Are you the one holding back your construction company?

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ℹ ABOUT THIS EPISODE

In this eye-opening episode, Wade and Stephen delve into a critical issue that many business owners face: being their own worst enemy. They discuss how contractors may unintentionally become bottlenecks in their own businesses, and share practical ways to identify and overcome these obstacles. 

Through real-world examples and 20 actionable tips, this episode aims to help business owners step back, delegate effectively, and build systems that don't rely solely on them. Whether you're a seasoned contractor or just starting out, this episode offers invaluable insights to help you scale your business and achieve greater work-life balance.

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⌚️ In this episode:

• 01:00 Understanding the Bottleneck Concept
• 01:23 Real-Life Examples and Self-Realization
• 02:40 Recognizing the Signs of Being a Bottleneck
• 04:12 Delegation and Trust Issues
• 05:34 The Importance of Taking Breaks
• 07:31 Hiring, Firing, and Employee Management
• 09:44 Building Effective Systems and Processes
• 15:57 Staying in Your Lane: Focus on Core Tasks

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Wade Carpenter, CPA, CGMA | CarpenterCPAs.com
Stephen Brown, Bonding Expert | SuretyAnswers.com

Transcript

Wade Carpenter: [00:00:00] What if I told you the biggest thing holding your business back Isn't the market, your team or your clients, it's you? Today we're tackling a hard truth: How to spot when you might be the one slowing your own business down. Contractor Success Forum. I'm Wade Carpenter with Carpenter Company In this eye-opening episode, Wade and Stephen delve into a critical issue that many business owners face: being their own worst enemy. They discuss how contractors may unintentionally become bottlenecks in their own businesses, and share practical ways to identify and overcome these obstacles. CPAs, joined by my cohost Stephen Brown with McDaniel Whitley Bonding and Insurance. Stephen, is it possible some contractors may be their own worst enemy?

Stephen Brown: It is. We could relabel this the Tough Love podcast because the whole objective of this podcast is to let you think, are you holding back your company in some way? Are you the [00:01:00] bottleneck that's keeping things from flowing properly? And when I say tough love, it's tough to hear and have self-realization about things that you're doing, maybe to hurt your organization. But I think it's a great topic and a lot of our listeners need to hear this. Because the whole thing about bottleneck is, if you're doing a construction project, there's something. That may be a bottleneck holding up the entire production on the job.

It could be some concrete you're waiting for, it could be any number of reasons, but that creates a bottleneck. And the thing about this podcast topic is, are you the bottleneck?

Wade Carpenter: Yeah, for a lot of contractors, I think maybe they're trying to scale or whatever, but they hit a point where they're just working so hard. And actually this topic came out of a conversation I had just this week with a contractor that reached back out. I talked to him over four years ago. He had scaled [00:02:00] up, but he basically hit a wall. And as somebody running my own firm, I understand, this is my 25th year on my own. And I realized that at some point you've got to be able to get out of the way and let some things get in the way naturally as a business owner.

But I was hearing him saying all this stuff like, I'm so worried about these people stealing from me or having this control, that he was constraining what his business could do. So that's why he reached back out to me and it's you remembered how we had talked about what we could do and how we worked with them. And so anyway, that's where the conversation started, but it really resonated with me after 25 years. There's things that I do every day that I know I should be able to pass down as I want to grow. These are things that, I need in my business. It probably looks different in a construction company, but a lot of the issues are the same.

Stephen Brown: And it's not just a matter [00:03:00] of deciding to delegate more, but the first mention of the 20 ways to help fix the bottleneck is owning it. Owning what it is that you may be doing as the owner of the company to be a bottleneck to your organization. That's the hard thing.

That expression, you can't see the forest through the trees. A lot of times like the person you were just talking to that was wound up about someone stealing from them or any matter of items that someone's just hung up and stressed over, creating a bottleneck.

You can say someone's stealing from you is creating a bottleneck, but what kind of controls are you doing to make sure that you're insured for theft and that you have internal controls in place to keep the theft from happening, and that you're willing to delegate that responsibility to someone else, and own the fact that it's slowing you down?

Wade Carpenter: A lot of people don't think of this. They just think, if I can just work a [00:04:00] little harder... and just like any machine, there's only so many parts of machine can put out. And if you're getting to the point where you're bumping up against a wall, maybe it's time to think about how you're doing some things.

So we did have 20 thoughts for our listeners today, but before we jumped into that, I was hoping we could talk about some of the things where maybe you could recognize that you are holding things back. 

Stephen Brown: Sure.

Wade Carpenter: This is one I struggle with. Are you the single point of approval on everything? Are you the human speed bump in your organization? You gotta have sign off on everything from you or it just doesn't get done. Do you ever see stuff like that?

Stephen Brown: Oh absolutely. And the whole point is you've got to say, alright, at some point we can put systems in place, at least for signing checks, to have dual signatures on checks and some other internal controls. And trusting your reports to tell you what's being [00:05:00] paid and what's coming in.

And that information being accurate and then having someone else verify that information. So it's a separate responsibility. Someone who may not be authorized to deposit or withdrawal funds. Yeah it's a huge point. You're a speed bump and you're slowing something down. The first thing we always see, as a human speed bump here, is payment. Right? Then another item of being a human speed bump is just delegating authority, to make decisions that need to be made. If you're always doing that for someone who's an employee of yours, how are they ever gonna learn how to do it themselves?

Wade Carpenter: Absolutely. And already hit on a couple of things that, that guy was talking about just this week. He's so afraid of that. And you do have to put some controls on things.

But the second way I would say, you know do your jobs pause when you're not available? You're out sick or something like that, or God forbid, take a vacation. Do things come to a grinding halt? If it is and you're not getting where [00:06:00] you, you know, the cash flow and the profitability, maybe some of these things might be resonating.

 If you're still doing all the job costing, the payroll yourself, and paying all the bills and, trying to do all the ordering. At some point that becomes too much for one person. And if you're working in the field all day and then come doing paperwork all night, maybe it's time to think about what you're doing.

Stephen Brown: Yeah, it most certainly does. And just you said, God forbid, take a vacation. You're right. It's like a running joke in our industry, taking vacations. But your family's gonna demand it. They demand some quality time with you. And if you don't have the systems in place to be able to take that crazy vacation idea, we might have listeners just hanging up when they hear that.

But if you're not planning that or at least letting your spouse plan this vacation and totally relaxing and being part of that vacation, then your systems aren't in place. Are you [00:07:00] gonna go on vacation and worry the whole time? If you do go on vacation and worry all the time, you might be a bottleneck.

Wade Carpenter: Here's your sign.

I think it all goes back to do you have enough trust in that? do you double check each one of your project managers work, or your estimators? I know we were just talking about, Stephen, I guess was reading my book and I think the father would've checked that son's bid a little closer, but I get it.

I guess there comes a point where, okay, you don't trust them to do it. Maybe they've, screwed up in the past and you've tried to train them. If you haven't trained him, maybe you can train him. But there's also a point where, the guy was talking about he had worked with this controller for three or four years, and she just could not grasp the job. She could not do the job and he felt like he kept going back and forth. But if you're at a point in your business where somebody is holding you back because you have no trust and you don't feel like you can fix it, [00:08:00] maybe it's time to find somebody else for that job.

Stephen Brown: It absolutely is. And you're gonna have employees cost you money. We talk about the business side of running construction companies all the time. We talk about how risky it is to be a contractor. But part of the process, one reason you hold on to extra profits and income in your company is to deal with the unknowns, the employee mistakes that cost you money. The jobs that end up costing you money and you make zero money and it costs you money, that has to come from somewhere.

But at the same time, if the mistakes are being made and all the right procedures are in place and you just had the wrong employee in the project, then you can just move quickly to correct that.

But if it's a situation where it's a learning experience and that person is gonna work that much harder to not make that same mistake again, and they actually bring revenue into the [00:09:00] company to help offset that loss, that's someone you gotta invest in.

Wade Carpenter: Yeah.

Does your team come to a pause instead of deciding on something that needed to be done because they're in this analysis paralysis, afraid of making a decision you're not gonna agree with?

 The Bottleneck in your business, which is very common for a business owner, but if you're the first one in and the last one out every day, maybe you need to work on having other people do some things. If you're always the go-to firefighter for everything, it's never gonna get better unless you figure out how to change it.

Stephen Brown: Yeah. It's kinda like Jeff Foxworthy. If you do this, you may be a bottleneck. Yeah.

Wade Carpenter: How do we fix this? Why this happens. We know there's, fear of loss. If I let it go, it's gonna fall apart if, a lot of people you have this control and leadership and you want it to be perfect 'cause your name's on it. It's just, yeah. There's gotta be a balance between having it perfect and having it 85% and then maybe you making sure that other [00:10:00] 15% gets covered somehow. So I do think we need to jump into these 20 ways. I know you've already said the first one, the own it first. Any more you wanna throw out on that list?

Stephen Brown: After you own the fact that you might be the bottleneck, then the second one is loosen your grip on everything. And again, that's easier said than done, isn't it?

Wade Carpenter: Yeah, I guess I just went into that. It's okay, if it's 85% right, then you know, how can you accept the fact that may not be a hundred percent? Maybe work on training them to get it better next time, but making sure that those major things are covered so that you can move on.

Stephen Brown: Okay. And then we talked also about, really delegating things that need to be done. As your company grows and you take on more work, you have to delegate more.

Wade Carpenter: Yeah, and just some things that you never think about that you, it's always so [00:11:00] close to the vest. Delegating for real means, one of the biggest things I did was finally turning over payroll. I always did the payroll myself. I obviously could do it. I didn't want anybody else knowing, but when I did that about probably a little over five years ago, I could never go on vacation or I could go on vacation, but I'd still have to do payroll, stuff like that.

Stephen Brown: You weren't really on vacation, were you?

Wade Carpenter: Yeah. And so again, thinking about okay, don't just give 'em a task, but let them own it.

Stephen Brown: Okay. And the next one that we just talked about yet again, was your name's on that company, and it's gonna be done right because everything's done as a reflection on your name. Maybe it's a time to think about changing the name and the ownership. Selling it to your employees. Having a more generic name that represents the whole entity instead of just you.

That, that's a big one. That's hard, isn't it?

Wade Carpenter: Yeah. And that's a big leap whether it takes that. But it can be [00:12:00] very frustrating to a business owner when you feel like your employees are not engaged. And you feel like they don't really care, nobody's gonna care as much as you do. And I know that's a constant problem, but if you'd never let go, I guess said differently, if you hold on too tight, they're not going to be able to take any rope and run with it for you. So are you setting that up for yourself?

Stephen Brown: Yeah. Next one, hiring and firing folks like it matters,. My first impression of that one, Wade was if you are owner of a construction company and you're hiring and firing people like it matters. You are hiring people because they can take responsibility and you can delegate to them. And you're firing them because they are not taking the responsibility that you give them, and accepting the delegation, they're lazy or they're incapable of doing what you need them to do. 

Wade Carpenter: [00:13:00] Do you have the wrong person in the wrong seat? Does that cause delays? I have a situation with another contractor I was dealing with that I. held onto somebody, she had been with them for probably 25 years, but she did not know her job. But she had this knowledge that, okay, we can't get rid of her because she knows so much, just afraid to get rid of her. So they kept paying this high salary, and then, it was causing problems. The way she was doing things caused double work.

And so when we sat down and said, let's do this, let's take this off her plate, we saved hours and hours every week.

If it's the wrong person in the wrong seat, do you need to make a drastic change? Do you need to fire 'em? I don't know. I'm not saying you do. Just if you can't change the game maybe.

Stephen Brown: We were talking about the owners being the bottleneck. What about other employees, like this woman that may have been a bottleneck? Maybe not that she was doing it specifically, but [00:14:00] her responsibilities were causing a bottleneck. 

Wade Carpenter: In this case, they felt like they couldn't delegate to her. So the owner was holding onto those things. And he could not move past that because they didn't have the right person right person to be able to do that.

Stephen Brown: We talked about building systems that don't need you a little bit, so you could go on vacation, but before that you had defined roles. Stop the guessing.

Wade Carpenter: That sort of goes with the last one we were just talking about. If it's the wrong person, can you put 'em in a different seat? Just tell them this is what your role is. If they can accept it and you've given them enough rope to where they can make their own decisions, or if they're just guessing because they're afraid to do something, they don't know that they have the authority to do something. Is that holding you back? 

Stephen Brown: We discovered at McDaniel Whitley that regular reviews help our organization run smoothly. If you have a review once a year that's predicated [00:15:00] on a raise or not, and the employee feels like they're just getting grilled, that doesn't help anybody.

But having a productive review that talks about the flow and the delegation and the issues and the problems, and also how we can help them get through those issues , it's been tremendous.

Wade Carpenter: I'll move on to the next one. Building systems that don't necessarily need you. How do you multiply your time? I think about my own firm, like how do I get over the fact that i'm still the only one that is signing a tax return, so I wanna make sure it's darn right before it gets to me. I implemented a system where there's two checks before it gets to me.

 Whether it's, these checks and balances or the big thing now is AI and automation do some things, some real things for a contractor that take it off your plate. So if you can systematize it and streamline it, AI is really getting to that point in the last year, [00:16:00] where it can actually take some things off you. That's what I'm talking about.

Stephen Brown: Sure, and we've done numerous podcasts on creating systems that work and also on how to use ai for this very specific reason.

Wade Carpenter: I had another one that was sticking in your lane. And what I meant by that is are you the estimator and the salesman and also working up the bids? And taking out the trash and, doing those kind of things? If you got little things that could be done by hiring an administrative assistant or something that can do $25 an hour work when you're doing like $500. I don't know, I'm just making stuff up. But if you can stick in your lane and this is what you do best and pass off the stuff that is low rent, that's my thought of what I meant by that.

Stephen Brown: No you're exactly right. And the toughest thing to delegate is putting bids together. The control of it. You have estimators that you [00:17:00] hire to put bids together, and then you have to check it over and then reconfirm those figures are accurate. And a lot of times, the historical data that you keep on hand and your knowledge of who you're working with as far as unit costs are concerned, and the profit and overhead that you put on that, that may have to come to you.

But what if it comes to you and someone else as well, that has a different set of responsibilities? You just check the numbers, you check the addition. You double check this, you double check that, and then when everyone checks it and signs off of it, then it comes to you to put your final stamp of approval on.

Wade Carpenter: I guess another one I had, I titled it Climb the Ladder. What I was meaning by that is do you need to get out of the field and stop doing all the work yourself?

There's another YouTube channel that if you may have seen, Jesse Lane. Which I think he has some great messages out there. But he recently put out a [00:18:00] episode where somebody called him a fraud because he's running a construction company and can go on vacation. Basically he has gotten out of swinging a hammer, and that's the point. If you can stop doing that kind of stuff, delegate it and build these systems, you can build a massive organization that runs without you. 

Stephen Brown: Yeah.

Wade Carpenter: Saying no to some jobs. If you say yes to every single job just to keep cash flow or whatever, and you've got more work than you can do, but you still not got no cash in the bank, maybe it's time to slow down and think about what types of jobs, and maybe you should say no more often.

Stephen Brown: Yeah, that's tough. It's tough to say no, especially when something's in your wheelhouse that you need to bid on for any number of reasons. Your reputation, your control of the local marketplace, but you just don't have the time to do the project.

Wade Carpenter: That sort of goes [00:19:00] hand in hand with the next one was like drawing boundaries. And we're actually gonna do a episode on this pretty soon. Instead of trying to be everything to everybody all we take is construction and we got pretty good at it, but just like for a contractor, draw your boundaries.

You technically could do that type of job, but should you? Is it really in your wheelhouse? Is it really something that you can make good profit on?

I get it. You feel like you're gonna lose out, feel fear of missing out, fomo, whatever they call it. Put some boundaries up and you'd be surprised how people respect it.

Stephen Brown: Okay.

Wade Carpenter: I guess the next one, basically taking a vacation, taking a real break. And, maybe you feel like you can't do that, but if you can just get away for a day or two and just think about what you're doing and how you're doing it and how you could change the game so that you can get to that next level. That goes in hand with, do you need a [00:20:00] coach or advisor or somebody just to -- I think you said this is the very first of the podcast was like you're in the forest the trees and can't see any other ways to do things.

Stephen Brown: And my advice for what it's worth to anyone, is you gotta take some time for yourself. To recharge your batteries, whatever that takes. And then you're able to give back to your family and to your business.

Wade Carpenter: Yeah. I guess some other thoughts. I know since we're getting a little longer, keep learning. Just, basically stay humble and realize that you don't know what you don't know. I think you've said it a thousand times on here.

Stephen Brown: Yeah.

Wade Carpenter: Building an ownership culture and not everybody can do that, like we've done that here in carpenter company . People like their job and, you have to set the mood and all that stuff and have the right people, but when they feel like they own it, it's amazing what a team can do. That [00:21:00] may be sharing information, those kind of things and making them feel like they have a part in the decision.

Stephen Brown: Absolutely. That's such a big point, because you don't literally have to sell your company to your employees for your employees to have ownership in the company. You just don't. Employees have ownership because they're challenged, they're rewarded. They feel part of the team, part of the family.

Everybody's pulling together with the same set of oars. And if that culture doesn't exist in your company, you may be a bottleneck.

Wade Carpenter: To get to the next level, sometimes you do have to let go of some things. Maybe trusting, but verifying, having checks on things. Believe it or not, sometimes simplifying the process. Just having somebody else look at it and simplifying it can go a long way to making it.

Stephen Brown: And your perception of a process that can't be simplified is the wrong perception. There's always a way to simplify a process, isn't there? [00:22:00] 

Wade Carpenter: Break it down into smaller parts, and if talking about the workflow, just take one piece of it at a time. 

Stephen Brown: Talk to your advisors and consultants about what other people are doing in the same situation. Because if you have a complicated problem that you can't simplify it's absolutely guaranteed that other folks in your line of work have had the same problems and have figured out a way around it.

Wade Carpenter: That's like the book I wrote with trying to use Profit First. If you got a bottleneck in your cash flow, that can bottleneck your cash. And so getting systems like that can your operations and do a lot of things.

But again, I guess the whole question of this whole thing is if you disappeared for 30 days, would your business still survive? Or would it stall out? would you not have a business anymore? So.

Stephen Brown: Yeah, it's a good question. And you kinda have to ask yourself that all the [00:23:00] time, don't you, Wade?

Wade Carpenter: Yep. Any closing thoughts? 

Stephen Brown: Not being a perfectionist. Really think about why you're a perfectionist. What's controlling that and what do you do about it? And be the CEO and not the crew. So you're the chief executive officer, you're the company. If you start acting like you're part of the crew then maybe you're the bottleneck.

The final part of this podcast ought to be your call to action. That's the whole point is, are you called to do something about this? Are these problems continuing to come up over and over again? What kind of advice do I get? Have I even looked into the Profit First system and how that might solve some of these problems. There's just a lot of answers out there and I think this has been a great topic, Wade.

Wade Carpenter: I agree and again, it's something that I've struggled with myself in building my own firm and as I've scaled. I guess what I would tell you, the call to action. you as a Contractor, you [00:24:00] may hate the architect 'cause they always cut your pay apps. But, it's your business. You're the architect of your business. And your job is really to, draw up those plans and lead the crew, not just swing the hammer.

If you're tired of this, holding on too tight, never can sleep 'cause you're worried about payroll and can't take a vacation, maybe it's time to think about not just chasing more work. Definitely chasing more profitable work, but is it also a scaling problem?

Stephen Brown: Take a deep breath, relax. It's gonna be okay.

Wade Carpenter: Yeah, so if nothing else, I hope if you listen this far, that we've at least made you think about where you are in your business. We appreciate you listening. If you've got any thoughts or comments, we'd love to hear 'em in the show notes below. If you enjoyed this, we do this every single week. Please share, subscribe. It always helps us out. We will see you on the next show. [00:25:00] Thanks.