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Company Growth Hinges on More Than Profit and Loss

Pramote Polyamate/Alamy Stock Photo Construction team working on jobsite
How can a contractor expand a business when revenue is on the decline? The Family Business Institute’s Wayne Rivers digs into what a growth mindset truly means.

"If you're not growing, you're dying." This piece of business wisdom has been around for ages. But what does it really mean? An email exchange and a conversation I had with Chris Duininck may help shed some light. He runs Duininck Inc., a very successful, third-generation, heavy-civil contracting firm operating in Minnesota, South Dakota and Texas. He wrote, "If a company isn't growing sustainably, it's dying. I'm keenly aware of my shelf life, and grooming the talent coming behind me is the most important thing I can do as a leader—that is, to prepare the next leader."

My bias when thinking about growth has always been top-line growth. When you read the financial press discussing the growth of Fortune 500 companies, they're talking about sales and profit. But, to Duininck's point, that's hardly the only way to grow.

Think back to the Great Recession. Most contractors lost 40%-50% of their volume. How could a contractor grow when revenue is on the decline? Upon speaking with Duininck again, he said that, since taking over from his predecessors, the company really hasn't grown the top line all that much. But what his team has grown are margins, efficiencies and employee satisfaction. Duininck said he also "consistently looks at (the) organizational design and strategic plan," and he and the company leaders review their "talent management and executive coaching capabilities" to ensure their business is a sustainable one.

Think about that for a minute: How many contractors do you know that focus on improving their internal executive coaching capabilities? Duininck said his company wants to be the "preferred place to work in (its) area." You're not just competing with other contractors for your workforce—you're competing with everybody and anybody. You're potentially competing with people hundreds of miles away because, in the hybrid work model of today, people don't have to be in a particular city to work for a company there.

Contrast this discussion of sustainability, organizational design, strategic planning, evaluating systems and executive coaching with what you typically hear from peers and friendly competitors. So many times, you'll hear a contractor say, "Oh my gosh, we just got the biggest job in the history of our company, and we're not sure how to staff it!" The cycle very often is to grow in volume, scramble to catch up, run into the "ceiling of complexity," have a crisis, recover and begin the cycle all over again. 

What if you could break that vicious cycle by evaluating and reinventing in a way similar to Duininck's approach? For example, in his review of his company, he found that a number of vice presidents had 10 direct reports. Duininck now strives to get that down to five direct reports per VP to help make everybody more effective. He said it would take six months to design the changes he wants and about two years to implement.

Let's once again return to the Great Recession. If a contractor lost 40%-50% of his revenue, how could he possibly grow in those conditions? Now you know. He could improve employee engagement, customer engagement, IT systems, business development skills, worker training, margins or any number of other things. There are so many ways to grow and improve a construction company; it doesn't always have to be volume. Duininck also pointed out that what worked in the 1990s does not necessarily work with today's employees. To be sustainable requires periodic rethinking and reinvention.

As we wrapped up the conversation, Duininck quoted the famous management consultant Peter Drucker and added his own spin:" 'Success breeds that which is not successful.' Financial gains can lead to complacency, which can ultimately lead to failure. Fight complacency, but enjoy the ride. And show genuine gratitude for those who are toiling alongside you."

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