Parks & Deck Creation with Bobby Parks

DECK CREATION BOBBY PARKS

UNIQUE projects, such as this stylish Middletown, N.J., deck built by Decks by Kiefer LLC, which won third place in NADRA’s National+ Deck 2021 Competition, is an example of the high quality of work necessary to successfully scale a business. (Photo by Decks by Kiefer)

How big should your company be?

As a deck builder or outdoor living contractor, how “big” do you need to be in order to be profitable and successful? Can you meet your financial goals doing $500,000 a year or is $1 million the mark you should be shooting for? Do you possess the experience, skills, and drive to grow to be a multimillion-dollar business? Or, can you maintain your company at a smaller level and still be profitable enough to create financial stability?

The simple answer is you need to be big enough to achieve your personal goals. It’s less about size and more about having a realistic plan, predictable profitability, balance of sales and production, and a manageable process of operations. It should be about being one of the best in your market. It has everything to do with the quality of the projects you design and the process in which you deliver them. And it’s about having balance in your life and feeling proud of what you do.

The majority of deck builders are smallervolume contractors with many operating only one crew. Fewer operate in the multimillion dollar range. All sizes and models include challenges, benefits, and risk. So, there are no right or wrong answers as there are ways to be successful or fail with either. From a financial standpoint it’s not about how much you gross, but more about how much you net. There are smaller companies that work off higher margins and multimillion-dollar operations that work off lower to average margins. Some of the better larger companies do both volume and strong margins.

Self assess. To determine if you even want to grow larger, ask yourself these questions: Do you have the organizational and business skills to scale your business to a higher level? Do you have or are you willing to implement systems that assist with this? Do you have the motivation, discipline, desire, confidence, and commitment to undertake all involved? Are the market demographics in place and is the labor force available?

Other factors to consider include your personal makeup and limitations: your self confidence, drive, leadership abilities, technical skills, sales ability, people skills, and competitive mindset.

Growth at a certain point requires you to remove yourself from the field to work and manage a business. You will need to insert people into positions and delegate duties as you scale upward. This increases the fixed overhead cost.

All things being equal, a smaller company won’t provide the same profits as a larger one. At the same time, depending on how organized

a company is, the headaches and risk grow with size. The mission is to maximize profit. It boils down to running an efficient business, and tracking and maintaining targeted profit margins through job costing.

Whatever size you target, you need an annual business plan that you create, monitor, and track versus just moving forward from day to day and crunching the numbers at the end of the year with hopes you show a profit. Size is determined by your sales and production capacity with the gross sales and margin formulas included. Technically, the higher the net margin, the lower your sales could be. At the end of the day, it come’s down to hitting sales numbers and net margins that provide you financial security. The buildout capacity has to be in balance with the sales each year to fully gain the profitability benefits. Creating efficiencies and a strong reputation that allows you to increase actual profit margins makes it easier to flourish as a small building contractor.

I believe you’re going to be better off with a goal to grow your crew to a size that doesn’t require you to contribute physically full time each day. This opens up a path to be able to be a contractor longer as you age. Considering the hiring challenges today, most deck builders may be better off developing and refining a smaller- to medium-size company. This model will be easier to staff and maintain the quality and service standards that you want to be known for. What you may lack in production can be made up in margin if approached properly.

Once you’ve achieved this level with efficient systems in place that are scalable, you always have the choice to take it to another level. And keeping overhead low likely positions you better to handle downturns when, and if, they occur.

So, how big does your company need to be? That’s entirely up to you. But base it on it being the size and type of company that you can be proud of. Don’t overreach. Self assess and you’ll know.

Bobby Parks is a nationally known contractor who has delivered over $40 million of outdoor living projects. He is founder and former owner of

Peachtree Decks & Porches

LLC and current president of

BP Consulting & Design LLC.

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