failed.

Yeah.

That picture is the ultimate example, I think, of how doing this the wrong way can have really, really ugly consequences if things aren't properly in place.

Well, I mean, the perfect example, isn't it all those building companies who signed double, triple, if not four times the amount of contracts they normally did.

Yeah.

In the last few years.

Yeah. They can't build them. And yeah. You're Right. Yeah, absolutely.

That was really interesting, wasn't it? Because when we looked at the numbers from the state of the residential construction industry report, we could clearly see that the smaller building companies didn't do that. The 50% of them didn't sign any extra contract because they were aware of the, the risk. Only about 50% did sign extra, but they only signed about 20% extra. But it was those big, big building companies with their big sales teams that sign three and four times the amount. And we can see the consequence of, of that. What's going on and, and what's going on below the surface as well is, is pretty ugly.

And I think this is why some people can fear scaling, because if you see like, yeah, there's, you can see somebody so quickly.

If somebody that big can fall over with their amount of resources and their size team, what chance do I have? Well, again, we're back to expertise versus experience. That's in fact, the perfect example of it.

I'm going to ask a question for the apprehensive builders or the skeptical builders with the current times. Would, would you get a lot of resistance from building companies to scale at this time?

Well, look, there are some. Yeah, and you can't blame them really, can you? You know, you can't blame builders for being a little cautious and maybe even skeptical. But I think when you use the word skeptical, that these are probably applies more to the guys that do not fully understand their numbers because there's no skepticism from the guys that understand their numbers and they've got a clear plan, a clear idea where they're going. You know, that, that kind of doesn't come into it because they, yeah, they know they're just executing a plan. So skepticism does come from people that have maybe not got to this stage, this level where they understand their true numbers and have a plan on, on where they want to go. I always remember back the 90s, 80s, I think it was, when I had a distribution company and expanded that. And with a distribution company, yeah, that's, that's quite a risk growing that because you're confined to like a warehouse size. So to go and move into something five times bigger each time you grow, you're putting everything on the line. I remember someone saying to me, this was back in the early 90s. He looked at me just after we'd moved into the new warehouse and he said, said only a madman would expand in a recession. I was talking to my wife last night. Only a madman would do it. He must be talking about me. But I, I would say it's generally better to expand in a downturn, especially for builders, because builders make more money in a downturn than a boom. I mean, booms are great for cash flow, as we know, but they're not very good for profitability. So, yeah, the thing to remember is that the best building companies always survive. It doesn't matter what's going on in the global economy, the best building companies always survive. It's the ones that don't deliver a great service. They're the ones that fall off the bottom.

Yeah. I think we must go back, Bosco, just on this, to amplify to what we've said for the last, whatever it is, 35 minutes. There's a bunch of things involved in scaling. There's systems, there's profitability. It doesn't matter whether we're in a recession. If you're going to improve the quality of what your building company is delivering, you're already working on being ready to scale when things turn. So there's no reason to not put in the work that would be required to scale, even if you choose not to at the moment. Because simply by improving your teams, improving your systems, making yourself more profitable, you may end up in a place where you decide, well, I don't need to scale, I'm very happy with where things are now, but I can scale if I choose to. So my comment on this would be there's always something you can be doing in the now in order to improve the situation for sure.

And think about it as well. I think we've glazed over this quite quickly, but when you talk about scaling your systems, it's not all just like your company manual and how you handle a phone call and systems like that. We're talking about your marketing systems, even your construction slots, what you're planning on filling the next year and what your lead times are. All of those systems need to be thought about as well, because especially when we're talking about trying to scale in a bad economy.

Yeah.

If you only advertise when you need leads, it's too late. So this is why it's all about planning. When do you want to scale and when are you planning on cleaning up? Because you'd be doing it well in advance and you'd be preparing your systems for that day.

Yeah, I mean, I, I had a coaching session with a, with a New Zealand client today who we were talking about the recession and the economic times, etc. Etc. And he told me about a new client that he'd got in the last 10 days. And I said, well, how are they going to fund this? And he said, well, they've been farmers for the last 30 years. They just sold their farm for 15 million. They're funding it themselves. So even though there are economic pressures on other people out there, there are still people around that have their own way of doing things. And we're back to what we always talk about. If you're marketing correctly to the correct avatar, you're taking them through a professional sales process. You are then watching your construction costs and schedule as you build. Even in a recession, you can run a very profitable building company.

But it's mindset, isn't it? Because if you believe, you can't. Oh, no one is building. No one's gonna build a custom home. Oh, especially not the big ones right now. Well, yeah, no one is, but there are always people there. There are always. And you just need to make sure you are the one designing and building that home for them.

I think Henry Ford said, if you think you can or you think you can't, you're right.

And it's interesting because if you think about the last recession too, you had some of the most amazing companies that came out of it. Airbnb and Uber. It's usually during those times when innovation hits its peak.

Have you heard about Swimley?

No, I haven't yet.

Okay. Swimley is the newest one. You can now go and swim in your neighbor's pool. So there you go. There's another one out of the recession.

What I was gonna say, if I can just jump in though, as well. It's not to say that every building company that doesn't make it is a bad building company. Sure, that's really, really important. Worth saying. What it does mean, though, is there were some gaps somewhere. So it doesn't mean they had a terrible service, they had a terrible product, or they're terrible people. A lot of the time, especially in this industry, when you separate the cowboys, when you separate the people who aren't doing it right, a lot of the time, what it comes down to are the systems in the building company. That's what separates people. So if you can get in control of your own building company and maybe forget about scaling the systems to begin with, but having the right systems in place, the right financial systems in place, and your right team in place, start with your core foundation. Because often, yeah, it's not bad people, bad builders who end up failing. It's a lot of the time a lack of knowledge that leads to that result.

Is it safe to assume that scalability has more than one outlook, one approach, one outcome.

It definitely has more than one outcome. Yeah.

Bosco, I've got to just say to you, because it's part of our core values, don't ever assume. Bosco. Ask more questions. Sorry, Scott.

Question, wasn't it?

Okay, so, okay, you have multiple outlooks at the apb. What are some of the most common ones that you can encounter? Is it, you know, is it first to growth as far as people are concerned? Looking at the three pillars, systems, people and revenue, where do you see typically the common DNA for scalability?

Bosco, Remember what Andy, I think it was Andy said at the top of the episode, never, ever scale an unprofitable building company. So don't even look to scale until you've got your house in order to.

So numbers first. Numbers first.

Let's get. Yeah, it's. What is it? The right people on the bus. How many analogies can I bring into this? The right people on the bus. Yeah, you got to know your numbers and that's when you can look to scale. And then it all starts with exactly what Russ said. What's your goal? Because that influences so much. You know, it could be a massive, big, hairy, audacious goal, but your big, hairy, audacious goal could be completely different to your competitor's big, hairy, audacious goal. Everyone's got different goals, and so the plan at which you create to achieve that, it's going to look different for everybody. So there's no real blanket way to scale a building company or exactly the steps that you should do in exactly the right order. But the original question, Bosco, is the outlooks different? Totally. Because you've got personal growth, you've got professional growth, you've got numeric goals. You can have other goals that don't necessarily. They're not like a net profit goal. You know what I mean? They're not like a financially realized goal. So they can have so many different characteristics. But then you just put it into your business plan and what does this mean? What do you need to do and how are you going to get there? But absolutely, we should always be targeting not just business growth, but professional growth as well. Because at the end of the day, as the leader of the building company, you will have to change to be the leader of a company of that size or whatever you're targeting, you have to grow, you have to change, and so does your team as well.

So we've talked about the Facebook group, we've talked about events, we've talked about potentially planning. What are some of the resources and tools at the APB specifically that we could potentially share to our listeners out there on helping them scale?

I think, Bosco, this one is going to depend on how serious people are about doing this, because we obviously have a plethora of free resources that are all designed to help builders run. They're building businesses more efficiently. And if you cut through everything we've spoken about today, essentially we can say you can't scale a business until it is profitable. It's not going to get profitable unless it's efficient. How does it get efficient? It gets efficient by having the right systems in place. And to stay with Sky's wonderful analogy, the right people in the right seats on the bus, that was better. There we go. But the reality of this thing is virtually everything that we offer in the membership portal and in the private and the elite mentoring groups is focused on exactly this. It's in transforming your building business into being the most efficient business possible. So what kind of resources? Everything you can think of. And in terms of this discussion today, really what's got to change before anything else can change is the leadership mindset and attitude. So we have got a full catalog of, of leadership training, we've got a full catalog of strategic planning things. We literally take a building business apart into its, its six primary disciplines. In every one of those disciplines, we've got templates, checklists, training. I mean, if somebody is serious about scaling, here it comes. Sky, join the apb. It's not there. It is. It's not even an option.

And there's the annual retreat as well, which if you are serious about scaling, the annual retreat is probably the best thing that you can possibly do for your building company, because this is two days intensive working with some of the top coaches in the industry and really like Andy says, pulling the business apart and understanding exactly how to put the blocks in that will scale it on solid foundations and really keep pick those goals so that when you do decide to exit, you're maximizing your asset there. Probably the other thing actually to come to mind is APB rewards, which is a very important component for scaling because it's putting you in touch with the best possible partners in the industry for all these different components that you need. You know, sky was talking about scaling your systems. Well, how do you do that? You've got to bring in some of the best systems and the best people to work with you as you scale. So when you take your building company to the next level and you need an even better website. You want to start delving into search engine optimization to make the most of these organic leads on top of all the referrals and paid leads you're getting. Who do you go to? We've got the partners lined up for you. Obviously, as you get bigger, you're going to need a construction lawyer in your court. You know, not reactively for a dispute, but proactively to make sure your contracts are as watertight as they can possibly be. So I think rewards is a is a very important component of the resources we offer for guys that are serious about scaling up.

And then I'll add one accountability. So working with an executive coach one on one privately, just get someone like you say, Russ in your corner, but able to look at the numbers with you, bounce ideas off of, ask questions, put you in touch with other people.

Major I guess I'll end with drive the bus, don't crash the bus.

And as Russ pointed out, you need to know where the bus is going. That's your goal. Make sure you know the end destination.

Well, I want to thank you all for the energy, the time, the wisdom. There's a lot here to really help the builders achieve their goals in the new year. And once again, thank you so much for your time. I look forward to having you back back on again.

Thanks, Bosco.

Incredible. Thanks, Bosco.

Thanks so much, Bosco. And to all the builders out there, it's a lot easier than you think to scale a building company.

Cheers.

Thank you for listening. Remember to subscribe to Professional Builder Secrets on your favorite podcast platform and leave a review. To learn more about how the systems at the association of Professional Builders can help you grow your building company, visit association of Professional Builders.com See you next time.