Green tree.jpg robertsrob/iStock/Getty Images Plus

11 Reasons Why You Must Grow

Growth provides stability, flexibility, makes recruiting easier, provides for much better results should you want to sell the business, and more.

If Hamlet were an HVAC contractor he might ask, “To grow or not to grow?  That is the question.”  Hopefully you are more decisive than Hamlet the contractor. Here are 11 reasons you must grow.

1. Experience Growth as a Form of Insurance
If you run a ten-truck company and lose a tech in June, it is irritating, but you can work past it.  If you run a two-truck company and lose a tech, it is devastating.  Not only will you struggle to keep up, you won’t have time to find a new tech.  Scale is its own form of insurance.

2. Stay Hostage Free
Scale also means you cannot be held hostage by an employee threatening to quit unless paid more.  Most contractors are stubborn enough to terminate any employee who tries to hold them hostage, but it is so much easier when the consequences are minor.

3. Gain Better Brand Identity
Larger companies have more trucks.  If the trucks are well wrapped with a good logo and overall graphic design, then the trucks alone will drive brand awareness through the roof.  It is not only possible, but probable that your company brand awareness will exceed that of the products you sell.

4. Make Recruiting Easier
With greater size and better brand identity, recruiting becomes easier, though not necessarily easy.  Most people prefer to work for a better known company than a lesser known one.  It is more prestigious.  It is also safer.  Moreover, as your company grows, you can afford better benefits, which further adds to the company’s attraction.

Larger companies can also hire for attitude and develop the rest.  They can create tune-up specialist positions to groom people for the service tech role.  They can carry a couple of apprentices, ready to step up when a tech leaves or growth demands an additional truck.

5. Gain Buying Power
It is true that larger companies buy better.  They get volume discounts and special pricing unavailable to smaller companies.  They often get first crack at promising new products and technologies.  It is easier for a vendor to persuade other contractors to sell a product if one of the larger companies in the area are selling it.

6. Grow by Acquisition
It is difficult for a small company to acquire another company.  It lacks the resources.  By contrast, larger companies have the ability to absorb smaller ones.  They can acquire smaller competitors, which really means they are acquiring a customer base and labor force. 

7. Reduce Overhead Per Hour
Overhead does not ramp up in a straight line.  It steps up.  As sales increase for each step, the overhead can be spread over more labor hours, reducing the overhead per billable hour.  This is how larger companies can afford better benefits, better training, better resources, and so on while remaining price competitive when they want, although many opt for greater profitability.

8. Take Vacations
Small company owners do not own businesses.  They own jobs.  They have the freedom to take off for an hour or afternoon whenever they want, but they struggle to take off for a week.  When a company becomes large enough that it can run without the owner’s constant presence, it is a business.  Business owners have real vacations where the owner can leave for a week or even a month and return to a thriving business.

9. Work On What You Want
Owners of larger businesses can self-actualize.  They can assign the tasks and duties they abhor to others, which frees them up to work on the things they enjoy.  They can work on the business, not in it.  This is empowering.  It is rejuvenating to someone who has worked hard for a decade or more to build a business.  The owner comes to work with a new joy for the business.

10. Create an Exit
Few contractors think much about an exit strategy until it is too late.  Small companies have little potential for an exit.  If they find a buyer, it is usually a marketing move to acquire customers with a little down and the rest based on performance.  It is better than nothing, but not enough to retire on.

Larger companies can exit.  There are buyers for companies with $8 to $10 million in sales, or more.  Multiples increase with size and are also higher for businesses that are more process centric than people centric. 

11.  Have Fun
Face it.  Running a bigger company is more fun.  Yes, you have people issues.  Yes, you have drama.  You also get to see people develop and grow within the business.  You get to try new things.  It is just more fun to build than to hold.

Contractors in the Service Roundtable grow three times faster than the industry.  If you want to grow your contracting business, invest $50 a month in company.  Join at www.ServiceRoundtable.com.  Call 877.262.3341 to learn more.

 

 

Hide comments

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish