Photo of Dr. Rudolph Francis with Beacon Enterprises

Rehab Contractors Overcome 3 Key Problems to Succeed

by Rudolph Francis, M.D.

Note: Our blog for Nashville-area home builders shares a smarter way to set up and run your contracting business. It appears on the second Saturday of each month. Read all the blogs here.

We see great opportunities ahead for new rehab contractors.

But first, the bad news: most new building contractors fail in the first 5 years. Usually, it’s because they fell into these 3 traps:

  1. Hiring the wrong people
  2. Tackling the wrong projects
  3. Not leading, learning, and adapting.

Rehab Contractors, Use a Process to Hire the Best People

Construction is a people business. And good help is hard to find: 4 out of 5 contractors have trouble finding skilled workers, says the Associated General Contractors.

The better your employees are – individually and as a team – the stronger a business you will build. Take the time to hire the right people and build a healthy culture.

If you get desperate and have to make a quick hire, it often leads to regret. Here’s how to avoid hiring the wrong people:

  • Seek referrals from employees, suppliers, construction teachers at local community colleges, and contractor colleagues you don’t compete with.
  • Ask others in your company to interview each candidate. Teach them to ask open-ended questions to surface examples of past problems and how candidates overcame them.
  • Test candidates’ skills. For example, ask them to write an email to a customer about a schedule delay – so you can see how they’d handle that.

Provide a formal orientation for new hires. Make sure they understand how your company and your culture works.

For the first 60 days, assign a buddy in the field to work with new hires side by side. Schedule regular weekly meetings with new hires to praise good work, probe for problems, and make adjustments as needed.

Keep an eye on each employee’s performance. One bad apple can spoil the whole barrel. If people see that you let an employee slack off, soon everyone else slows down.

Employee Turnover

Hiring right helps you minimize employee turnover, which can easily cost thousands of dollars each year. To replace one low- to mid-level employee costs between 16% and 20% of their annual compensation, says the Center for American Progress.

Create a company culture that makes people want to work for you:

  • Assign clear roles and responsibilities.
  • Praise people in public.
  • Correct them in private.
  • When things go wrong, focus on fixing the problem, not fixing the blame.
  • Recognize and reward good work.
  • Incentivize employees to refer job candidates.

Keep your people informed with regular meetings. Here are tips to help you head off employee turnover.

Rehab Contractors looking at plans

Listen to Your Gut to Avoid Problem Projects

If you get desperate to find work, you may be tempted to take a project that doesn’t feel right. Maybe you find:

  • A good challenge that doesn’t fit your skill set.
  • A project that’s too small to make a profit from.
  • A project that’s too big for your company right now.
  • A customer who acts strangely.

If so, trust your gut. Turn down the work. Wait for better projects to come along. There’s nothing worse than getting bogged down with the wrong project or client.

Lead, Learn, and Adapt to Succeed as Rehab Contractors

Successful contractors lead, learn, adapt and persist. That’s how they make the transition from a craftsperson to a business owner.

As a leader, you don’t need to do every job in your company. But you do need to know how each job is done.

Consider taking an accounting course at a community college, so you can oversee your accountant’s work. Be careful with money: about 80% of embezzlements occur in small businesses, says Hiscox. Protect yourself:

  • Separate business and personal finances
  • Make sure your signature is required on all business checks.
  • Have bank statements mailed to your home, not your office.

You will face unexpected challenges that force you to adapt. For example, here’s how to manage work sites during COVID-19.

Plug into industry resources and networks that help you adapt to the trends and changes ahead:

Yes, starting up your own contracting business is tough. To succeed, avoid these 3 traps:

  1. Hiring the wrong people
  2. Tackling the wrong projects
  3. Not leading, learning and adapting.

Our blog for Nashville-area contractors appears monthly, read all our blogs here.