Some dreams are just too good to pass up

Running Head: SOMETIMES THE DREAM IS TOO GREAT TO PASS UP 1

WS5A5 Final-Hartman.doc

Sometimes the Dream is just Too Great to pass Up

Jerry Hartman

Indiana Wesleyan University

MGT302 Management and Leadership

January 29, 2013

Dennis Stull, Professor

I have read and understand the plagiarism policy as outlined in the syllabus and the sections in

the Student Bulletin relating to the IWU Honesty/Cheating Policy. By affixing this statement to

the title page of my paper, I certify that I have not cheated or plagiarized in the process of

completing this assignment. If it is found that cheating and/or plagiarism did take place in the

writing of this paper, I understand the possible consequences of the act/s, which could include

expulsion from Indiana Wesleyan University.

Sometimes the Dream is Just too Great to Pass Up 2

Steven King says in his book On Writing to always describe the weather. It was cold and

snowing beyond the insulated glass witnessed from a booth inside at the Brentwood Panera. The

great falling of white death that was predicted would fizzle out to an un-measureable dusting.

One may wonder why discuss the weather in a paper for business management but the outside

cold and dark was reflected in the resident of the booth. Michael known as the Man in Charge of

American Renovations LTD., a window and door contractor, a renovator of damaged houses

back when mortgage money was available, and a expert in fenestration, was facing a blizzard all

his own. We shall not dwell into the personal issues facing him but peek at the professional

conflicts that were blowing like a freezing wind through his mind. Michael was a grandfather

with over forty years in the remodeling and building materials. His friend Jay was going to quit

his employment and start his own business in sporting goods; not basketballs and bats but gym

and fitness equipment like the moveable basketball backboards found in schools and YMCA

gyms. Jay was the supplier and installer of the equipment so in Michael’s thinking they were

both contractors facing the same challenges and problems. Jay, who held a bachelor’s degree

from Bowling Green University, was a young father with the second on the way. Michael was

infected with a melancholy from small voices in his head silently screaming,

“What makes you think that you can help anyone you looser? Remember the Window

King? Bankrupt. Brand manager for Kolbe Windows, blew it didn’t you? Think you can teach

anyone management skills? Ha.”

Michael knew that if he was going to attempt his own company again he needed to learn from

those mistakes because mentoring others was part of his core values.

The central thought that infected his thinking was how an owner of a small remodeling company

engages modern management techniques to build a successful business? What help is available


to a one person organization? Others have succeeded, where did they win where Michael felt he

lost? What actions should someone who wants to be an entrepreneur before having business

cards printed and start developing a website? What information is important and what is junk?

There are 161,000,000 Google listings for small business management skills, intimidating at the

least.

He knew that it was not a great source but he had read that entrepreneur and management of a

business was not the same. Some entrepreneur needed to hire a manager. He listed some

opinions from a LinkedIn discussion from August of 2010.

Entrepreneurs are happy to run off and create new worlds. Managers prefer to grow

existing ones. Either will be benefited by a charismatic personality.

An entrepreneur has a vision and the manager makes it happen. Mangers alone are not

visionaries, but need guidelines to complete tasks. Entrepreneurs are bored by the day to

day of business, but get overly excited when presented with new possibilities. At least

that is how it works for me!

An Entrepreneur is more of a hunter looking for the next kill, but a Manager is more of

shepherd taking care of his flock.

The manager manages risk; the entrepreneur takes them.

He wondered how to begin with so much information, but remembered how do you you eat an

elephant, one bite at a time.

Michael remembered Clark Swanson the always impeccably dressed representative for dealer

financing at 5/3 bank. He said that the average lifespan for a home improvement company was


one year, one month, one day, a statement that was brought home to Michael from Walt

Steppenwolf in an article in Remodeling Magazine entitled Getting Started,

“Unfortunately, particularly among small companies, the failure rate measured over a

five-year period is high. New owners often don't know how to run a remodeling company

-- or don't know what to expect when they launch one.”

A study by The Joint Center for Housing Studies at Harvard University entitled The Performance

of Remodeling Contractors in an Era of Industry Growth and Specialization stated

“Small non employee remodeling firms compared to new residential construction

industries, general remodelers had a higher one-year failure rate in 2004 than both new

single-family contractors and new housing operative builders. As mentioned previously,

general remodeling contractors had an overall business dissolution rate of 12.9 percent,

but examining failure rates by the size of the business (in terms of payroll expenditures)

clearly shows that smaller contractors are much more likely to exit the remodeling

industry (Figure 14). Twenty-two percent of contractors that had payrolls of less than

$30,000 in 2003 were no longer operating.

Walt Steppenwolf in an article in Remodeling Magazine

“Unfortunately, particularly among small companies, the failure rate measured over a

five-year period is high. New owners often don't know how to run a remodeling company

-- or don't know what to expect when they launch one.”

A study composed by Abbe Will and Kermit Baker for The Joint Center for Housing Studies at

Harvard University entitled The Performance of Remodeling Contractors in an Era of Industry

Growth and Specialization stated


“Small non employee remodeling firms compared to new residential construction

industries; general remodelers had a higher one-year failure rate in 2004 than both new

single-family contractors and new housing operative builders. As mentioned previously,

general remodeling contractors had an overall business dissolution rate of 12.9 percent,

but examining failure rates by the size of the business (in terms of payroll expenditures)

clearly shows that smaller contractors are much more likely to exit the remodeling

industry (Figure 14). Twenty-two percent of contractors that had payrolls of less than

$30,000 in 2003 were no longer operating in 2004, a failure rate almost ten times higher

ten times higher than contractors with payrolls of $350,000 or more.”

Michael did not want to fail again, or share any advice with Jay that would cause him

failure. Michael remembered the sermon from Pastor Ken two week ago about Christ is our

foundation. If one had asked Michael what the foundation of a business was he would answer

profits or at least cash flow. He was pleasantly surprised to discover the foundation of a business

is planning. He had thought of business plans as being an instrument for acquiring venture

capital. A Google search for business plan brings up 2,070,000,000 hits. Ok small bites. The


Small Business Administration teaches in their article, Ten Steps to Starting a Business, the first

activity a eager entrepreneur needs to do is write a business plan.

A business plan should include

A snapshot of your company and who is in charge.

A description of the company.

A market analysis.

How is the company organized?

What are you selling?

How are you going to market?

Where are you going to get the money for it?

What do you forecast the company will do over the course of time?

A list of variables such as government regulation.

Linda Case says in her book Remodelers Guide to Making and Managing Money that before

starting a business these issues must be explored.

Your mission statement

Your vision Statement

Your core values

Unique offering

Your target market

Rhonda Abrams, in her book, Successful Business Plan sets forth the fundamental steps to the

business plan process:

1. Lay out your basic business concept.


2. Gather data on the feasibility and specifics of your concept.

3. Focus and renew the concept based on your data.

4. Outline the specifics of your business.

5. Put your plan into compelling form.

Ms. Abrams also includes this quote from Eugene Kleiner, Venture Capitalist,

“Even if you have all the money you need, you still need a business plan. A plan

shows how you’ll run your business. Without a plan, you don’t know where you’re

going, and you can’t measure your progress. Sometimes, after writing a business plan,

you may change your approach, or even decide not to go into a certain business at this

time.”

Dwight D. Eisenhower once said: "In preparing for battle I have always found that plans

are useless, but planning is indispensable."

Not having a business plan was one of the reasons that remodeling contractors fail according to

J. Jerrold Hayes in 30 Plus Reasons Why Contracting Businesses Fail

The simplicity of the lessons reminded Michael of lessons learned in the past. Steve Covey

saying “Begin with the end in mind” in his book 7 habits for Highly Effective People and John

Wimber, founder of the Vineyard Church movement, called it “Planning your future in advance.”

One of the lessons Michael heard years ago, from Tom Hopkins author of How to master the Art

of Selling, in a seminar, was you cannot control the numbers you can only control the activity.

Simply put, make a plan, work it and stay focused on the goal. A business plan would lay

everything out in writing. In Michael’s words, what are you about, what do you believe, why

should anyone choose you, and how are you going to do it? Goals, was the word that came to


mind. "Goals in writing are dreams with deadlines." Brian Tracy – “Dream Big, but be sure to

have a plan, or else you'll just keep dreaming.”

Michael knew from experience and reading Victoria Downing in a Remodeling Magazine

entitled Goals for Sales Excellence where she wrote that goals needed to be SMART

Specific – Measurable – Attainable - Realistic - Tangible

Richard Steven’s article The Three Steps of Management from Remodeling Magazine explains

that high performance is the result of building on a solid foundation of the basics which are:

Set goals, Monitor and Adjust

A business plan with specific goals seemed like a simple idea for Michael but he knew it

was not easy work. He also knew it was what was missing from his past ventures. He understood

that running a business was not all fun and games even if every detail was planned out. It was

war.

“I have studied the enemy all my life. I have read the memoirs of his generals and his

leaders. I have even read his philosophers and listened to his music. I have studied in

detail the account of every damned one of his battles. I know exactly how he’ll react

under any given set of circumstances. And he hasn’t the slightest idea what I’m going to

do. So when the time comes, I’m going to whip the hell out of him.”

General George S. Patton

“What makes the difference between a winning general and a losing general? The

winning general has the strategies to enable him to outthink, what makes the difference

between a winning general and a losing general? The winning general has the strategies

to enable him to outthink, out plan, and outmaneuver his foes, just as you have to

outthink, out-plan, and outmaneuver your competitors in business. The only difference


between fighting a war and competing in business is the battlefield on which you

compete. Whether you realize it or not, everyone in business is engaged in “business

war.” Think about it.”

The former is found in the essay, You’re in Business War Whether You Know It or Not, written

by Ken Brodeur on the web site Strategic Planning.

We have a plan but how does one manage the business though? Michael would give the advice

get Quick Books Pro for accounting, but he also knew that if the numbers were not inputted

correctly and faithfully, then the owner would be looking at false information. He also

understood the hardest aspect of selling on your own, what he believed killed more remodelers

than anything else, and how he was deluded years ago was the financials. Michael was Vinyl

Kraft Windows dealer of the year in 1998 their top producer for units with an independent

dealer. He personally took home a total $18,000 that year.

Walt Stoeppelwerth in his article from Remodeling magazine relates

“For some time I've been giving a seminar aimed at smaller contractors -- those under

$600,000 –called "Small But Smart." During the session, I always ask how many people

in the room mark up their work 50% or more. Invariably, fewer than one out of 10 will

raise his hand. The most common mistake made by newer remodelers is that they have no

idea what the markup over cost must be in order to make a profit. As has been stated

many times in this column, the minimum markup is 50%, and as a company grows, it is

67% and even higher. In the handyman business, the labor figure is over 100%. The

biggest reason for this misunderstanding about markup is that most small company

owners have never taken courses or attended seminars that show them how to break down

job costs”


J. Jerrold Hayes in 30 Plus Reasons Why Contracting Businesses Fail adds to our understanding

“No Understanding of Pricing -Boy this is a big one in my estimation. This means

understanding both the concepts of markup and overhead recovery and how to estimate at

least semi-accurately. Poor pricing decisions - Even with an accurate estimate, some

contractors still would want to shave off their bid price just to ensure that they are the

lowest bidder and would eventually win the job. Although dropping prices is a pricing

strategy, it is most of the time not sustainable and should be looked at as a short-term

strategy.”

What financials are important? The book The Remodelers Guide to Making and Managing

Money by Linda Case relays the basic financial reports that you should be receiving regularly.

What You Need

Profit and Loss

Balance Sheet

Job Cost

Cash Flow Projection

Annual Budget

When You Need It

Monthly

Monthly

Weekly or Bi Weekly

Weekly

Annually, Realigned Quarterly

Judith Miller writing for Remodeling Magazine in an article she calls Ratiocination; the five

ratios will tell you if your company financials are improving or moving you closer to the edge.


The Ratios are

Sales ÷Total Assets

Net Profit ÷ Total Assets

Working Capital ÷ Total Assets

Retained Earnings ÷ Total Assets

Equity ÷ Debt

Michael wanted to add another ratio that was gaining credence in direct sales organizations

taught by Jim Cory in his article Measuring Up, in Exterior Contractor Magazine, is Net Sales

per Lead issued (NSPL). Cory believed it was a stronger indicator than close ratio or demo rates

because of the raising cost to gain a prospect.

Ok Michael thought, business plan, marketing plan, work the plan, mission statement, vision

statement, who are you, your customers, your offers, and why you should be chosen. We have

added financial to watch for. In his mind though was a nagging concern that haunted him and

caused him to make mistakes in the past. The lone owner, working by him or herself, sometimes

http://www.prosalesmagazine.com/Images/ratiocination_graph_tcm71-1620985.png


you need to share victories or defeats. Michael wished that he had an advisor to turn to years ago

when he made the decision to change his marketing in order to smooth out the selling cycles. He

wished that he had a bookkeeper to rip off the rose colored glasses he wore when looking at his

sales figures. He wished that he would have listened to his gut that things were not right and

changed some installation crews. He was blinded by his desire to help people and did not face

the reality that his customers, his primary responsibility, were being shortchanged. A loss of

confidence was something that he knew from experience.

NARI, The National Association of the Remodeling Industry has a daily newsletter and each

week they have a feature entitled the big five, where expert answer five questions posed to them.

Shawn McCadden wrote on this concern.

“Biggest challenge: I have recently started working with several new clients who first

called because they felt they were losing confidence in themselves. After a bit of

discussion, we agreed that each of them had really lost confidence in their businesses and

business systems, not in themselves. My best advice: It’s a whole new world out there.

Most of the old methods used to conduct business, motivate employees and attract work

no longer produce adequate results. Successful remodeling business owners must be self-

confident. At the same time, to remain self-confident you must also be confident about

how you do business. If I’m describing your situation, ask yourself how long you plan to

tolerate mediocre or inadequate returns for all your effort. Find the help you need to

identify and implement what you and your business must do to build a new and

sustainable business that prospers regardless of the economy. Build a business you can be

confident about.”


Michael thought where one could get help if they needed it? He would have started classes to be

a Certified Remodeler through the Home Builders Remodeling Council if he had not started

online college in order to finish his degree. He would include information about that in an

addendum. The courses taught covered all aspects of running a business including how to use

technology and accounting principles. He remembered having a prejudice against the remodeling

trade associations because his friend and employer Mike Gilkey was bothered by the other

members trying to gain information from him. Tim Sanders in his book Love is the Killer App

shares that we should share our knowledge, network, and compassion. Michael believed that it

was sound advice that fit into his values. He had learned about the Christian Business Network

meetings held each month. He did not know if the National Sporting Goods Association would

be a help to Jay but it was worth looking into. He thought about his Bachelor’s of Andersen

(Windows) Degree and how he could count 16 certificates from various manufacturers and eight

from seminars and training courses. Most suppliers concentrated on product knowledge and not

business skills. He was registered for training through both Simonton and Mastic both which had

great information on marketing; a subject which was constantly changing.

Education, what you don’t know either learn or hire someone. There are resources

available. Find someone to partner with, a mentor, and a friend you could share with. Michael

thought ministry leadership 101, join an accountability group. Michael wasn’t quite sure if he

had asked and addressed all the questions and challenges before him. It was time to scribble a

mind map and engage SWOT analysis. Make a plan, work the plan, and be willing and brave

enough to take the first step, one bite, and one step at a time. Bob Goff says in his book Love

Does, “I used to be afraid I wouldn't make enough money; now I'm afraid I won't make enough

difference.”


References

Abrams, R. (2010). Successful Business Plans: Secretes and Strategies. Palo Alto, CA: The Planning Shop. Retrieved 2013

Brodeur, K. (2010, feb. 2). You're in business war whether you know it or not. Retrieved Jan. 22, 2013, from strategicbusinesstools.com/Blog/you’re-in-business-war-whether-you-know-it-or-not-: strategicbusinesstools.com/Blog/you’re-in-business-war-whether-you-know-it-or-not-

Case, L. (1998). Remodelers Guide to Making and Managing Money. Washington D.C.: Remodeling Consulting Services.

Cory, J. (2012, Oct. 18). measuring up lead return now key metric. Retrieved Jan. 2013, from http://www.replacementcontractoronline.com: http://www.replacementcontractoronline.com/sales/measuring-up-lead-return-now-key-metric.aspx

Downing, V. (2003, October). Goal Setting for the Sales Proffesionals. Remodeling, p. 27.

Editorial. (n.d.). Thinking about starting a business. Retrieved from http://www.sba.gov: http://www.sba.gov/category/navigation-structure/starting-managing-business/starting-business/thinking-about-starting

Hayes, J. J. (2005, December 11). paradigm-360.com/management/30 plus reasons why contracting businesses fail. Retrieved Jan. 26, 2013, from paradigm-360.com: www.paradigm-360.com

McCadden, S. (2013, May 13). Real Remodeling Challenges, Real Remodeling Solutions - daily 5 Remodel. Retrieved Jan 22, 2013, from www.daily5remodel.com: www.daily5remodel.com/index.php?action=article&rowid=1672

Miller, J. (2012, Sept. 17). http://www.remodeling.hw.net/finance/ratiocination.aspx. Retrieved Jan. 26, 2013, from http://www.remodeling.hw.net: http://www.remodeling.hw.net/finance/ratiocination.aspx

Rigg, A. (2007). How to Beat the 80/20 Rule in Sales Team Performance. Scottsdale, Az: Performance Press. Retrieved Jan. 2013

Steven, R. (2011, Oct. 18). owner-issues/the-three-steps-of-management. Retrieved Jan. 22, 2013, from www.remodeling.hw.net: www.remodeling.hw.net/owner-issues/the-three-steps-of-management.aspx 2/

Stoeppelwerth, W. (2004, mar. 2). www.remodeling.hw.net/remodeling/getting-started.aspx 2/. Retrieved Jan 22, 2013, from www.remodeling.hw.net/remodeling/getting-started.aspx 2/: www.remodeling.hw.net/remodeling/getting-started.aspx 2/


Addendum

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Some dreams are just too good to pass up