“Two roads converged in a wood and I took the one less traveled by, and that has made all the difference.” ~ Robert Frost
Every mature industrial company is nothing more than the net result of the management choices made from the beginning. Put yourself in the mind of a contractor. Think back to the very first project you took. That was your beginning.
Throughout 2026, we will be taking a “thought” journey together through the management choices made along the way that resulted in the company you are currently concerned with. This thought journey starts like this:
- What was the first job you took?
- How did you find out about it?
- Did you have to submit a bid? Were you invited? Were you an independent sub?
- Why did you take it?
- Did you form a legal corporate entity at that point?
- Did you start to keep books from the beginning? If not, did you formally record your “business” activity? Was it for just income tax purposes? Or otherwise?
- Did you make a profit?
- How did the first job lead to the second job?
- Was it comparable in size and skill level? Much bigger? Smaller? More complex?
- Did you have to expand your company’s capability to take on the second job? Take on a partner? Hire additional skilled labor? Hire a secretary? Bookkeeper?
- How did you expand your capability to handle simultaneous projects?
Professional Business Management
All ongoing business management is about making choices. Your existing business is the net result of the choices you make. Some were good choices. Some not so good.
The question is how do we distinguish the good choices from the bad? That is the main area of interest of professional business managers.
- Did the choice advance the company’s well-being?
- Should I make this same choice again to achieve a similar result in the future?
- How do I evaluate and measure the positive or negative impact of a decision on the company’s bottom line?
In business management the choices can be separated into two distinct categories: 1. Profitable choices. And 2. Unprofitable choices. To evaluate the efficacy of business management choices, professional business managers ask the following question:
Did the choice contribute to the bottom line or take away from it?
Easy to Ask – Tough to Answer
This simple question is not so simple to answer. Why did you make a profit on one job but suffer a loss on another?
- Did you bid too low?
- Was your crew too green?
- Did bad weather put you behind?
- Was the job too complicated or high tech?
- Did you choose dependable subs?
- Was the owner a nightmare?
- Were your eyes too big for your belly when ambition encouraged you to attempt a project that was much too big for your people to handle?
- Did you take the job because your cash flow was drying up, not because you thought you could make money doing it?
What was the Monetary Impact of Each Decision?
- How much money did that inexperienced project manager cost me?
- How much money did I lose using the low bid concrete supplier rather than the more expensive but established supplier?
- As it turns out, leasing earth moving equipment would have cost the job half of what buying all that equipment ended up costing.
- Inexperienced labor was not “cheaper” than experienced labor because they turned out to be considerably less efficient on this job.
- Trying to save money by not staffing up my bookkeeping department made a mess of billing and collecting and doubled my interest costs on the funds I had to borrow to finance ongoing operations.
The Science of Business Management
The science of business management asks all the questions above and evaluates the impact of each decision on the company’s balance sheet. With this information in hand, the science of business management goes on to identify the profit pitfalls hidden in future business activity and formulates a sound decision making plan based on the history of both positive and negative outcomes.
The Decision Tree
Next week we will make management decisions starting from the very beginning and demonstrate how to execute a “Decision Tree”.
For more information on making advantageous business decisions, read more at: DECISIONS
For a broader view of the science of business management, read more at: MANAGEMENT
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Please circulate this widely. It will benefit your constituents. This research is continuous and includes new information weekly as it becomes available. Thank you.
