How to Scale Your Contracting Business Above $1 Million
Jim Johnson walks contractors through scaling past $1M by time blocking, scoring tasks by effort and impact, and saying no to tools that don't fit your stage. He highlights one firm's targeted direct-mail campaign that generated $8M a year, and stresses picking one most-important task daily while building sales and leadership skills first.
Chapters
The thing that's most confusing to most of us as contractors, or really anybody growing a business is there's so much information available out there, so much knowledge available out there, so many tools that are available, so many services that are available. We get really confused because we have to really look at this person that's selling the tool or this person that's selling the service. Are they in my best interest for me to do the right thing at the right time today based on who I am as a contractor, or are they more focused on them and making a sale and not really asking you the questions of is this the right thing for you to do today? This was actually something that really created this opportunity to scale my business faster. Is learning what to say no to based on what stage I was in as a contractor so early on, your biggest focus is how do I generate revenue and focus on the thing I do best and then leverage the other things that are out there that take care of the things you don't do well. For example, maybe you're not a production superstar, fulfillment person that actually does the work. You might be more on the sales side of things. So who could you put in place that would allow you to scale that side of your work because you're not having to do it? We get suckered into all these different things that are like, hey, get more leads today, but if you got more leads, can you actually sell them? Do you have a sales process that's great and closes at least 35% and hopefully closer to 50% of the people that you talk to. And so what you'll usually find is that the smaller of a contractor that you are, there's more foundational type work that you need to do. And some of that work is on you and who you are as a leader. And as far as a person that performs at a high level, most of us are not in any type of routine. We walk around this planet in reactionary mode all the time. We have the next sale, we have the next job to build, we have the next person to make happy. We have the next piece of information to learn, and we're just reacting all the time without having a real roadmap to go, hey, I should be doing this now so that I. I can do that later. You know, it's one of the biggest things that kept me from growing early on in my companies was I wanted to be this thing way over there. Like, I, hey, I knew I was going to be 30, 40, $50 million business, and I was trying to do all the things that a 30, 40, $50 million business does, because I was trying to emulate them, I wanted to be exactly like them. But what I really need to do is go back and look at what their path was. How did they get to there? What were the first things that they did, especially if I'm doing something less than a million dollars. And so I started to look into that. I started to do some. Some of my own observation, ask some questions of people, got my own coaches and things like that. And what I learned is that the very first thing that most of them do is they get a routine. They know when they're going to do the work that's necessary to do the work that's necessary at the right time. So they tend to enforce some time blocking. And what that means is they section off portions of their day and then their week and then their quarter and then their year to accomplish the things that they want. Which most of us that are business owners, entrepreneurs, just starting out isn't natural for us. It's actually the opposite of natural. Natural is just to run around like a chicken with our head cut off most of the time. It's unnatural to be regimented and disciplined and consistent. But what we found is that if we can put that in place and be really consistent with our effort on a daily basis in the little things, those big things just naturally happen. They're actually an outcome of the effort that you do today. One of the best things I ever got taught, John Maxwell shared with me, he goes, hey, man, your future self is going to thank your current self for the amount of discipline and routine that you put into your world. And so there were certain things that I had to get. I had to do a lot of personal growth side of things, learning how to be better at sales, be better at marketing, be better as a leader, be better as an entrepreneur. These things that I had to do to start to bring value to my company. And if I don't know those things and I'm not good at those things, I'm kind of at rookie stage. Think of it as like, hey, I'm just beginning. I'm starting to figure things out and I've got to get this information. Some of the information I learned early on was this idea of making the best use of doing the right, most important thing at the right time each day. So I wanted to go look into what that looked like. I found this idea of time blocking. And so I started to block out the times of my day when I was going to do certain things. Like I wasn't going to go out and try to get new jobs on a Monday morning between 8 and noon. That doesn't work. It just doesn't work out real well. Everybody else is kind of getting their work underway, so why shouldn't I take that time to get my work underway? That's when I would use planning. It'd be meetings with my team, it would be getting paperwork done. It'd be all that stuff that I didn't need to be outgoing and needed to be ingoing on the business at hand. And so I would block out a section of time to do all my paperwork and all those things that were kind of business oriented. And I actually didn't even go and sell on Mondays. Mondays people have bad attitudes. I've had a rough day, beginning of the week, all that other good stuff. So I started to block my time to do the things like marketing, the various aspects of building out a process, all the things that need to get work done, internal work that was necessary on Mondays. Then Tuesdays I would get a little bit more about marketing and some of the efforts that I would put in there. Maybe even going out and being a part of a networking group and starting to set in times. The key part of that is it's a general effort during a specific amount of time. So for example, I didn't say I was going to go meet Mrs. Jones. I would say I'm running appointments during these times. Or I didn't say I'm going to work on this specific marketing thing. I would say I'm working on marketing to residential in these times. And I worked really hard to pick the right times to do that so that I could be very effective in the times when I was in front of people. And so this idea of time blocking became very important. But it was all this stuff, right? The general stuff that needed to be done. And I wasn't sure that I was working on the next most important thing, like how do I determine what that was? And that's where the concept of an action matrix came in. It's this idea that we have a lot of things to do. There's a big long list of them most of us have. And the idea is to get them all written down and then give them a score. This is purely judgmental on the amount of effort that it would take to do that thing and the amount of impact that thing would have on a scale of 1 to 10. So if it was something hard and big, it might be a 7 or an 8 on an effort Score, maybe I'm building out my sales process. So that's going to take me some real effort, education, learning to get done. And so that might be really high on the effort score, but the impact score was even higher, like a 9 or a 10. Like if I nail that sales process, it's going to have the biggest impact on what's going to happen for my business. And so that particular thing would go into what I would call major projects. It wasn't the thing I could do right away, but I could knock off little pieces of it to get that thing done. Then there were things like a networking situation. Like, I've got a networking opportunity. It's just one, it's not a whole bunch. I've got this task to maybe go do a, a home show as a contractor, or maybe it's a networking gathering. And I've got to say, effort on that could be a little bit smaller, maybe a three or four. I don't have a whole lot I have to do with that. Depending on how you go about doing it, especially if you've done one before. But the impact could be a seven or eight. That would go into quick wins. So I'm scoring everything to go, hey, over here is quick wins. Kind of top left. If you're thinking of a matrix, those are things I can knock out right away and have an impact on my business. Where if it was a bit bigger, that'd be major and that would be on the top. Right. The other things that scored lower. Okay, so maybe it scored lower in effort and low in impact. I was looking at delegating that thing, whatever that was, or eliminating it. Finding some other way to either get it done or get rid of it. That wasn't me. I had to get into that box so that I understood that this would be kind of the elimination box. And then the ones that would have low effort and kind of medium impact, those would go into what was called fill ins. Those are the things that we're kind of doing on a daily basis all the time. But it started to prioritize, like, hey, what's the most important thing for me to be doing? I also created another little thing that was really important, which was what's the most important thing of the day? One thing. Do one big thing. And each and every week. And so these are the types of things that we go through from a foundational aspect with contractors to get the base in. If we get the base in really well, the rest of it, all the other stuff gets really easy. But if we try to do all that big, huge stuff that doesn't actually have an immediate impact on the results of our business. We're going to struggle for quite some time until we can actually scale. And most of the time we're kind of guessing, is that the right thing for my business? So that's a little idea of getting a bit of control on saying what to say no to. You know, all of these offerings that are out there, they're all very good at enticing you and tempting you to say, this is going to be the magic pillar, the easy button that allows you to solve all the world's problems. And you're going to be this huge scale, giant, big business with tons of money and boats and planes and hot girls and parties. The reality is that it's the small little things that are prioritized in order of impact that are going to generate an outcome of the lifestyle that you want to live. And so be very cautious of what you hear. Listen well, listen like, hey, yeah, you can get me 30 more leads, but run it through the filter. Do I have a process to handle all of those leads? Do I have the sales process to convert all of those leads? And do I have the staff to handle all of those leads? Do I have the culture that I want people to be involved in whenever we do get those leads? Or are you going to just piss away money? That's the reality of it. You're going to spend a whole bunch of money getting a whole bunch of leads that just get burnt because some marketing company convinced you that marketing was the biggest thing that you need to do. And early on, when you're less than a million dollars, that that heavy duty, high expense marketing stuff is something to avoid. There are other ways. We teach a lot of these all star marketing tactics that allow you to generate well over a million dollars without a massive expense. And it's one of those things that like opens people's eyes. Whenever we're coaching them, they're like, wow, I didn't realize that that was something I could do. I actually have a little story about that. I did a event in Birmingham, Alabama about eight years ago and it was standing room only, which was shocking. Birmingham was starving for information on how to be a great contractor. As a matter of fact, fire marshal came in and said, hey, no more people in here. We had people standing all around the outside. And I talked about some of these various tactics. And one of the things I talked about was this highly customized, very well thought out strategic letter that you would send to specific neighborhoods Markets, situations, and put that thing together, walked everybody through it. It's actually part of our platform to this day. So go through that whole thing. Everybody thought it was cool. I come back to Birmingham seven years later. So last year, I come back to Birmingham, and I'm talking about something completely different. Working with one of our partners. And this guy comes up to me during a break, and he's like walking towards me, and I kind of stick my hand out to shake his hand. He puts both arms out and just puts a big, huge hug on me. I'm like, what's up, man? I didn't even know who he was. He's like, I'm so and so with so and so company. And I just wanted to thank you for that letter. That letter is our total marketing effort. That's all we do. It doesn't cost us anything but some envelopes and stamps, a little bit of time, and it generates about $8 million a year for us. You changed my life. You changed the lives of our salespeople. You. You've also helped us with how we have create a client experience. So you change the life of our clients. I just want to thank you for helping me build this business that I was after. Man, that's the stuff that really makes me happy to see people take the thing that we have and do it at the right time and implement it and have great success with it. So really think about what is it that I needed to be doing right now that's realistic, low cost, high impact to get me to above a million dollars?
