Why You Must Learn How to P.A.N.I.C. to Be a Successful Contractor This list of 5 essential factors is the key to starting and running a contracting business that will remain successful as your competitors fall by the wayside.

In Start Your Own Construction and Contracting Business, the staff of Entrepreneur explain how you can get started in the construction and contracting industry. Whether you're interested in building homes or prefer contracting the services needed to get the job done, this guide will help you determine what type of construction or contracting business is right for you. In this edited excerpt, the authors outline five key traits contractors must have in order to help their business succeed.

Often the daily life of a contractor is chaotic and messy. Schedules are disrupted by weather and absent employees. Projects are delayed because supplies aren't available as promised. Clients call with change orders and seemingly inane concerns. Vendors call asking when payment will be made for merchandise. An employee thinks that his paycheck is incorrect, and two work crews need the same piece of equipment.

While many people would cower in fear or become completely unglued with crises, successful contractors and entrepreneurs thrive on activity, variety and challenge. They're able to step back from daily chaos and view the big picture, understand where it's all leading and forge ahead with the business of their business.

While successful contractors do not panic during challenging times, there are reasons why small-business owners should PANIC in order to be successful. While not inclusive or unique, the following PANIC list gives the important factors required to become a thriving and happy contractor.

P is for perseverance

Successful contractors exhibit steady persistence in spite of the many obstacles they meet each day. Running a business is a difficult, sometimes discouraging, undertaking. Entrepreneurs are able to stick with their long-range plans and not get sidetracked by temporary difficulties. Perseverance implies a great deal of optimism about the future and a strong passion for your work. If you really believe in the future and believe that your work is important to your community, you'll be able to overcome adversity, win clients, and own a respected, profitable and successful business. And having faith in yourself allows you to go further than others and rise to the top of your profession.

A is for accounting

A good sense of financial management is critical to succeeding as an entrepreneur. Because cash flow is the lifeblood of most businesses, including those in the contracting industry, timely management of income and expenses often makes the difference between a successful business and one that ultimately fails.

In many parts of the country, contractors have to contend with seasonal fluctuations of income and expenses, which makes long-range financial planning essential for success. Successful contractors establish a reasonable budget, use it to implement a competitive system for establishing prices, and regularly monitor both income and expenses to ensure that their financial management plan is on track.

Starting your own contracting business involves a certain amount of risk, but the risks can be greatly reduced by employing a sound and consistent financial plan.

N is for natural ability

In general, contractors are creative craftspeople who use their innate skills to develop their business. Some have the power of visualization and can "see" how the many elements of a project fit together. Others are masters of scale and proportion who can place individual elements together. Yet others are true artists who can make perfect individual elements that fit into the whole. Finally, successful contractors understand that many times "form follows function," and they use their skills to ensure that their creations not only look appropriate for their task but also "work." Whatever form or forms of creativity these entrepreneurs display, they all have full confidence in their own natural abilities, which allows them to forge ahead and take on the risks that are inherent in starting a new business.

Natural ability and creativity aren't limited to merely the physical aspect of a contractor's work. Creative accounting can save a contracting company thousands of dollars each year. Creative use of employee incentives can raise the level and quality of the work produced by the company. Every aspect of managing a contracting business can benefit from creative thought, and the most successful entrepreneurs tap into their own natural abilities. In addition, contractor-owners must be able to multitask, and not only the day-to-day events of running the business but also the consequences of many conflicting personalities working together for a common goal.

I is for instinct

Most of the skills required to operate a successful contracting business can be learned, either through formal training or from experience. However, instinct, which really means having a good feel for business, is something that cannot be taught. It's the intangible something that separates the most successful entrepreneurs from the average business owner. Those with good instincts really know themselves and, most important, understand their own strengths and weaknesses, turning this knowledge into an asset and creating an efficient and profitable entity. These folks not only have the ability to talk a good game, they can also execute their plans to the benefit of the company.

Business owners who really understand themselves also understand their own shortcomings and take steps to balance their weaknesses by surrounding themselves with people who compensate for them. The best and most successful realize that their success is often a result of the people around them rather than themselves alone. Instinct, or good business sense, allows these entrepreneurs to get the most out of the people around them and build a true team with a common goal.

Confidence is an asset, arrogance a liability.

C is for communication

Excellent communication skills make up the final section of my definition of the word PANIC. Communicating is less about making stirring speeches than it is about the ability to convey enthusiasm and energy to both employees and clients. With the emergence of the internet, email, cellphones and voicemail, we have become more impersonal than at any time in recent memory. Thus, in the modern world, possessing good people skills is of greater importance to the entrepreneur. Not only must the contractor be able to accurately share their corporate vision to fellow workers but they must also be able to convey enthusiasm, professionalism and sincerity to clients.

Communicating with employees starts with hiring the right people for the job. Good hiring is a result of being able to put yourself in another person's shoes and see what they see, feel what they feel and have sensitivity to their expectations. Upon hiring the right people, good communication means having the ability to motivate the new employees to succeed beyond their dreams, pushing them to their creative limits and then recognizing their achievements. It also means respecting and utilizing the knowledge, wisdom and practical experiences of the seasoned employees.

Communicating with clients follows a similar path. The ability to sell your service or product requires that you be able to sit in their chairs, understand their problems and focus on their dreams. It's imperative that you remember good communication is not only about what you have to say or how enthusiastic you are, it's very much about how well you listen.