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back to: Home | Test Your Business

How Close You Are To Owning a Business That Gives You Financial Freedom?
Ron Roberts & Guy Gruenberg

1) How much of your work is negotiated?

_ Less than 10%
_ 20% to 50%
_ More than 50%

2) How do you generate the bulk of your leads?

_ Word of mouth.
_ Yellow Pages advertising.
_ Through a systematic prodding of referrals, relationship building, and targeted advertising.

3) How accurately do you predict the cost of work?

_ We almost always run late and use more hours than budgeted.
_ Individual jobs run long and short, but on average we do pretty well.
_ We rarely run over budget.

4) How thoroughly do you plan?

_ We live day by day.
_ We create an annual budget, project schedules, and two week activity plans.
_ For the most part, we create detailed marketing plans, financial plans, sales plans, and operations plans.

5) How much time do you devote to improving your company's systems and structure?

_ Very little if any.
_ Only during the slow season and not more than 20% of my time then.
_ Almost all of my time.

6) How much turnover do you suffer yearly?

_ Close to 100%.
_ 30% plus or minus.
_ Less than 10%.

7) How well do you understand your financial statements?

_ I don't.
_ I understand the income statement but not the others.
_ I understand them well and review them frequently to see how well the company is doing.

8) How big is your line of credit?

_ I don't have one.
_ Less than 5% of my annual sales.
_ I don't need one because I receive all my money within 30 days.

9) What do you do when one of your workers fails to perform his job correctly?

_ Scream at him, then fire him if he does it again.
_ Complain about him to my staff.
_ Sit down with him, explain my expectations, listen to his excuses, and try to coach.

10) How clearly have you established your employees' roles and responsibilities?

_ Nothing is written. I tell them what to do when I need something done.
_ We have written job descriptions but they are not very detailed and have never been updated.
_ Job descriptions are current. Employee responsibilities are reviewed and discussed frequently.


Each first answer is worth 1 point. Second answers are worth 3 points. Third answers are worth 5 points.
Your Score ____________________

Here's where that puts you:

10 - 20 pts

Join the crowd. The vast majority of contractors are going to score in this range.
They have created a job for themselves and run it pretty close to the edge. Typically, they are going to suffer during a recession and will be emotionally and physically drained by the end of the year.

20-30 pts

Hey, you're doing pretty well. Probably far better than the average contractor.
You're probably running a profitable business that is very comfortable to manage. Most contractors that score in this range have figured the game out well enough to find their place and keep things running relatively headache free. They're usually not growing much, but keep chugging along in both the best of times and the worst of times.

30-50 pts

Congratulations! You've built a REAL business, or are darn close to it. You are well on your way to creating financial freedom. Keep it up.

Very few contractors reach this level of performance. Those that do usually grow consistently until they reach the $10 million to $20 million mark, or whatever point the owner loses his passion for growing the company.

For contractors scoring near 50, the sky's the limit. Here’s to you!

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