The Chess Match that is the Business of Contracting
by Ron Roberts (Ron and Guy Gruenberg are business partners in The Contractor's Business Coach organization)
Adapted for sweeping by WorldSweeper's editor, Ranger Kidwell-Ross
Reflecting on chess games made the author realize how close chess resembles the contracting business. Although the analogies in this article best relate to construction sweeping, they provide valuable insight into a number of types of business activities. We encourage you to think of each of the examples shown in light of your own company's unique challenges and situation.
When we last had a chance to sit across the table from one another my partner, Guy Gruenberg, shared a story about a game of chess he found himself in while killing time on a well-earned vacation with his wife. His story reminded me of a day back when I was 12 or 13 and had my rear end handed to me playing chess against a classmate.
The difference in the two stories is that Guy beat his opponent who apparently got a little overly confident and I lost mine to a far superior player who whipped me four times in less than 30 minutes.
Every chess game is unique. Every contracting job is unique.
Sometimes you know your chess opponent. Sometimes on a project you are working with the same team of property manager, general contractor or trade contractors as on a previous project. Other times you have zero experience with any of the key players.
Sometimes a chess game evolves just as you expect. Often times it doesn't. Same with sweeping projects.
Sometimes you have to sacrifice a pawn or a queen to win a chess game. Sometimes, you have to sacrifice something to come out ahead on a sweeping project.
As chess and contracting share so many traits, we would do well to follow several guidelines chess players learn.
Chess Lesson #1: Never Underestimate Your Opponent
As Guy's opponent discovered too late, underestimating your opponent will often cost you a game. In construction your potential opponents are many. The dangerous ones are the ones who pose as teammates. These are the ones who act like they will be there for you when you need help. If this is only the first or second time you've worked with your "teammate," stay cautious and don't underestimate the ways in which s/he could hurt you.
Chess Lesson #2: Anyone Can Play the Game
Almost anyone can become a sweeping contractor. Other than local and state business licenses and bonding, nothing further is required. Used sweepers are relatively inexpensive. Material suppliers are more than happy to sell materials. General contractors are often happy to give a new contractor a chance if his price is low enough. Just like chess, sweeping is an easy game to get into.
Chess Lesson #3: Someone Out There Is Better Than You
No matter how good you are at running your business, assume one of your competitors is better. Better at selling. Better at recruiting. Better at running operations. Better at tracking costs. Better at everything. If you believe your competitive advantage is that you are a better business person than everyone else in your market, you are sorely mistaken.
Chess Lesson #4: Never Stop Improving Your Game
We've yet to meet the perfect contractor. Even if you are currently the best, someone out there is striving to knock you off your perch. The only sure way to stay ahead is to keep upping your game.
You can improve your game in many ways. One is by reading and following the advice we offer at Contractor's Business Coach, WorldSweeper.com and elsewhere. Another is by improving your personal and employee productivity. A third is by constantly improving the quality of your team. Always keep improving your game.
Chess Lesson #5: Never Let Your Guard Down
Letting your guard down is a sure-fire way to lose a lot of money in sweeping or any other contracting business. It never fails that when you least expect a problem, a general contractor, property manager or building owner with sinister intentions will be able to cost you money.
I know of two such situations right now where the GCs set up their subs for financial failure. In both cases, the contractor I spoke with will be lucky to escape bankruptcy. In neither case did clear warning signs appear early in the project. In hindsight, the GC laid the trap during the bid process.
Chess Lesson #6: Think 5 Steps Ahead
In construction terms thinking five steps ahead means making contingency plans. Be aware of what could go wrong and decide how you will respond. Classic examples are cash flow and scope of work. What are you going to do when that big check you're expecting doesn't show up? What are you going to do when the inspector won't check off on your quality?
Chess Lesson #7: You're Going to Lose a Few Games
There are different levels of losing the game of contracting. The first level is not being able to consistently perform the scope of work within the budgeted costs. In other words, you don't make as much gross profit on the job as you expect. The next level of losing is when you go so far over budget that your revenue equals your burdened direct costs. The final level of losing is when your payroll, materials, and cost of performing the work cost more than you are getting for the job.
You are going to suffer first level losses. You might infrequently suffer second level losses. You should never suffer third level losses. Ever.
Chess Lesson #8: Know When To Walk Away
The game is often lost long before the final outcome. In contracting the time to walk away is when you realize you've blown a bid and before you sign the contract.
Don't hesitate to walk away if you have that opportunity. Don't assume you will be able to make up for it by adapting your sweeping process or not actually performing the scope of work required in the contract.
Sometimes, if you are working for a friendly GC, you will have an opportunity to walk away with minimal damage even after you've started the project. Take advantage of that and strive to make it up to him on future projects.
In closing we try and follow three sets of rules: our wives', the Ten Commandments, and "The 10 Biggest Mistakes Contractors Make." Let us help you master your business. Help is just a phone call away! Wishing you great success in 2012.
Should you need help finding a strategy that will allow your business to thrive, give us a call. We've been identifying them for years with great success.
More information about Guy Gruenberg, Ron Roberts and their company may be found on his website www.contractorsbusinesscoach.com. Guy may be reached via email sent to firstname.lastname@example.org.
If you have new information to provide on this topic, let us know and we can add it in as an addendum to this article.