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1Call2Build—Our Blog

Here are some thoughts and insight on our business and the construction industry in general. We update our blog regularly to keep you informed and entertained.

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October 3, 2017

Business Owners, It’s Time to Get Real.

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Mark’s three-part succession planning series will examine why a succession plan is important, questions business owners must ask themselves before planning, and elements of a succession plan.


Thinking about the life of your company after you is hard. We’d all like to believe that one day each of us will ride off into the sunset, confidently bestowing the sweat, sleepless nights and responsibility to a capable successor who will continue business as usual while we enjoy the financial dividends of our lifetime achievement. A clean, simple transition. Later. When you’re ready.

Leaders, it’s time to get real. Three in five small businesses do not have a succession plan in place and even large corporations have been known to operate on the ledge without an identifiable succession plan. Historically, successions have not been well done. The lack of preparation – for planned and unplanned circumstances – may account for a number of business stumbles and failures following transition.

Start the succession planning process now by first answering a few tough questions. Give yourself time to reflect on the past and visualize the future:

  • How much money do you personally need for your own financial independence in retirement?
  • Have you enlisted the help of a certified personal financial planner?
  • At what age do you see yourself divesting from daily activities of the company?
  • What does retirement look like for you and your family?
  • Do you want to reward key employees for their support, loyalty and performance?
  • Are there likely successors in place with the knowledge and capability to be leaders?
  • Are they ready now, or do you need to cultivate their knowledge and capability further?
  • Will you consider an external successor?
  • Do you wish to preserve a family legacy?
  • Have you enlisted the help of an attorney?
  • What happens to the business in the event of your untimely death or disability?
    • Who will fill the leadership void? Is their assignment temporary or permanent?
    • Who will communicate with employees and “calm the storm”?
    • Who will make financial decisions?
  • Do you have a strong cash flow and balance sheet to maximize valuation?
  • Have you enlisted the help of a certified public accountant?
  • How is the value of the business determined?
  • Have you enlisted the help of a certified business appraiser?

I’m an advocate for professional assistance from a certified financial planner, attorney, accountant and business appraiser. Professional expertise is critical to a successful transition plan. Once you’ve answered the questions above, you’re ready to enlist professionals and build the team that will lead you to a successful transition.

 

In the final installment of Mark’s three-part succession planning series, he will share the steps and key elements of an effective plan that maximizes financial independence for the business owner, and provides stability for the company. 


Mark Schwei is an equity partner and member of Consolidated Construction’s executive team, which designed and implemented its own succession plan strategy. He is an engineering graduate of Marquette University and imparts his love of details, practicality and ingenuity on matters related to company leadership. Mark continued his executive education through the University of Wisconsin on the subjects of Business Planning, Mergers and Acquisitions, and Sales and Marketing Management, and received specific training in the area of succession planning from national experts. Mark is a leadership mentor and business coach to chief executives as current Chairperson at The Executive Connection (TEC).

October 3, 2017

Why Plan Your Company’s Future Now? Millennials Know.

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Mark Schwei’s three-part succession planning series will examine why a succession plan is important, questions business owners must ask themselves before planning, and elements of a succession plan.


For as much discussion taking place on issues facing each generation in our current workplace – Baby Boomers, Gen Xers, Millennials and now Gen Z Post-Millennials – rarely does the topic of succession planning receive much attention beyond Baby Boomers. At least, so we thought.

A June, 2016 online Harris Poll[1] survey among 502 U.S. business owners with fewer than 300 employees revealed that young business owners actually have a better grasp on the importance of succession planning than their elder counterparts. According to the survey, Millennial business owners are more likely to have a business succession plan in place (61 percent) in comparison with Baby Boomer (32 percent) and GenX (32 percent) leaders. Analysts theorize that the discrepancy is philosophical: Baby Boomers believing they’ll work in their current position until retirement, then hand the company over to a deserving family member or subordinate; Millennials hoping to run multiple companies and gauging success by how each is positioned before they leave.

Millennials get it. We may not all be on a straight line to retirement, and life happens unexpectedly. Succession planning ensures a healthy transfer of the business under a variety of circumstances and makes financial security a priority.  Succession planning also:

  • Aligns the leader’s personal financial and retirement expectations with the business enterprise.
  • Unites and creates clarity for first- and second-tier leaders.
  • Motivates employees. Within the succession plan, a performance-based profit sharing plan can attract and cultivate up and coming leaders.
  • Elevates confidence in the company from its trusted business partners: bank, legal counsel, accounting firm. Including these partners in the process from the start only improves that confidence further.
  • Provides a course of action for successors in the event of a leader’s untimely disability or death.
  • Preserves a family legacy through careful planning and design.

Like your financial planner says about retirement savings, “Start early.” Millennials who have already started succession planning in the prime of their careers reap benefits that compound over time: more clarity, more motivated staff, higher confidence from trade partners. Although it’s never too late to start, those who start early have the most leverage and long-term security.

 

 

[1] The Small Business Owner Study was conducted online by Harris Poll on behalf of Nationwide from June 10-23, 2016. Respondents comprised 502 U.S. small-business owners of companies with less than 300 employees, and included 190 Millennials (ages 18-35), 152 Gen Xers (ages 36-50) and 106 Baby Boomers (ages 51-65). Results are weighted to be representative of small-business owners in the U.S. Research participants were drawn from the Harris Poll Online (HPOL) research panel and partner sample.


Mark Schwei is an equity partner and member of Consolidated Construction’s executive team, which designed and implemented its own succession plan strategy. He is an engineering graduate of Marquette University and imparts his love of details, practicality and ingenuity on matters related to company leadership. Mark continued his executive education through the University of Wisconsin on the subjects of business planning, mergers and acquisitions, and sales and marketing management, and received specific training in the area of succession planning from national experts. Mark is a leadership mentor and business coach to fifteen chief executives as current Chairperson at The Executive Connection (TEC).

September 26, 2017

Do the Long Term Benefits of “Green” Design Elements Outweigh any Potential Higher Costs?

Ask A Pro_9

Q. Do the long term benefits of “green” design elements outweigh any potential higher costs?

A. While a desire to incorporate certain green elements into a commercial construction project can sound daunting, an analysis of commercial construction data shows us that a significant number of projects report minimal or no cost increase to incorporate reasonable levels of sustainable design. So, the answer is yes.

Of course, depending on the type, scope and size of a project, there can be additional initial cost when incorporating green design elements into a project. But many studies show that the average increase in first-cost premium can be as low as 1% to 2% to include moderate levels of sustainable design.

With that being said, one of the keys to incorporating green elements into a building project is to have a greening discussion early in the design process. Many issues pertaining to initial cost overruns can be alleviated by developing a dialogue early in the schematic phase by the design and construction team, subcontractors and material suppliers. The requested green elements should be clearly outlined and detailed during the design development phase, confirming the capital and operating benefits over the expected life of the building are real. By providing that information, the building owner will have a better understanding of the true value of such an investment.

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July 27, 2017

How do I Compare Construction Bids Apples to Apples?

Ask A Pro_plans

Q.  How do I compare construction bids apples to apples?

A.  You’ve heard the advice, “Get multiple bids.” However in order to accurately compare, you must be looking at the same scope, product, specifications, materials, and quality of work. Even within specialty trades, contractors are diverse in their quality, experience, materials and methods. Comparing bids apples to apples is nearly impossible, and leaves much to the imagination. Rather, the goal should be to achieve a complete understanding of what work will be produced within the scope of each bid.

The lowest bid is not necessarily the best bid. In fact, it may be a red flag that indicates inferior materials, a misunderstanding, or corner-cutting on quality or code compliance. In some instances you may be presented with a low bid only to be surprised later with expensive change orders for extras or upgrades. Good contractors are respectful of your expectations and seek to understand that information up front.

In the best scenario, a system is set in place for design and estimating that work hand in hand. A preliminary budget is set early, and the design is “married” to the budget as it develops. Final bids are based on a detailed design that most accurately reflects the owner’s intentions.

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June 26, 2017

Can you Describe What Goes Into Creating an Initial Estimate for a Construction Project?

Ask A Pro_9

Q.  Can you describe what goes into creating an initial estimate for a construction project?

A:  An early stage estimate of the project cost differs from a construction budget, as it relies on the contractor’s past experience and involves some art and some science. It allows the Owner an opportunity to organize funding sources and plan actual expenditures in advance.

Relying on information and plans that may not be complete, the estimator must blend known data, such as a building’s size and scope, with other details based on unit costs, assumptions, historical data and best judgment. As the design is refined, the final budget is based more on solid information.

When creating a preliminary estimate, the estimator first must assess the level of detail of the plans to determine the best method of approaching the estimate.  He’ll then assess the site and existing conditions, considering overhead power lines, presence of hazardous materials, site grades, etc. that will require additional scope and labor.

Estimators next must prepare accurate quantity take-offs based on the plans, determining the materials needed and factoring seasonal effects and price trends. The estimator will then extrapolate the associated labor needs, wage rates and equipment needs to install. Finally, general project requirements such as permitting, insurance and design fees are also incorporated.

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