Management Talk: 10 cardinal rules for survival

These “Ten Cardinal Rules” for a construction company, when followed, keep you focused on the survival of your construction related business. They are difficult to follow because they require discipline. They are successful because if you acquire the discipline to do these things, you will have the discipline you need to get a business running and keep it successful.

1. You shall return all phone calls the same day.
This means return every call, regardless of who it is from or what you think it is about. Return that call the same day or by 9 am the next day. Why should I, a potential customer, spend money with your company if you won’t extend the simple courtesy of returning my call?

2. You shall keep ALL appointments, and on time.
Your first promise to your customers is that you will be on time to your appointments. If you are late, or if you don’t show up at all, you have broken that promise. Why would I want to do business with someone who breaks their promises?

3. You shall present yourself to your customers and the public in a professional manner at all times.
Whenever you are in public or on a sales call, make sure you are properly dressed and groomed, and that you conduct yourself as a professional at all times. Carry with you all the necessary forms to do business, as well as a camera, tape measure and any tools needed to do your job.

4. You shall keep your ego in your pocket.
Your customers do not care how much you know until they know how much you care. Keep your opinions, ideas, advice and any design work in your pocket until you have established a good rapport with your customers and have gained their trust.

5. You shall interview the customer to see if they qualify to buy from you, not if you qualify to sell to them.
Go on sales calls to establish a relationship with the potential customer and to determine if they are a qualified buyer. Don’t go on sales calls to be interviewed, provide free design work or give out free estimates.

6. You shall get written quotes on all items that exceed $300 on your estimate.
Stay focused on the task of acquiring accurate numbers on your estimate sheets. Don’t fall into a trap of thinking your time is too important to compile an accurate estimate. Inaccurate estimates can bite you, and the time spent getting an accurate estimate will make up for the money lost on a cost overrun.

7. You shall determine your correct markup and use it without fail.
Take time to analyze your overhead expenses and do the math to establish an accurate markup or gross margin for your business. Then stick to the numbers like glue. Don’t cut price or give things away free. Get paid for all you do. Any other approach is financial suicide.

8. You shall honor your overhead budget at all times, and spend not otherwise.
That means no toys that are not in your company budget. Set the budget each year during a six-week end of the year planning period, and that’s when you decide what is needed and what is not. Then stick to your decision.

9. You shall continue your education on a daily basis.
Reading one hour each day, attending classes and staying informed will do more for the financial success and long-term survivability of your business than any other one thing you can do.

10. You shall take a fixed salary from your business each month.
That means paying yourself and your spouse a fair salary for the work you do to own and run the company. This is an overhead expense, not to be confused with profit or wages for working on a job (which is a job cost expense).

Michael Stone has more than four decades of experience in the building and remodeling industry. He wrote the book, “Markup and Profit; A Contractor’s Guide,” published by Craftsman Book Co, and his second book, “Profitable Sales, A Contractor’s Guide,” was just released. Michael offers Coaching and Consulting services for construction companies throughout the U.S., as well as products for business management, and is available for speaking engagements. He can be reached by e-mail at, by phone at 1-888-944-0044, or on the web at

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