Systemize Success: Mastering Contractor Scaling

Scaling a business is often misunderstood. Many believe that simply hiring more people equates to growth, but true scaling involves establishing foundational structures, processes, and systems. This video dives into the critical differences between scaling and growth, emphasizing how having documented procedures can streamline operations.

We explore why relying on untrained hires without a solid system leads to chaos rather than efficiency. By implementing effective training and operational frameworks, we can ensure that every new team member contributes positively to our goals. Join us as we clarify these concepts for sustainable success!

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Episode Transcript

Jim Johnson (00:00):
I think one of the things that we need to look out
for as somebody that's lookingfor this concept of scaling and
understanding what that means, Ithink a lot of people struggle
with what does scaling mean.
I think a lot of times theybelieve that scaling means to
grow through a group of people.

(00:21):
Now, the more people I have, themore revenue I generate and so
on and so forth, but truthfully,that's not scaling at all.
Scaling is putting in thefoundational structures,
processes, systems, training,that kind of stuff so that when
you do go out and hire folks,you have a system to plug them
into.
It doesn't matter how manypeople you hire because you have

(00:43):
a system and a process that youcan put them into and repeat
over and over and over againbecause you know exactly what
it's supposed to spit out.
It's the biggest mistake that Isee most contractors make.
It's their thought process is tosee their ability to scale is to
go hire a bunch of people thatprobably do what they do, or
they think they can do what theydo, and all it does is create

(01:05):
more of the problems you'realready dealing with by the
things that you currently do.
You weren't able to get all thework done.
You weren't able to get to allof the customers.
You were starting to have a bitof fall through and not meeting
your timelines and commitments.
And now you've got to go outthere and hire a bunch more
people to do the same thing,because there is no process.
There is no system.
There is no exact way of doingthings.

(01:28):
And you can't train them veryfast either because there's no
process for that.
So they got to.
Hand, hold, verbally, train thewhole time, which what that
ultimately does is diffuses yourscaling and actually shoots your
scaling down, shoots growthdown.
Scaling is one thing, growth isa different thing, and I think
most people would believe thoseare the same thing, and they are
not.

(01:48):
Growth is what happens after youscale, after you have your
systems, your processes, yourstructure, your training, hiring
processes, everything in placeand ready to go.
You can generate leads and youcan sell them.
You got all that figured out.
All right, awesome.
Now we can grow inside of ourscale.
Does it make sense?

(02:08):
You hear a lot of the whole 10xyour business grow and scale
your, but they say grow andscale, right?
The reality is in order to growa business, you've got to scale
it.
And to scale it means that youhave documented the processes
and systems in every aspect ofyour business, both
foundationally and operationallyso that now whoever you hire.

(02:29):
You can set them behind ascreen, a desk, in a job, and it
is fully functional and they canliterally just read what needs
to be done and do it.
That's truly being able toscale.
But the idea of being able toput somebody in position and
say, here's the stuff you needto know and expecting them to
execute that.
If you're not there, that meansthat you are partially.

(02:53):
Ready to scale, maybe.
Depends on how far you are alongin the process.
Very first year in, in theroofing business, home service
contracting, exteriors, thattype of thing.
I did really well as asalesperson.
I sold 108 jobs in the firstthree months.
I kind of developed some systemsand processes for myself to
execute.
And they asked me to be thesales manager.

(03:13):
I'm like, that sounds great.
I'd love to.
What's the job description?
They're like just make people dowhat you do.
And I went, that's not really ajob description.
Let me put together some thingsand let's see if we can actually
make this work.
So I took a couple of months,actually started to develop
process and system and startedreally thinking about, okay, one
person, me, Versus a bunch ofpeople doing it.

(03:36):
What kind of problems does thatcreate?
Because now it's a volume andcan you actually get it done?
Those type of questions pop up.
And so I did a pretty decent jobof putting together what I
thought the process and systemwas, and I missed some things.
I mean, this is how I know Imissed some things.
I hired 107 people.

(03:58):
Inside of three months is justsalespeople.
That's not all the support staffand everybody else to come in
and sell.
Thinking mathematically, if Ican get each one of those people
to just average 500, 000, thatwould be a 50 million company.
So let's go and brought them allin, did a pretty decent job of
training three to five daytraining program and then

(04:20):
ongoing education and training.
And all the systems and all theprocesses were only documented
as like what the task was.
It was like, create an estimate,turn in an order.
There wasn't the depth of it,exactly how to do it, right?
Like the next step, how long itshould take, what tool to use,
all these other things that wehelp with, uh, building
processes around here.

(04:41):
And so what I ended up doing isI created a sales team that was
high functioning.
We did 41 million, whichcreated.
Literally a ticking bomb ofexplosion when it came to
customer service.
We weren't executing quicklyenough.
We weren't follow doing muchfollow through.
We weren't even concerned reallytoo much about the production

(05:02):
side of things.
So we didn't have qualitycontrol, final inspections, any
of that kind of stuff.
And I just, Did not get deepenough into what it was that I
needed to cover to create agreat client experience.
I've learned my lesson sincethen quite well, and not
necessarily about how fast can Ihire a bunch of people, but how
great can I make the system andwhat number of people can it

(05:23):
handle at a time.
So yeah, that's my stories thatlike the climax 29 years old.
Trying to do it all trying tokeep customers happy and hold
the thing together Not a lot offun to go through that not
exactly the way you want tolearn something But I promise
you this it's send it home.
I learned it.
All right I got to do this alittle bit better takeaway is be

(05:44):
persistent about your processesI mean like get it nailed and
then run it and practice it withthe number of people that you
currently have and see if Itbreaks if it breaks you're not
ready.
We actually did an exercise.
This is a great exercise forthis We do this with several of
our clients We will build whatwe call the ideal process.
That it's way that a job issupposed to go from start to

(06:06):
finish.
And then we'll get all the keyplayers into a boardroom and
we'll start where it starts.
Hey, this is Jim.
I'd like to get an estimate formy roof.
And Janie, the person taking inthe phone calls, does her script
and enters her lead and doesexactly what she's supposed to
do and then hands it to thesales rep and the sales rep does

(06:26):
his part and he's got to walk itthrough every little step of the
way.
Okay.
And then it gets handed off toproduction and breaks, right?
Like there wasn't the rightthing, he couldn't do his job.
And that's how you break aprocess before actually
implementing a process to ensurethat you have a process that's
going to stand up to the test oftime.
That'll go two ways.
One is they, they built out theprocess the best they could

(06:48):
think of.
And then it just doesn't work.
That's because they didn't testit and didn't consider some of
the outside factors that comeinto play.
Okay.
Uh, the other is they overprocess it.
They say, Hey, um, this thinghappened one time, but it was a
big thing.
Like it was a problem.
I'll give a great example.
We had a client that, uh,reneged on a contract.

(07:11):
I also knew that my contractwasn't like an airtight
contract.
Like it was a simple designcontract.
And so we, when we got involved,the homeowner had like 6, 000.
We went to the back to theinsurance company, got
everything covered for him.
It was like 62, 000 windows anddoors and all these other
things.
And they reneged on thecontract.

(07:31):
Pissed me off.
I was beyond irritated with it.
I felt like we just lost sixtysome odd thousand dollars.
That's never going to happenagain.
I'm going to get an attorney.
We're going to write a loctitecontract.
And sure enough, we did.
And we implemented it, trainedon it, practiced it, and the
whole bit.
Cut our sales in half overnight.
because we over processsomething.

(07:54):
We said, Hey, we don't ever wantto let this happen again.
So we're going to do this nextstep, which then created a whole
nother problem.
Cause what happens is you go,okay, I'm going to make this
move and you make the move.
It creates a new problem.
So now you have to do a newthing to your process to solve
that problem.
And there's this downhill flowthat comes out of it and you end
up becoming way over processed,way too restrictive.

(08:18):
You're not agile.
You're not flexible.
And the whole thing comescrashing down around you.
And people are just irritated byit.
There was actually a piece ofsoftware that came out in 2009
that was competition to thesoftware I was working for at
the time.
And I got a little sneak previewof it.
I went, that thing's never goingto last.
Because every step somebody hadto answer a question, yes or no,

(08:39):
yes or no.
And most of the questions wereno, no, no, no, no, I don't need
to do that thing.
Don't need to do that thing.
And so they over processedsomething which made it hard to
use the user interface.
A side of it became garbage.
Nobody wanted to do it.
So you've got to find thisbalance and my best advice for
that.
So my best advice for building aprocess for a contractor, think

(09:01):
of 80 percent of the things thatyou need to cover.
What happens 80 percent of thetime, 80 percent of the time it
goes like this, and this is theideal way for it to go get that
nailed first, concentrate onfocusing on 80 percent of the
time.
This is the way it's supposed togo.
We call that the ideal process.
And then every if then thingbecomes a new process.

(09:24):
If this happens, go do this andfollow that process.
If this happens, go do this.
And that's this process.
But get the ideal one downfirst.
If everything went perfectly,what does that look like?
Okay, I've got that nailed.
We're following it most of thetime and now 20 percent of the
time something's popping up.
Now we build a process for thoselittle things and it's not

(09:45):
nearly as hard.
Most people overbuild processesfrom the beginning and it's just
a nightmare for them to get out.
But