Markup and Profit Blog: Michael Stone’s practical advice

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Markup and profit blog
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Michael Stone

Michael Stone has been one of my favorite “gurus” for several years because he possesses the rare combination of practical business management and consulting experience for working contractors and sub-trades.  In other words, his hand-on advice makes sense because he has been hands-on himself.

His underlying philosophy has always been that contractors need to learn how to price their jobs properly, and set clear business rules so that their organizations can be consistently profitable. This combination requires some discipline (watching costs, setting clear rules and policies), courage (you need to have confidence to set your prices so you can make money, not just be “lower than the competition) and knowledge (you need to really know your costs, and how to market effectively, so you can avoid the “low price wins the job” trap.)

You’ll find plenty of actionable and simple ideas in Stone’s regular  Markup and Profit blog postings. Here are a few from recent posts:

Employee Issues — Speaking English

Stone advocates that English-speaking skills should be mandatory for your new employees. This makes sense, especially if they have any interaction with clients where English is the first language. However, what should you do about the really good workers who aren’t so good at English?  He writes:

.. .maybe it would be worth your time to help pay for ESL (English as a second language) at a local school. I know several contractors who’ve done this and not only did they get better employees out of the deal, those employees appreciated the effort and were more loyal to the company that helped them. Their fellow employees were also able to communicate better with them, and it became a win-win for everyone.

Friction on the job — or in the office

What should you do when employees don’t get along? Festering personality conflicts can really interfere with the smooth operation of any business, and Stone argues these must not be allowed to continue unchallenged.

Suppose you have two carpenters, or a leadman and a carpenter that are not getting along. You hear bits and pieces of it rattling around the company, but it hasn’t really come to a head yet, you just know there are problems.

Call both parties into a meeting. Sit them down and start the meeting with, “Joe, Bob, I’m aware that the two of you seem to have a problem getting along. It’s disrupting the workflow of this company, and that means it’s costing me money. It’s going to stop as of right now. I’m going to leave you in this room and ask the two of you to resolve any and all issues you might have. You don’t have to agree with each other – maybe you need to agree to disagree. But I need you to be able to get along, without causing discord, if you both want to stay employed. Stay in here until you can get your differences resolved. If you can’t, or if down the road I continue to see problems between you, your future with this company will be coming to an end.” Then you get up and leave.

Every time I’ve seen this method used, it has worked. Many employees don’t realize the impact their disagreement is having on the company. When it’s pointed out to them, the need to take care of their families almost always will override their egos and things will get resolved.

(There’s a great comment to this post where a reader asks about a book-keeper who keeps the records right, but has started offending the other employees with her attitude.)

Cleaning the jobsite

This is a basic marketing/client relationship issue for residential contractors and should (if nothing else, for safety reasons) be important for non-residential and new construction work.

The first time you show up and the job is a mess, you get the guys together and you tell them you want the job cleaned up right now. Stop whatever they are doing, get it cleaned up. You also tell them that the next time you come to the job site and there is a mess, they will stop what they’re doing and clean it up on their own time. If they don’t want to, they can go home (without pay, of course).

I understand that drill outs, framing, etc., can make a huge mess. And they want to finish the drill out or framing before the clean up starts. That makes sense, I wouldn’t argue that. But if the drill out is done and your employees are running wires or pipes and dragging chips and sawdust all over the house, it’s a problem. If the drywall has been hung, the taping is started and you have drywall scraps all over the place, it’s a problem. There’s absolutely no reason for employees not to take a few minutes and sweep up before moving on. It only takes a few minutes, and it keeps the mess from spreading.

You’ll notice one thing about Stone’s style is his no-nonsense approach to work and business standards. Employees need to know there are some basic rules, and if they aren’t followed, there are consequences. You don’t want to keep troublemakers and sloppy workers around your job sites. (I’ve explained to Stone however that employment rules vary from jurisdiction to jurisdiction and you should always understand the rules where you live/work and be sure you follow them. Canadian common law, for example, gives “bad” long-term employees extremely expensive and hand-tying severance pay or notice rights, if you are not careful and fail to start out the relationship with a properly drafted (with good legal advice) employment contract. I’ve seen businesses nailed for up to a years’ salary (each) when they’ve dismissed crappy workers.)

Stone’s blog should be on your must-read list. His books and seminars are worth their weight in gold, as well. I posted his blog in the Best Construction Blog competition because I think it is one of the best. While he may not campaign for votes for his blog (and so it may not get that many in the ‘popular vote’), I really think it should rank much higher. (But I won’t be the judge who decides that!)

P.S. Here’s a brief YouTube video when Stone visited Ottawa to give some advice to local contractors. I asked him for his basic advice on what everyone should do.

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