provided by: 
Of the questions I am asked by contractors, "When is it time to grow?" certainly ranks in the top two or three. Trying to hold back my disbelief at the question I want to answer (but I normally don't!), "When is it ever time NOT to grow your business?" Now before you consider me too cynical or arrogant, let me share my perspective on this very important aspect of being a successful contractor.
First, for any contractor to purposely NOT be focused on building their business is just short of committing economical suicide. Even for those contractors who do not have a formal business plan or financial goals, most still strive to be successful. Seeing your sales and profitability figures increase is simply an obvious form of measurement if you are growing.
The question asked by many contractors does not come from business owners who are simply looking for an easy formula to long-term success and security. Most contractors take their futures very seriously and want to be competitively positioned in the marketplace. Thus, they are sincerely interested in recognizing when it is time to go beyond the "wait for the phone to ring" response to growing business.
What are some of these contractors asking then? Well, I think what they are really driving at is how do you know that it is time to plan for growth, purchase new or more equipment, add another estimator, or take on more debt to subsidize the business until sales picks up?
Asked from this last perspective, there are several indicators you should consider before realizing that it is time to grow your business. First, look at your profit margins. Are they increasing or are you making less money than in the past?
Losing your profits may be due to your firm's lack of focus on quality performance. You may not be holding your people accountable to reduce their operating costs and become more financially responsible. If your profits are steadily increasing you may be positioned to take on greater risk due to having your performance systems and processes under control.
A second consideration is to observe the number of calls you are getting unsolicited from customers. If you are getting increased requests for work it may indicate there is more work available than in previous years or that more companies or individuals have money to spend. Increased requests could also suggest customers are looking for more responsible and quality-based contractors who are highly regarded.
Another reason for the increase in unsolicited calls from customers may be due to your company's reputation. Again, you may be driving good referral business due to your crews' performance and the friendliness of your estimators, superintendents, foremen, or even office employees.
Yet a third consideration is to assess the performance load your crews can take on. Can your people do more work? Among your current workforce, do you have a few more employees who could lead their own crews or run their own little team of employees? If this is the case, growing your business could very well reward the people in your organization who are looking for more responsibility. Not growing your business would restrain such people, moving some to look for job opportunities elsewhere.
A fourth consideration must rest with your own personal convictions. Do you want to grow? Growth is exciting but it is also scary. Adding people, equipment, debt, etc., to your existing structure will require forethought and planning. Such planning will take a greater amount of time and require you to think "outside the box" looking for new answers to new questions.
In the end, if you are not personally motivated and driven to grow or expand your business, chances are good that you will fail. Bigger is not always better. If you are not driven to have the biggest contracting business in your area, then focus instead on being the most profitable. Align yourself with other contractors who will feed you the type of business you excel at while you pass on other types of work to them.
When to grow your business depends on many additional considerations. Do I have the right people to take on more work? How much more work can I accomplish with my existing equipment? Will my material supplier support me with more material … and at what cost savings? Is there the available work to support my aggressive growth projections? Am I capable of managing and leading more people and interfacing with more customers?
The previous list of questions should be carefully considered. While not every question can be answered initially, you should realize that the more you uncover and understand about the costs and benefits of growing your business, the more confident and prepared you will be to take on your growth opportunities.
author: By Brad Humphrey