PM's new columnist tells what's different and similar between plumbing and the business of contracting.

Just so you'll know, I'm one of those guys who gets jolly about running screw pipe in a brand new mechanical room. After cutting and threading 10 or so sections, I love to watch them line up in the trapeze, square with the building lines, elbows in perfect alignment. It's a great feeling to stand back and admire all that pretty work. (That's usually when I'll realize I forgot to figure for insulation!)

When I'm hauling my brood around town, which is just about always since five of our eight children are still at home, my teens will quietly nod their heads and lip sync the words, "See that building over there? I did the gas piping up on the roof ..." Then they'll sigh (I'm sure it's a sigh of admiration), "We know, Dad, we know." By now, they know most of the "historical landmarks" and the story that goes with each. I'm not going to stop bragging about the work, because my sweat and blood went into these buildings that will serve people for decades.

It takes a plumber to appreciate good plumbing, especially since the public never sees most of what we do. We compensate with a lot of pride in our work. We know what it means to do it right, we know the consequences of shoddy workmanship, and we know how important our craft is to the well-being of society.

It is not, however, just as a plumber that I'm writing this column. We're here to discuss the business of contracting, so I'm writing to business owners who happen to be in the pipe trades. This will be easy because the business side of our game is so similar to the profession we love. It's also easy because of the character of the people in this great profession. Almost daily, I meet someone new who cares about doing right things right, about offering fair value to his customers and being fair to his employees.

Laws Of Plumbing & Business

Good plumbing obeys the laws. I'm not merely talking about codes and regulations, but the laws of physics. Water goes downhill, expands when heated and can remove walls and bystanders when a superheated pressure vessel ruptures. We dare not ignore the law.

Business is no different. The law says you have to make a profit in order to grow, or even survive. The law says a limited supply with high demand drives the price upward and, conversely, large supply puts downward pressure on prices. We've all seen the sewer that runs uphill for a few feet or the gas line that's overloaded by a few thousand Btuh of demand. These might work for a while, but sooner or later the law will demand justice and exact consequences.

Another parallel between plumbing and business is that excellence largely takes place behind the scenes. When we admire a successful business, one with plenty of profits and a great reputation, we don't see all the effort and planning it took to build that business. We see a sharp-looking crew in crisp uniforms driving late-model trucks and think those guys have it made, never considering all the battles fought to get there. The owner applied the law of doing right things right and what we see is the outcome, the achievement of his goal.

Ignorance of the law is never an excuse. Obviously, some consequences are more dire than others. Five lavatory faucets on a half-inch water line won't work all that well if everybody washes at once, but it's only a nuisance. Plugging a T&P port or bypassing a low water cut-off could exact a much harsher penalty. For the business owner, ignoring a poor driving record or borrowing too much money could have the same explosive results. Most of us get away with infractions for a while, but the longer we ignore the law, the more we flirt with disaster.

A Planning Exercise

With this column, we'll explore several business laws over the coming months. To wrap up this month's edition, I'd like for you to consider one of the laws that applies equally to the trade as well as the business. It's simply stated as, "Failure to plan is planning to fail." Are you steering your business toward a goal or are you simply going along for the float trip to wherever the wind blows?

It's important when setting any goal to be specific. For example, two years from now might be March 15, 2005. Otherwise, two years from now starts acting like tomorrow, which means it's only a day away but never gets here.

Now ask yourself these simple questions: How much annual personal income would I like to have two years from now? (Or, to be specific, how much would you like to report on your W-2 for the year 2005?) And, if I draw 10 percent from the business, how much in total sales will be necessary to provide the income I so rightfully deserve?

What if you answered the first question with a reasonable $100,000 salary as the owner of your establishment? Simple math, one of the laws in this case, says if you want to take 10 percent of sales as your salary and you want your salary to be $100,000, then you'll need a million dollars in sales to get there. Pretty simple, so far.

Now you have a target; You're shooting for a million bucks. What if your sales are currently running at $500,000? What can you do to double that number? Practically every contractor on the planet could raise his prices to make a little headway. Some could even double their rates if they'd just do it. For most, it's going to require a little more effort.

If your business is construction, you won't have much room for a price increase, so you'll have to look at some other options. Getting more work done with the crew you have will help some but it's doubtful you'll be able to double production. Although you may be able to make some productivity gains with more efficient planning and scheduling, the fact is, you'll need to land more jobs and hire more people.

People require vehicles and equipment. Landing more jobs means bidding more jobs and managing those jobs when you land them. Do you currently have the capacity to take on this extra level of work? Probably not, so you need to be recruiting now in order to meet the goal that is looming merely two short years from now.

Taking the time to do this sort of planning is what your job as an owner is all about. After all, you're not making the big bucks for nothing, right?

Obviously, there's no guarantee that all your plans will succeed. We don't even have a guarantee of our next breath. I can guarantee, however, that if you don't have a goal, you'll never achieve it.

The business landscape is littered with failed contractors who didn't go through this basic exercise. The law caught up to them and they, along with everybody who did business with them, paid the penalty. Maybe you've been racing along, outside the law. When will it catch up to you?

Next month, we'll expand on the theme of goal-setting as we explore "The Dollars And Sense Of Vision." In the meantime, run, don't walk, to your nearest bookseller and get a copy of "Good To Great" by Jim Collins, published by Harper Business. This is a "must read" for anyone wishing to build something greater than "just a business."