Why Construction Businesses Fail When They Grow Too Fast | Ty Adams

[00:00:00–00:01:27] Host — Nitin Khanna

Every construction business owner wants very decisions you make to grow your business at risk? What happens when the business gets bigger, but you decision? Today we're going to talk leadership, and what it really takes to scale. Welcome to Business of to the people who are building changing the construction industry. My than 25 years of experience in roofing operations, leadership, and business helped oversee more than $325 million in more than 10,000 adjuster meetings projects across 14 states. Today, results, Ty helps contractors build scale their businesses more effectively. lessons he learned the hard way, how to doesn't depend entirely on the owner, construction companies owners will need Ty, welcome to Business of Construction.

[00:01:27–00:01:42] Ty Adams

having me on. And yeah, I mean, this is business. I love talking about talk about uh the good, the bad, the everything. So, I'm excited to uh dig

[00:01:42–00:02:03] Host — Nitin Khanna

Welcome, Ty. So, Ty, I want to start construction business owners can relate teams, and experienced significant have also experienced is what happens back to that period when you were

[00:02:03–00:03:44] Ty Adams

Yeah. So we're talking 2009 2010 time of time really around the world you know was was really hitting every industry the false impression that in insurance companies uh primarily pay for a roof or been affected by a storm and the was under the false impression that that downturn because primarily the insurance deductible. That was my first were expanding, we were growing, we were my contractor license renewal classes, the instructor would ask, you know, be like 98% of the room, and then the ones that were in store restoration. So, The success during that time really set standpoint that we could sell anything. can sign contracts. What what we didn't talked about the financial downturn and management that we could we we could I didn't have the understanding that I in place to really help continue to mold

[00:03:44–00:04:02] Host — Nitin Khanna

people. So Ty, when you realized that the first thing that actually broke operations? Was it the people? What what an indicator that something was breaking

[00:04:02–00:04:54] Ty Adams

Yeah. So from my seat, the first flow and the AR started getting older lesson right there because if you're an signals um there you're already 90 to proactive there. So, it was seeing the older which really started the you know that's what they say profit is a business. It's the cash flow. Right. And you know that's a lesson I guess learn from here is that it's not about

[00:04:54–00:05:22] Host — Nitin Khanna

growing a business that can be scalable next um that brings us to a very about just the growing of the business. scale and that can scale profitably. just chase higher revenues without profitable. Now let's shift gears here.

[00:05:22–00:07:54] Ty Adams

expertise here. the sales. Now you businesses. I remember last time you and one of the things how you grow this What's the difference between being a sales organization? First of all, you know, it comes down to the uh the number one, their their customer. So you large numbers, but if they really if concerned about getting the contract payment, it's that eventually is going company. So really understanding that worldclass customer care not just about the impact of whatever service you life. So like in in in my scenario where restoration roofing, okay, in been jobs, that big of a deal. But most of the time been through this once or twice, if any actually a pretty big upheaval for for be only a day or two project, uh the pets, maybe maybe you got, you know, There's there's a variety of things that get to have some empathy for for the believe makes a a great sales rep is to then I would I would say right behind so to speak. So whether it's the data, management notes, pictures, things of whoever you're handing that off to to Because you can sell it, but if you isn't any commission coming your way. So handing that off to to your teammate so

[00:07:54–00:08:39] Host — Nitin Khanna

Yeah. Yeah. No, that's well said T. You important is it to be empathetic in the one transaction. It's about building that repo with the clients and a transaction. It's about re really a solution to them for their needs and what we see in our business as well and recurring business and referral sources if you bump into a construction business

[00:08:39–00:13:26] Ty Adams

owner is solely responsible for her built first and what do you think you have started her thing up? common scenario where you know you they were either good at sales or they that job is what whether it's you know piece and so a lot of times they're not or dealing with people you know people and hopefully we never get to the point seems like we're getting closer with the long ways off from that. So what I would you said, is involved in the sales is involved in the sales, but they need to for them and for the organization. you thin and the organization needs an owner down the road to see you know make sure watching over their financials and once put that in the two 2 to 3 million is a still means you're probably producing you're solely focused in that sales can struggle. So, that's number one. But somebody who is going to be able to hold professional way, in a in a in a mature somebody else do that versus the owner. or involved with with having that's important, but it needs to be in hold a manager accountable and a manager accountable. But people get the it has it is a kind of like a bad People think about they're cranking down tight fisted or they're a micromanaging. piece is is just ensuring that that your have a prescribed process, we need to Whether it's uh performance, uh whether turning, you know, jobs into production, something that you can't ever stop like train somebody, you know, for a day go because what what do people do over path of least resistance, right? you you forget to blind spots, to to to support that. And in order for grow in sales. I mean, obviously your eventually you want to have that sales reps, but over time you want them to grow other sales managers in your business leaders or the business owners lies on you right it's one thing to say somebody to hold them accountable but at you and and I look at it if if expectations we need to look at see have we provided them enough tools instructions Have we given them proper right there's another another saying times manage people for the outcomes not people can learn from that statement too outcome that you are expecting and for that outcome as well to we as small

[00:13:26–00:14:41] Host — Nitin Khanna

America they are started by people who know building their businesses from many a million dollars in revenue if they are they build that business is by literally right it's fortunate or unfortunate part there's it comes with a huge sense of a company from zero to a million dollars In most cases, you are putting your doing the finance, you're looking at the sales, operations, client management, construction company owners get stuck. million dollars. They get successful up the same thing and expect different and say, "Look, I want to build a $5 million dollars." If you bump into a thing? Somebody who is stuck at a first thing you would tell them to delegate at the last

[00:14:41–00:16:10] Ty Adams

Yeah. Well, I mean, it's really what we that sales management piece. So, you time. And so if you are going to improve course we're we're talking about revenue sales. Sales is, you know, the wind in And so you've got to have that piece most of the time, the best way to to get like to say. So, if you've got a couple who is good doesn't or great doesn't going to be a good manager. So, um but that you're looking for in that good deal well with conflict resolution kind of go that up up and down. It it's manager sometimes is the referee between right? So, they got to be able to work you identify that person, then you pour create a great deep relationship because depending upon to to build the company.

[00:16:10–00:16:31] Host — Nitin Khanna

kind of step back from that sales somebody who can uh perform that role. there's a big difference between handsoff, right? So trust trust but

[00:16:31–00:17:27] Ty Adams

that's that goes back to my failure of great people in place and I implicitly checking on things the way that I should that I I caution and coach several of know, it's not about, you know, that you hired. But you do need to check in with accountability conversations. And it they start showing you that you can once a week, maybe once every other once a month, right? For for sure. So, would say get them in, delegate that, got to understand the pulse of your

[00:17:27–00:17:32] Host — Nitin Khanna

Yeah. Yeah. You know, well said. It's a

[00:17:32–00:20:00] Ty Adams

well right I have a team of 13 people thing for sure all those 13 people they it's it's that was the lesson I learned me to check on them and it just because don't want to have a full autonomy and now we have implement mented our team to to check on each other and learn from move. Let's go fast forward from here. in the seat of a business owner and now do you see construction industry going of construction industry? going back to people. So I we're we're You know, we you can take a look at people. And I often say if I had to great people, I would choose great people are going to elevate those those that going back to uh pouring into your mentioned about having meetings with better understand them. I love for what work, right? you know, they they have your son to work. But I love seeing somebody from production can go out and understand what it's what it's like to rep, you know, hang out either in the different items that that need to be receptionist to understand what kind of think that is a is a is a huge piece to your your teammates to understand what through. It it I believe will help you the process. So I think that is

[00:20:00–00:20:15] Host — Nitin Khanna

happen. the technology piece. Obviously, around, there's a new CRM coming out. new piece of technology or a a new AI

[00:20:15–00:21:01] Ty Adams

this is where I would also advise general is figure out what works for and make it better, but if you're here's a new this, here's a new that, it company, is not going to be good good kind of like a a business owner who strategies twice a month, right? It's up. And so that's what I would also to to see use technology to your

[00:21:01–00:21:31] Host — Nitin Khanna

know, get get feedback, get buy it. If we're going to this CRM and 90% of your it works, you want to get their input. Yeah. Yeah. You know, it's a it's a We always tell people, you know, it's a keep changing your strategy every other experiences are not going to compound.

[00:21:31–00:22:02] Ty Adams

Your learning of your team touch something about the AI, new models agree more. You know, means the the day find out that was obsolete. It's just going on in the world today. I I was in thought it was moving really really fast period for the world of IT. Things have

[00:22:02–00:22:15] Host — Nitin Khanna

touch base quickly on the technology and client, what is the one thing you would investing money on a new software?

[00:22:15–00:25:47] Ty Adams

I I really like the me and my we talk that that gross margin. So, for for me, understand where that gross margin needs maximize that as as much as possible. sure that that you understand the job understands what it should be priced at understands really good is for operations to see a the gaps and communicate that back to pitfall that happens a lot with with each other and that is the I'm a team something into production and it's project manager, I'm going to just fix don't want to be viewed as a complainer. an extra 10 minutes. Well, talk about the teams get used to, well, they'll back to that gross margin, if we can making sure that we're measuring it and talking about going in and going out. So piece but know understanding okay we're job that means we should be at 43% on what our margin hit rate is and if we amazing. But, you know, you want to be how are we doing as an organization. If means we're at two 2% off, that's that's three, four, five, obviously depends on is still significant even at even at a the piece that I would say is let's make cylinders regarding our margin. what that is. Is that is that a people documenting our process? Is it a technology piece that that can help that can't just go in and say this is going me that this is the best thing since to make sure that you are doing each of you know, that's what I see most uh with. They are just way too busy working They are on the working on the tools at their financial statements many case year had finished and it's just too late don't realize which jobs you were losing making money for you so you could steer

[00:25:47–00:26:38] Host — Nitin Khanna

it is important for any business owner least on a weekly basis and we put those know how much cash you have in your bank enough money to pay your payrolls on a working capital you're deploying. You for you so you can push more of those interesting conversation. One thing we comes to the show, every guest, we put Okay, let's go. that comes to your mind. You I don't it. Just tell me the first thing that or a great sales manager? Higher fast or higher slow?

[00:26:38–00:27:18] Ty Adams

What's the best early warning sign of a Nowhere near quota, right? I mean, it's characteristics. So, I know this isn't a thing to see, say, "Oh, a contract's of things that happen before a contract tracking those things, you won't find So, for for me, it's about the expected see that going down, you know that your Yeah. Yeah. They people look at it too

[00:27:18–00:27:22] Host — Nitin Khanna

every roofing contractor should know?

[00:27:22–00:27:38] Ty Adams

Gross gross margin. One of the first your gross margin?" Many times, understand that question. even understand the question. Forget answer. We we see the same thing. What's

[00:27:38–00:27:57] Host — Nitin Khanna

eventually stop doing? thinker. Holding frontline people interact with them. It's just that you doing that for you.

[00:27:57–00:28:17] Ty Adams

learned when you were 30 years old? mean you're going to be able to collect having that that thought that I can sell for failure. it's it's not just selling, it's selling

[00:28:17–00:28:33] Host — Nitin Khanna

Ty, you have experienced major growth helping other contractors scale their construction business owner one warning company, what would that be? Yeah. So

[00:28:33–00:29:31] Ty Adams

incrementally. So if if you're going to of expansion. It some people look at location. I would always recommend, you have that middle management piece in if you're going to add a revenue stream, magically take care of itself. So, you piece in place and don't skimp on that. manager over your sales department and you're probably going to need another assistant, right? And so that's the people in place to support whatever

[00:29:31–00:30:06] Host — Nitin Khanna

Ty, this has been a great conversation. here is that growing a construction jobs. It's about building the people, leadership that allows the business to owner. And I really appreciate you being lessons that come from things not going if someone listening wants to learn more with your other businesses, where should

[00:30:06–00:30:48] Ty Adams

Yes. Uh so uh thank you for that. My and mind you results it's plural like to right? And um and the reason I called it results. The most important word in that what it's all about. If if you're not just wasting our time and money really I've also recently built a predictive canvasing apps and that's called door doorreality.com.

[00:30:48–00:31:18] Host — Nitin Khanna

you found this conversation useful, episode with a construction business conversation. If you have experienced comment below. Tell me what's been your people, building a sales team, managing the day-to-day operations of your experience. I am Nitin Khanna and this