Why Your Contracting Company Is Failing (ft. Benji Carlson)

Logan Shinholser
Hey, everyone. Welcome back to the Contractor Growth Network podcast. I’m Logan Shinholser and today I have Benji Carlson joining the podcast. Benji is a key member of Breakthrough Academy, specializing in coaching and training for entrepreneurs in the trades and home service industries. His role involves assisting business owners in implementing effective systems and processes to enhance operations and profitability. He is also the host of the Contractor Evolution podcast. His expertise spans strategic planning, financial management and leadership development. He contributes to creating educational content and workshops tailored to the trades sector. What I like about Benji is he has a very engaging communication style, and he’s very practical and actionable in his business strategy. Benji will be speaking at our new era of contracting virtual summit. So let’s go ahead and jump on in.

Logan Shinholser
So the first question I asked Benji was, how do you define strategic planning in a contracting business?

Benji Carlson
I think the best definition that I’ve heard, and one that we use a lot, is it’s really fundamentally a framework to help you make decisions as a business. A strategic plan can come in all shapes and sizes. We like a very simple, condensed, one page strategic plan that breaks down kind of your foundational stuff, your why, your values, your behag five years out, your annual goals, your critical numbers, your quarterly rocks, and put it all in one centralized place. What it should do for you as a business owner is kind of give you a guiding North Star, a direction to go in. It should help play defense against a lot of the distractions that are inherent with entrepreneurship, where you kind of always looking at shiny objects and new opportunities and fresh ideas.

Benji Carlson
It really helps you stay anchored and stay focused and keep the activities of the business and yourself one linear path that’s been really thought through at a deep level, rather than just going on the whims and emotions of you, the entrepreneur, which I think a lot of people underestimate when they get into business for themselves.

Logan Shinholser
What happens when you don’t have one? I guess. What does your year look like without going in with a strategic plan?

Benji Carlson
It can, it can be very messy and it can be very knee jerky. You sort of going in one direction for one month, another direction for another month. What we find in the breakthrough academy universe is that business owners who are very business owners who are poor at strategy and poor at planning, or I should just say maybe still learning how to do those things, it’s their, their year tends to be a bit of a meandering, you know, approach towards a sort of vague goal that they’ve kind of thought through. But so I would say overarchingly, the pattern we see is not one that is super focused. The other thing that tends to happen is because you’ve not sat down and given yourself criteria to grade your business against, which is fundamentally what a strategic plan is.

Benji Carlson
You come up with revenue goals, you come up with profit goals, you come up with some implementation items that you want to put in place, and that gives you the framework to at the end of the year, just like in elementary school, give yourself a report card and say, how did I do? Did I get an a minus or am I, you know, kind of a failing grade? Because you don’t have that. It’s actually very, it really slows down the learning because you’re not able to be objective about what happened. You say, well, we did our best and this is where we ended up, and we’ll go ahead and do our best next year and see what happens. And so we find that people without well defined strategies take a lot longer to grow.

Benji Carlson
But more importantly, they sort of take a lot longer to learn what they need to work on as a business. And you kind of multiply that through time. You can end up in a pretty frustrating situation. A lot of business owners find themselves there, five years in, six years in, and they’re sort of like, man, I thought I’d be further along. I feel like I’m kind of plateaued or I’m sort of stuck in the same spot. So I think that’s probably what we see happen the most often. I’m curious if you have a take on it. What have you seen? What have you seen people kind of suffer from when this isn’t in place?

Logan Shinholser
It’s a lot because as a business owner myself, I know the years when we go in with a plan versus the years without a plan, and it’s just like an elongated version of if you go into the week, you know, having planned out your week on Sunday versus not. So it really comes down to kind of what you’re talking about, where it’s, you’re just, you’re kind of fighting this uphill battle, which is business with no real end goal. And at the end of it, when you look back, a lot of times you may not feel like you’ve either accomplished much or you feel like you’ve accomplished a lot. But in reality, when you actually look back at the game tape, it really was just the same year that you had last year and the year before.

Logan Shinholser
And it’s really because there is no measuring stick. There is no objective data, and it really comes down to a lot of times when there’s no strategic plan put in place that is not like the failure, if you want to call it that happens is not because you didn’t have a plan, but it’s typically because it’s the entrepreneur that doesn’t actually stop to plan stuff out for the year, which typically means they don’t plan stuff out for the month or the week or the day. And a lot of times those are the people that are ending up having to go back to Home Depot three or four times a day because they keep forgetting stuff. So it’s almost like because you don’t have this big plan doesn’t necessarily mean you have to go to Home Depot three or four times a day.

Logan Shinholser
But there’s a lot of alignment with the people that don’t put plans in place that are also the ones that typically have a lot of, like, slippage on job sites and things like that.

Benji Carlson
Yeah, yeah, I totally agree. I think as well, people just underestimate the. How easy it is to be, like, the onslaught. Like, business just comes at you every second. And what we’ve noticed with entrepreneurs is it’s very easy to get in the cycle where it’s like, yeah, well, were going to do this, but then we realized it didn’t work. So then went and did that. We were going to implement this technology, but we got 30% the way through and it became too hard. And you sort of operate on too short of a cycle. Like, I really do think that a year, like 112 month business cycle with a four quarters in it is kind of the right experimentation period. It’s the right sample size to try stuff.

Benji Carlson
If you get to the end of a year and this sales process that you thought was going to boost your sr has not, that gives you a meaningful enough data, a meaningful amount of data to pivot from or make changes to. But if you’re kind of operating on a much shorter attention span, which is what happens without a strategic plan, you never actually give things the chance to set in and take hold. And so you end up with this very just kind of scattershot line of growth and implementations. And so, yeah, I think that pretty much covers it. Those are the things we see without one.

Logan Shinholser
What are some of the top, like, aspects or competencies or metrics, if you will, that you focus on when looking at a strategic plan?

Benji Carlson
Like, what are the metrics I want to put in mind or how do we grade? What a good one is not sorry.

Logan Shinholser
How you grade what a good one is, but, like, what are some of the aspects of a strategic plan?

Benji Carlson
Yeah. Okay. I can take you through ours. So we have this one page template, which I’m sure we’ll go through when we do the summit. And if you guys, like, we can even probably send you something to attach to this episode. There’s kind of four columns. The farthest left we call the foundation column. And that goes through your core values, you know, three to five core values. It goes through your why or your purpose, like that. That mission that you are on, besides just making money, and it’ll go through your bhag. So, like, what is the vision five years from now that gets you really excited and motivated? We call that the foundation Golem, because those are the motivational forces that kind of, you nestle the annual goals into. That’s what anchor the.

Benji Carlson
That’s like the deeper well of profound motivation that’s going to give you the juice you need to execute on the annual stuff. And so then we move over to the annual column, and there’s going to be annual goals. And it’s pretty typical stuff. It’s things that your listeners will be familiar with. There’s usually a revenue goal. There’s usually the gross profit goal. There’s usually a net profit goal. There may be a few. A few key hires that you want to make. And then we move into sort of like an initiative section or an implementation item section, which is like, what are the activities we need to undertake? What are the things we need to do to make these numbers that we’ve had put down achievable? That could be implementing new technology, that could be rebuilding your website because the old one sucks.

Benji Carlson
That could be setting up a digital marketing funnel where you run paid ad campaigns on Facebook and it pushes to a landing page, and then they’ll turn into leads, and then your salesperson gets notified. It could be creating sops so that the operations of your business run works. There could be a whole host of things that’s for you to decide. This is kind of the fun part of being a business owner. You get to say, this is what we’re going to do. And these are the things, I think, that are going to lead to us hitting those. And then where the work really happens is we break those down into kind of quarterly milestones, because here’s a long time, so we usually want to give ourselves little mini targets throughout the year.

Benji Carlson
So to use the examples I was using, if we take the adopting technology front, let’s say by the end of Q one in 2024, we want to have our solution analysis done, meaning we’ve looked at this software, this software and this software, and we’ve made a decision that this is the one we want to go in. And then in Q two, we can begin implementation. Q three, we can roll it out to the entire team. And by Q four, the whole business should be running on this new platform. And so the goal is to take bigger picture stuff and continuously break it down into more and more manageable chunks.

Benji Carlson
I know you had a question about KPI’s and we can certainly get to that, but like on a very fundamental level, what you want to do is take these large boulders, break them down into smaller rocks, break those down into smaller pebbles, all the way to the point where you can start to build a really effective and aligned block schedule week to week with that plan. That’s really the goal at the end of the day, is to have your activities match with the mission. And that’s. It seems so obvious, but if you look at the things most entrepreneurs say and compare that to what their calendar looks like, it’s not telling the same story. And so the whole purpose of this is to bring those two things together and make sure that you are rolling in the direction that you said you wanted to.

Benji Carlson
And that takes work to do.

Logan Shinholser
But how do you do annual plan if you’ve never done one before? Well, we asked Benji just that.

Benji Carlson
I really encourage people to keep it simple and use a template like the one like we’ve got. We’ve got a great one, but it’s a google search away if you want to just type it in and see what comes up. I usually encourage people to adopt some form of pre built structure rather than just going blank canvas because that can be a little daunting. That would be one piece of advice. The second is to be totally real. Like, if you don’t have any historical data and you’ve never really done this before, it is going to be a guess. And that’s okay. You are just going to be going, I don’t know. I think that we can do x, Y and Z next year. Let’s put that on the page. Let’s build some plans around it.

Benji Carlson
Let’s go and try our best and let’s see what happens. It’s sort of a similar thing. It’s a similar thing with budgeting. A lot of people go, well, I don’t really know what it’s going to cost me to do to produce this revenue next year. How do I make a budget? And the answer is you guess. And then what happens is the next year. Now you do have some historical data. The year after that you’ve got your plan against some historical data and with it happens more quickly than people think. You get better at these things. You become skilled at the craft of charting a course, you become skilled at the craft of developing a budget. And the you’re able to make much more precise, much more educated guesses than you were before.

Benji Carlson
But in those early days, like I’m a big proponent of do your best, forget the rest and move on till next year. Like it’s. There is no. I don’t expect people to have this fully dialed and perfected their first time doing it. And I just think approaching it with an open mind that way. Kind of taking it easy on yourself that way, still following the process, but maybe not being so attached to the outcomes is a recipe for success. And just have faith that by year three you’re going to be a rockstar at it.

Logan Shinholser
Next we focused on what metrics or key performance indicators, aka KPI’s, should you be focused on in your business?

Benji Carlson
That is a great question and it’s a big question, so I’ll give you some baseline ones, but typically there’s going to be more industry specific ones. The KPI’s that a garage door business measures itself against is different than, you know, someone that does remodels is different than someone that does roofing. But you could think of this in broader terms to be like there are generally marketing KPI’s, there are sales KPI’s, there are operational KPI’s, and there are profitability KPI’s. So remember those four, just in case I forget along the way here, marketing KPI’s would be like monthly leads generated. It would be the conversion on landing pages that you have. It would be your booking rate. Some people might say that’s a sales KPI.

Benji Carlson
But of how many leads that you get, how many actually turn into book to appointments, things like roas, like return on ad spend, like what are you putting, how many dollars are you putting into Facebook or Google or whatever, and how much revenue you’re getting out, you know, so those would be some marketing ones. Sales KPI’s would be like your success ratio, or they might call it your sales ratio. If I go and do ten estimates and I book four jobs, I have a 40% sr. Average ticket or average job size would be like how much is the average deal that you do. It’s usually something salespeople and businesses want to try and move up. On the operational side, you’d be looking. This actually gets really interesting. You’d be looking at things like a comparison of your budget versus your actual.

Benji Carlson
So when I go and estimate a job and I say it’s going to take this many labor hours to complete. Am I coming in over or under and by how much? Some people have this dialed into the point where they can track revenue per hour, and that’s how they drive profitability, because they can see their crews are producing more than they’re costing. You’d get into customer. You get into customer satisfaction. That can be done like via an NP’s survey or some people go as simple as just tracking their Google stars rating to make sure that the quality of the work you’re doing is good and your customers are satisfied. And then when you come to financial KPI’s, it would be a lot of the stuff that accountants tell you about.

Benji Carlson
This is your revenue, this is your gross profit, this is your net profit, this is your EBITDA. And so there are KPI’s and broad strokes. You need to dial them in for your industry and your market and your own goals. And that is a very important exercise that I think this is one of those things where we get asked this question in webinar chat rooms and on the podcast and at events all the time. And it’s a difficult one to answer because it is something that you need to dial in for yourself. This isn’t like a. There isn’t like a one size fits all. I’ve given you some broad categories, but for every business owner, they need to figure out exactly what it is for them.

Benji Carlson
But once you do, the idea is you now have some objectivity in your business to grade people’s performance against. And that’s really the function it serves, is a management tool. You can start to say this salesperson is performing well because these KPI’s are tracking the way they ought to, or they’re not doing well because they’re way off on these KPI’s. It provides the foundation for like this idea of gamification. I mean, you know, I was talking to this landscaper the other day who’s got this really interesting scoreboard in his office. Like in the shop, people pull in with their trucks. At the end of the day, it’s a landscape maintenance company. So they’re all on routes. Like they have, like this stop.

Benji Carlson
This stop this stop to go and mow lawns and clear brush and blow away leaves and do your typical landscape maintenance stuff. And he’s got a scoreboard that every person can see at the end of the day, at the end of the week. And he’s gone so far as to. They’re all really into the Netflix Formula one series. So, you know, they’ve got the Red Bull team, they’ve got the Mercedes team, they’ve got the Williams team, and they all compete month to like to actually try to win a cup at the end of the year based on the efficiency of their roots and how much revenue they produce and how happy their customers are. I mean, it’s pretty cool. Like, they’ve got these graphs that go up when people do well and they go back when they do poorly.

Benji Carlson
If one crew is struggling and they’re actually going to miss, they’re not going to get to all their jobs. Another crew that succeeds can do what they call an overtake and they’ll go and take that job. It’s like quite competitive. So, you know, the level that you can dial this into and make it. It sounds like such a corporate, sort of like white collar. Oh, you need to get your KPI’s. Like, I think in this blue collar business environment, there’s an opportunity to make this quite fun, quite engaging, tap into some psychology and use it as a really effective tool. And the other thing that it provides is a really good baseline. A lot of people are talking these days about performance Paydev and moving off of just. I pay my guys hourly, I have to keep nudging them and motivating them.

Benji Carlson
It’s really difficult to get anyone to go the extra mile. Having really strong KPI’s is a foundational piece that sets you up to implement performance pay and bonus structures and really start to tap into motivational pay structures for your team. So long winded answer, but that’s kind of what KPI’s are. That’s, I think, how they can fit into a business. But I really want to be clear, they’re not a one size fits all. You can’t go ask chat GPT, what should a KPI be for my business? It’s something that you need to learn and think through and test and iterate and eventually you’ll kind of find the perfect recipe.

Logan Shinholser
Getting team buy into your company goals can feel like it’s an overwhelming task because it’s your company, not theirs. I asked Benji about how do you actually get team buy in for your business goals.

Benji Carlson
It’s a couple ways the first is you involve them in setting the goals. Teams care a lot more about strategies that they helped build. Business owners, especially junior ones, have a tendency to want to go lock themselves in a cabin in the woods for three days and really plan it out. We’re just going to think through everything and we’re going to come back with this master plan for the team and we’re going to share it and they’re going to love it and it’s just going to be this amazing thing that drives our year.

Benji Carlson
Historically, what we found is there’s nothing wrong with the cabin in the woods, but bring your leadership team, or if you can’t bring your leadership team, at least schedule a day or a few hours where your leadership team can answer some key questions in writing to inform the strategy that you go and build. And I think that is just low hanging fruit in terms of creating buy in. And the other added benefit is like the best ideas come from the ground floor, right? Like, you want to look at like lean manufacturing and the way they do things. At Toyota, for example, some of the most ingenious innovations about their production line come from the guy on the tools building the car door. It’s not from the CEO who’s way too far from the problem to actually understand what needs to happen.

Benji Carlson
So I think that, you know, make strategy for everyone is a good mantra to live by. I think gamification is a huge way to get people bought in. I think that answering the question of what’s in it for them, if you come back with the best strategy of all time, but it’s ultimately your business and it’s profit that you make and they’re not attached their individual goals, their career path isn’t attached to the organizational goals in any meaningful way. That’s a recipe for really bogged down, really lethargic teams who don’t really care. I think that creating a really, they say culture eats strategy for breakfast. And I think that’s true. I think that investing into quality, like high quality, non job site, non office time for your team, that could be something as simple as weekly wing nights.

Benji Carlson
It could be a Super bowl party, it could be. It could be a service trip at the end of the year if the goals are hit. I mean, we have a lot of members who take their team to Mexico. If x, y and z happens in the business, I could go on. But I think that it’s the job of the leader to sell the vision as one that’s meaningful, connect the people who need to execute the vision to its goals, to its outcomes in a meaningful way, and then hold them accountable using some data and some objectivity and some KPI’s, and have a big party at the end. If you hit it doesn’t need to be more complicated than that.

Logan Shinholser
Go the reverse. What if you don’t hit it?

Benji Carlson
If you don’t hit it, you, You generally do some reflection. You know, you don’t. You don’t crack the whip. You don’t. You. You. You know, when we fail, we take a step back, we say, what happened? What can we learn from this? What are the wins that we can celebrate within the loss? You know, look, my Seattle Seahawks lost last night against Dallas. They played really well, though. They scored 35 points. They’ve been in a bit of a slump, I’m positive. In that locker room, they said, look, we lost tonight by three points to a really good NFC rival. But our offense was cooking, our O line played better. Our defense made some really big plays. There’s some stuff that we can build on here.

Benji Carlson
It wasn’t the result that we wanted, but there’s some good stuff that we can build on, and we know what we need to work on for next game. So I think just a step back, a pause, some reflection, some acknowledgement, take the l, but move past it pretty quickly and chart a better course for next year.

Logan Shinholser
One of the cool things that breakthrough academy does with their clients is they talk about having a theme for the year. I asked Benji to expand upon what that really means.

Benji Carlson
A theme is leadership tool that you use to communicate something that is super important to the team. So you could think of it like a team wide mantra. Like almost like this overarching idea that people should think about and repeat and use it to guide their distinction, guide their. Their decisions. So, you know, I’ll give you an example. Maybe you have this business who, you know, one year in 2022, they were just, like, super focused on revenue and growth to the point that they actually had a whole bunch of bad reviews. They’re moving through projects too quickly. Their customers weren’t super happy. The referrals went down, their Google star rating went down, and that’s not good. And so maybe the owner the next year goes, you know what? The theme for 2023, theme this year is quality over quantity. And we’re going to. That’s.

Benji Carlson
That’s. I want that to be on the wall. I want that to be. If we could tattoo it to your forehead, we would like. I want it to be this constant, ever present reminder of what matters this year. Maybe another example is you have a team that’s also a business that’s growing really fast, but they’re so focused on some of just their day to day results that they forgot to build any infrastructure for the long term. And now they have a business that’s bigger than the systems can handle. You know, maybe their theme going into the next year is build it for the long term. So it’s just like a. It’s a sentence, it’s a phrase. It’s an idea that the leader kind of disseminates throughout the team. It’s usually.

Benji Carlson
It is usually, like, written and printed and put somewhere in the office just as a visual reminder, a visual cue. But it is there to remind people of something that really matters about what they’re doing that year. And it’s pretty effective. And we’ve seen a lot of people do that with a lot of success and fix really thorny problems in their business because they just did this very widespread messaging about a certain thing that was important to the team.

Logan Shinholser
And how do you figure out what theme you need to set for the next year?

Benji Carlson
You figure it out based on what bothers you the most. I mean, what, you know, if you’re a business owner and you, it’s December of 2023 right now, we’re headed into the end of the year. I mean, I can tell you, in our business, there’s like four or five things that bug us the most. There’s very specific things that we could absolutely make a theme out of. And Paul Akers is this really great author. He wrote two second lean, and he’s kind of got a bit of a cult following in the small business world famous line is fix what bugs you. And I think.

Benji Carlson
I think that’s a good way to approach things, like, just look at what’s painful, look at what’s a nuisance, look at what makes you see red or what makes your skin crawl, and try to fix that through tactics, through good planning, and maybe build a theme around it, too.

Logan Shinholser
So should theme be something that is, like, very cumbersome and, you know, it’s going to take you the full year to accomplish, or is it really more of just like a, we got to tackle this thing on a day to day and just keep it in the back of our mind, I guess. What are some, like, right ways and wrong ways to approach a theme?

Benji Carlson
Well, a theme is, like I said, a theme is not a plan. It’s not a tactic. It’s not a strategy. Think of it more as like a reminder of what the. What the. What the team needs to emphasize in a given year. And so it’s, you know, I think the only way that you could do it wrong would be to be very vague about what it is you want. The other way that you could screw it up is by not repeating it as much as you need to. I mean, leaders constantly underestimate how much they need to over communicate things to a team. Just because you bring up a theme in your January launch meeting or at your Christmas party once doesn’t mean that it’s going to sink in. You’re going to need to repeat this in team huddles every week.

Benji Carlson
It’s going to need to be plastered on the wall. You’re going to need to bring it up in your weekly one ones with your team. And so, like anything, if it’s. If it’s sort of uttered once and then forgotten about, nothing’s going to happen. If it. If you know, if you are just literally a broken record with your theme, it’s probably going to sink in and it will click for people.

Logan Shinholser
Benji speaking at the new era of contracting virtual summit. So I asked Benji, what does the new era of strategic planning look like to him?

Benji Carlson
The new era of strategic planning is one that. I mean, I would take a step back and make a comment about the new era of this space more broadly. I mean, I think that. I think I said this last year, too, but I can put a finer point on it now. It’s blue collar businesses are in a massive revolution right now. I think that maybe sounds a little cliche or a little grandiose, but when you look at how ripe for disruption your average contracting business is between new technologies that are coming out, new materials that are coming out, becoming more customer centric with their marketing and their buyers journey. Using video as a really high quality training resource, embracing brand, embracing digital footprint. There’s a lot of stuff that. It really bugs me when people say, oh, construction is so far behind the times.

Benji Carlson
Some people are, but there’s some people that are unbelievably forward thinking in the way they design their business. The new era of strategic planning is one that embraces that. Strategic planning is a fundamental thing. I mean, we’ve been doing this for thousands of years. The pyramids would have been built with a strategic plan. I mean, this is not new, but it’s so it’s not really the structure that changes, it’s the content inside that changes. And so I think the new era of strategic planning is one that embraces where the market is going, where customer preferences are going, where technology is going, and sets a business up to move in that direction with its surrounding environment, rather than being stuck a decade or two behind.

Logan Shinholser
If you want to learn more about how to plan your business for 2024 and hear more from Benji, other speakers make sure to join the new era of contracting virtual Summit coming up on January 24 and 25th. Go ahead and click the link in the description, learn more about the event and we’ll see you there.