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You do not have to aim for the luxury segment
Charging high prices, driving good cars and working with premium clients do not, in themselves, mean that you have built a sustainable business. In my experience, standard projects with clear procedures are easier to organise and repeat.
A business works where few things break down.
You can earn good money renovating premium properties and building expensive houses, but you constantly have to keep running on the hamster wheel. I often hear professionals in the luxury segment say: “We build one house a year. We do not even think about how to build 2 or 10. We simply do not have enough people!”
I believe owners need to make time to develop their companies and reduce the number of urgent problems. In expensive renovations, non-standard materials can make the work more complicated: for example, if an Italian tile cracks, you have to find a replacement and contact the factory. This is my example of a management challenge; it does not mean that there are no companies working in the luxury segment in Russia.
Start building your company
Let us return to the Italian tile example. Something has gone wrong: the tile has cracked. At this point, along with rushing to act, calling the factory and mobilising everyone, you need to think about why it happened:
- Perhaps the tools need replacing?
- Perhaps you need to hire a technical supervisor?
- Perhaps you need to replace the tiler?
You need to find the root of the problem and remove the cause of recurring failures. While you are doing this, the client may raise complaints. Therefore, resolve the immediate problem while considering how to change the process. You are building the company for the future while handing over the current project.
Trying to get everything done can leave you getting nothing done.
Introducing the 101 App can help prevent this kind of firefighting. It allows you to reduce the time spent creating reports, keeping management accounts and analysing business performance.
Provide service
An entrepreneur is someone who takes the initiative. If every task arises from the next unexpected emergency, it is useful to set aside time for planned work too: improving processes, quality and communication with clients.
Experienced entrepreneurs get off the horse when they see that it has died.
I used to want to take on every project I was invited to join: I thought that was service. Over time, I realised that an honest refusal can also be part of good service. If you accept an offer that you cannot fulfil, you create false expectations. There is strength in telling the truth. And the truth is not always “yes”. Working arrangements with clients and employees need to be discussed openly.
Whenever a situation is unclear, do not be afraid to pause the business and look for a systematic solution!
Do not hide from your clients
Many people ask whether tradespeople should be added to group chats with clients. We tried this, then decided against it. Tradespeople began to feel too important and could miss work because the client had allowed them to. Authority shifted from the foreman towards the client, making the tradespeople harder to manage. One advantage was that the tradesperson began to feel greater responsibility towards the client.
Since then, we have divided the company into two groups:
- Management: everyone above the foreman, excluding the foreman.
- Execution: everyone from the foreman through to the tradespeople, including the foreman.
Those who plan, and those who do the hands-on work. Everyone has a role, and we are all in the same boat.
Pay on time
The main rule for a successful manager is to pay wages on time. Right on the dot!
In my experience, regular payments give a tradesperson a sense of security and stability. For some employees, a predictable income matters more than a higher rate with a risk of delays. People’s priorities do differ, however.
Your task is to create conditions in which tradespeople can concentrate on their work. Financial difficulties at home can interfere with attention and performance. It is important to notice these situations and discuss them with the person concerned.
Learn to be empathetic and take a moment to ask whether everything is all right. After that, you can think about additional benefits, such as birthday presents or company celebrations.
Do not rush to raise prices
Before increasing prices, I suggest understanding your costs and how the work is organised. The cost of renovation depends on the scope of work, materials, the complexity of the property and contract terms. A price per square metre alone is not enough for comparison. In my own practice, I have encountered the following chain of decisions:
- The manager first discusses a price increase without checking whether downtime and costs can be reduced.
- A tradesperson senses weakness in the manager and wants to raise their rates.
- The manager is afraid of losing the tradesperson and agrees.
This chain can increase costs if higher rates are not accompanied by a change in productivity. When discussing pay, it is useful to consider both the rate per metre and the tradesperson’s monthly income. Managers should look for ways to reduce downtime and organise the work so that income growth is linked to results.
Within the 101 GROUP brand, we ran an experiment: we increased the rates for some items in our price list. From what I observed, tradespeople took more frequent breaks on that occasion: figuratively speaking, ten cups of coffee instead of two. This is a personal observation; it does not prove that raising rates reduces every tradesperson’s productivity.
Increasing the rates in a price list does not, by itself, guarantee higher productivity. For example, if 150 thousand rubles a month is enough for someone, they may prefer more free time to additional earnings. This is a hypothetical example of motivation that needs to be discussed with the individual employee.
Love what you do
In my experience, tasks that people dislike and have not mastered are harder to carry out carefully. Practice and feedback help people learn an activity; interest in it can also grow. The causes of mistakes should still be examined separately.
A manager is someone who leads people by the hand. Take your assistants by the hand and guide them until they come to enjoy a particular activity: creating reports in the 101 App, monitoring quality or preparing commercial proposals.
Wherever we look, there will be tasks at work that we do not enjoy.
It is important to build management skills gradually. If you do not understand a task well, it is harder to assess a candidate’s skills and the results of their work. Responsibility for the company’s development remains with the manager.
In my work, I use a financial model, management accounting and project analysis. These tools help us discuss decisions using concrete data and pass accumulated experience on to the team.
Look for curious people
Curiosity is one of the qualities I value in managers and leaders. If an employee is interested in new things and willing to learn, help them master more complex tasks. This can provide a foundation for development, but it does not guarantee that they will become a manager.
Some employees come to their manager with a question; others bring possible solutions. The ability to search for solutions independently can be developed through clear tasks, feedback and a gradual expansion of responsibility.
For some roles, I prefer to develop a person within the team; for others, I look for a specialist who already has the necessary skills. For example, the leader of a development team needs a deep understanding of the company’s tasks. In my experience, acquiring this can take several years; there is no universal timeframe. For a specific coding task, we can look for someone with the necessary technical skills. In both cases, the requirements depend on the role.
Focus on delivering projects
What should a company manager spend time on: finding clients or delivering projects? Where should the focus be? I am often asked this question.
If a manager focuses exclusively on finding clients, project delivery can suffer. Unfulfilled commitments create a risk of complaints and damage to reputation. I suggest paying enough attention to the quality of execution to ensure that the clients you attract receive the promised result.
Quality work creates opportunities for recommendations, but it does not, by itself, guarantee a flow of new projects.
Word of mouth (article in Russian) is one channel for attracting clients. In my experience, a recommendation from someone they know can give a company an initial degree of trust. The effectiveness and costs of this channel depend on the particular situation.
Think about your product and the quality of execution. This is the foundation of a company you can be proud of. It is useful to align marketing with your team’s capabilities: attract projects that you are able to complete.
Which of these tips suit your company? Discuss them with your team and choose changes whose results you will be able to check.
