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This subject gets comments in many different threads so I thought I’d give it it’s own thread.
This from the current issue (got mine today) of Remodeling Magazine (www.remodeling.hw.net), an excerpt of article by Linda Case entitled “Build Profitibility.”
I quote Ms. Case:
“If you don’t know how to make money in this business, here’s the reality:
You can be the highest quality remodeler in your town and go broke.
You can provide the best service – the best product – and go broke.
Your clients can adore you, enjoy your great service and product, and help you go broke.
Your clients can then refer their friends and co-workers and help you go broke even faster.
Being technically good at what you do will not, in and of itself, make you money.
These are many wise words for newbies and those a just a little older than newbies. Please, don’t think you’ve covered all the bases. You don’t.
Replies
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Sonny,
Ya know, I read that same article last night and now I know why I'm going out of business... I wish I would have read it a few years back...
Nonetheless...I always wondered what makes a good construction magazine editor a good businessperson. I've talked with one or two individuals personally at FH and they all said the business drove them into the magazine world. Interesting.
Think Ms. Case ever ran a framing crew or did the framing biz turn her to the journalism profession?
Mike
*MIchael, many years ago while having coffee in a restaurant with a retired contractor, I aske him why he thought our industry had so many bad contractors as far as workmanship and ethics.His reply was that the public has run most of the good ones out of business. How true, eh?That's why I always advocate to sell high;, sell to the upper middle class and higher, run tight contracts and more importantly, stick to them, and on teh flip side, service like crazy. In other words, as quickly as possible get your business to the point whereas 100% of all sales is from repeat clients and their referals.You can't be a contractor. You can't be a carpenter. You can't be a cabinet maker. You have to be a money manager. When you think as a money manager, you protect it, you use it judiciously; you invest it carefully (in staff, equipment, overhead, etc.); you invest it in conventional investments. You think in terms of the long haul, annually and longer - not profits by a single job. You think in terms of it coming in and going out and everything that impacts that is addressed. Nothing is thought of cavalierly.As many say, business is a game, and it is, but a deadly one, considering the potential adverse consequenses on our lives.
*Damnit guys quit scaring me!
*Don't look at it as being scared. Look at it as the opportunity to learn more in the next 3 months than most of us learned in 10 years. On second thought - be scared. Then you will really read a lot and take learn quickly.BTW, have you subscribed yet to Remodeling, FHB, JLC Qualified Remodeler and Professional Remodeler? Shame on you. Each month brings a wealth of info and it's all very important.Nite. Tme to lay in bed (or is it "lie" in bed?) and read my current Remodeling mag. Geez, in high school I always Aced English.
*Sonny,It has been my experience thirty years as a contractor and seventeen years as a contractor development trainer that the key reason why remodelers don’t make money has little to do with their skill in the trade. Furthermore, it has surprisingly little to do with their business acumen.The primary reason they go broke is they don’t charge enough. It is that simple.If they charged enough they could perform any job perfectly because if they didn’t have the skills themselves they could hire them and pay for them.If they charged enough they would have the funds to take care of most any problem due to a lack in business expertise.“The lack of money is the root of most evil in the remodeling business.”Once a remodeler learns to be a profitable contractor then the next step is to evolve from a profitable contractor to a profitable businessperson.This evolution is very clear to us in CCN. We often have new Members that are not charging the correct price because they don’t know their numbers. Once they learn what is the right number it is usually 30% to double their original rates.They initially choke and puke when they realize they need to raise their prices that much. They initially say, “It can’t be done, I’ll lose jobs.”Once they learn to market and sell (doesn’t take long) they start making money. After the company is on a solid financial footing they then start thinking in terms of being a businessperson, i.e. working on their business, not working in the business.This evolution is not surprising since there is so little quality training about how to be a successful businessperson in the remodeling trade. The training focus for decades has been on the technical side of the business, not the business side of the business.Do you agree? Richard KallerCertified Contractors NetWorkE-mail [email protected] http://www.contractors.net
*I have been a subscriber to FHB for almost two years now. I have occasionaly ordered a single copy of JLC but recently bit the bullet and subscribed. The remodeling rags I wasn't aware of but will look into. I also (ok guys hold the laughter down!) have a subscription to the handyman of america club and their magazine. My this old house subscription is about to run out and I'm going to let it because I really can't say there's anything worthwhile in it other than some pretty pictures. I have a few of Tauntons books on trim and framing by Thallon. and I've been adding whatever I can to my library as money permits.
*Although I'm not a "young guy", I'm 38, I am still new to this business. I have been trying different advertising avenues most of which is the merchandiser (local freebie). The type of people who respond there are cheapos typically and no matter how well you "sell" they are just intereseted in the lowest price. This being said I have looked into running an ad in the local newspaper but found that to just be to expensive given my current situation. I then stumbled onto the idea of contacting local builders who were running help wanted ads to offer my services as a sub. the initial response has been very positive but I won't know really until they begin to call for me to actually bid on jobs.This is where my question lies. how do you attract the right type of clients when you are just starting out and have not built up a very large network yet?I am going to a pig roast put on by one of the local building supply houses tonight. there will be alot of other contractors there as well as alot of product reps. I plan on trying to make as many contacts as I can and network to the best of my little ability. also learn as much as I can about any new products or application techniques. oh yeah and feed my face on some roast pig too!
*Richard, I agree with you in theory but in the real world of the Tampa, Florida area, it doesn't work. I went through about 6-7 years of just getting by. I made money but not a lot. I tried to increase all my work a little at a time and squeezed out about 11% more but that was about it. Maybe its just me or my geographic area? The cost of living in Florida is VERY low and the competition is VERY high. For the past four years, I tracked my jobs bid to jobs acquired ratio and then on the ones I end up getting, did some comparative pricing with other guys I knew in the business, the Means guides, etc. I was still about in the mid range (there is always someone lower) but was not getting enough jobs to survive. Its my experience that folks are very selective when in comes to cost of a job. Cost overrides quality here anyday. People around here will move into a new house before they spend $40k on a remodel. I experienced that three times last year. It would be great if I could sit down and talk to someone such as yourself sometime just for kicks to see what some alternatives might have been. As I've mentioned before, I'm looking for a new career but still am curious as to what I could have done differently. I guess I'm just stubborn but for almost ten years I've seen people show my estimates to other guys who say they can beat it by a couple hundred dollars and lo and behold guess who gets the job? It really ticks you off when you give a client an estimate of say $6k to do a job and they find someone who can do it for $5,750. Happens all the time but I guess thats just business? I have to admit however that I never did that to another guy and now I'm thinking maybe I should have??? ;)Mike
*Steve, When I first started out, I went pounding the pavement to realtors, interior designers and material suppliers to get my cards out and my name around. For a few bucks in gas and a few hours of my time, I actually got quite a number of calls and quite a few jobs out of it. After that the initial contact served as a start for future business. Just watch so your "cold calling" doesn't appear as desparation. Some of the calls I got from my canvassing were the "could you change my doorknob?" or "I got your number from so and so. They said you are LOOKING FOR WORK" (read that "I'll pay you very little to do my job since you must be pretty hungry")Mike
*Sonny i get FHB and JLC, and Qualified Remodler does Pro remodeler have a web sie where i can order it?
*Ron, Professional Remodeler can be ordeered at The Housing Zone, another nice site:http://www.housingzone.com/pr/index.asp
*Mike,You raise some important issues this is how we see them. Just food for thought. Please see insertions. Michael Rimoldi - 04:57pm Sep 20, 2001 EST (#8 of 11) Building Contractor, Woodworker, Message Board Addict Richard, I agree with you in theory but in the real world of the Tampa, Florida area, it doesn't work.Michael - Everyone thinks their market is the worse market and the grass is greener on the other side. I know this first-hand since I have conducted contractor development seminars for the last 17 years in ever major US and Canada market.We have Florida contractors, after joining CCN that are now getting double the price they got before. The difference is we helped them change their paradigm that the Client is “price driven” to the Client “is looking to have trust and confidence in the contractor and getting a good job.”Michael - I went through about 6-7 years of just getting by. I made money but not a lot. I tried to increase all my work a little at a time and squeezed out about 11% more but that was about it. Richard – This is understandable. The remodeling industry has done a very poor job of teaching remodels how to market, sell and how to evolve from contractor to a businessperson.If you are going to achieve a significant increase in price then you need to significantly differentiate yourself and your project from the competition. If you use the same methods and simply raise your price I would expect you would top out at about 11%.Michael - Maybe its just me or my geographic area? The cost of living in Florida is VERY low and the competition is VERY high. For the past four years, I tracked my jobs bid to jobs acquired ratio and then on the ones I end up getting, did some comparative pricing with other guys I knew in the business, the Means guides, etc. I was still about in the mid range (there is always someone lower) but was not getting enough jobs to survive. Richard – We train Financial Literacy and Financial Business Planning, as well as, have a Financial MasterMind group where we see Members financial statements. In many cases the contractor has the wrong price on their work. They are using the same methods you are using. Means guides, what the competition is charging etc. The highly successful remodelers are significantly higher priced than that criterion. Their price is based on their cost, and profit expectations, not what others tell them is the right price.This is a total paradigm shift. They have to learn that price does not drive the market. However, if they bid just like everyone else, and everything looks the same to the Client then low price often wins. Why would anyone pay more when they can buy the same thing for less?What we need to remember is that the Client was not born with a Remodeling Manual in their brain. They really do not know what they are buying. In order to get a better price and be able to deliver a better job requires educating the Client how to buy a remodeling project, making them aware of their options, how to determine if the price is fair, and contractor selection criteria.Michael - Its my experience that folks are very selective when in comes to cost of a job. Cost overrides quality here anyday. Richard – Our experience indicates that once the Client is educated about buying a remodeling project that price becomes a minor point and getting what they want becomes the major buying motivation. Of course our experience is based on educating the Client, not simply bidding a job and hoping the Client selects us.Michael - People around here will move into a new house before they spend $40k on a remodel. I experienced that three times last year. Richard – I agree that can happen. This is why we qualify the Client during what we call the Measure Call. All contractors conduct some type of Measure Call, i.e., the measure the project. In CCN of course we measure the project, but our primary focus is on measuring the Client, the Client’s needs, the Client’s motivation. During this process we along with the Client can determine if remodeling is the best bet for them or should they move. There would be no reason to prepare a bid for someone moving. This is one reason why we sell Design Build prior to bidding the job.Michael 0 It would be great if I could sit down and talk to someone such as yourself sometime just for kicks to see what some alternatives might have been. As I've mentioned before, I'm looking for a new career but still am curious as to what I could have done differently. Richard – It is exactly because of the communication void you mention is why CCN has become so successful. To learn more about CCN visit http://www.contractors.net. For your information we have turned a lot of contractors in “burn out” stage looking for a new career into highly profitable contractors in a very short period of time.Michael - I guess I'm just stubborn but for almost ten years I've seen people show my estimates to other guys who say they can beat it by a couple hundred dollars and lo and behold guess who gets the job? Richard – If you estimate is being shown to others then there is something wrong with your process. This is usually an easy thing to fix.Michael - It really ticks you off when you give a client an estimate of say $6k to do a job and they find someone who can do it for $5,750. Happens all the time but I guess thats just business? I have to admit however that I never did that to another guy and now I'm thinking maybe I should have??? ;) Richard – If you lost a job for $250 what the Client is telling you that they didn’t see the $250 value in your proposal. They apparently felt the other contractor was doing exactly the same work but it was $250 less. If that is so it simply indicates you have an easy problem to fix. You have a sales problem, you are bidding, not selling.Hope this helps.Please feel free to e-mail me directly with any questions.Richard KallerCertified Contractors NetWorkE-mail [email protected] http://www.contractors.net
*Richard: "This is a total paradigm shift. They have to learn that price does not drive the market. However, if they bid just like everyone else, and everything looks the same to the Client then low price often wins. Why would anyone pay more when they can buy the same thing for less? What we need to remember is that the Client was not born with a Remodeling Manual in their brain. They really do not know what they are buying. In order to get a better price and be able to deliver a better job requires educating the Client how to buy a remodeling project, making them aware of their options, how to determine if the price is fair, and contractor selection criteria."This is the key. I agree with Richard and have proven it. I'm in Naples, FL so some people say it's easy for me to get my prices cause Naples is an expensive area. Baloney. My competition routinely charges from $25 to $45 per hour. Accoringly I should not be able to get the $75 to $85 per hour that I do - and that's for small jobs which are typically done for less per hour. My sons remodeling business is netting nearly triple the national average for net profit, basing their rates on upwards of $120 per hour, and manyh of his competitors are less. In fact, we have not advertised since June of 1991. I started the business in March of 1991 and sold it to my sons as of 1/1/99, and started another company specializing in small projects. To eliminate the public's thinking that that meant I was a "handyman", my cards read: "Professional Execution of Small Projects" - no handyman workmanship, nor handyman pricing, and I talk to them about that philosophy.It's not the market. It's not the geographical area. It's not the project type, and it's not the economy. It's the "mindset" of the contractor. You must "sell" jobs, not "buy" jobs. You must create a "demand" for your business, not just take what comes along. Finally, further proof is in the fact that I service about 90 - 100 condo associations besides doing projects for private parties, and believe me, there is no one chintzier than the typical condo association. Knowing that, why do their property managers still call me to solve their problems - at my rates?I don't condon Richard plying his company here on this forum, but for those of you who cannot grasp his and my point, whatever his memberships dues are , they are a drop in the bucket verses the benefits (read $$$$) derived from CCN's educational programs. BTW, I'm not a member of CCN, just someone who happens to know how to make myself in demand, and with clients who don't even bother obtaining other bids. They also know I don't participate in the bidding game.
*Guys, I'm sitting here shaking my head. I don't doubt that it can be done but for the life of me how? I hear you talking about educating the clients. what are you educating them about? for all practical intents the building process is the same. tried and true methods of construction applied. how does letting them know that I will use screws and glue differ me from the next guy who uses glue and screws? Are you telling me that I should badmouth the competition? (which I never would anyway!) should I tell them that I use pixie dust to hold my construction together? Should I tell them that I only use XYZ brand of cabinets and that anything else is junk? I see alot of philosophical talk here but nothing tangible. someone give a concrete example instead of all of this talking around things like is going on here. I'm having a hell of a time even getting calls as I'm new. I can barely afford my home much less someone's "no money down, we'll teach you how to sell" programs. or am I to understand that the only people that you're interested in helping are the ones that are established and not just starting out Richard? I understand that you are in the business to sell your "assistance" but that doesn't help when you come on here and tease us with "We can do this and we can do that". I charge more because I'm a professional? so far that one wouldn't fly with anyone I've met, educated or not. end result and price. PROVE ME WRONG! don't just say it's so, so it must be so. enough circular logic.
*Steve, here's what has happened. Due to your circumstances, engineering backgound and propensity for the trades you have decided to become a remodeler. Sort of if I, being a novice anthropologist, decide to become a "real" anthropologist. What happens:1. I get creamed by "real" anthropologists, and because they realize that I am a novice and worse, one with not academic background.2. I missed opportunities becasue I'm "green" and didn't know what to look for.3. I have no practical "field" experience to a substantial degree.4. I place myself in the unenviable position of having to learn what others have learned by many years of experience and academic teachings and quickly sonce it is now my livelihood.Do you realy think any of us can teach you what you need to learn over a forum or two? How long will it take me to teach you how I sell, what I say, and when I say it, or how to read what a potential client is really saying?As to the technical aspect, it has take most of us years (of mistakes) to learn what to look for and examine before creating an estimate. That's just two of the many aspects of this industry. In effect you have jumped (or got pushed) into the lake and are only now trying to learn how to swim. That's why I suggested those 4 magazines. Another good course to take is twofold:1. Read the older threads here, on the JLC and RO forums. 2. While on each site, read as many of the past articles as you can. Take notes on production, advertising, marketing, selling, etc.
*Steve,I appreciate your honesty and openness as you are working towards the goals in your life. Want to chime in with my opinions on a few things. By the way I am going to email you as well because I do have some ideas for you. They are absolutely free… I am just a struggling contractor just like you. I would be happy to send you a package of tools that I have developed and acquired over the years.Wanna try to reinterpret some of the things that have been said here primarily for Steve’s sake because what we have here is some grey headed contractors debating our business. This debate is not targeted towards someone new in the business. I remember VERY WELL how hard it was to break in to the business, it still runs shivers up my spine just thinking of it. First I guess I will debate Sonny on some of the things he said. Not cuz I don’t love Sonny … cuz I do! But because I am worried that for someone new to take some of the things he said at face value is to miss some stark realities. Sonny says “It's not the market. It's not the geographical area. It's not the project type, and it's not the economy. It's the "mindset" of the contractor.” There is a ton of truth in that. However here are some things that that statement does not address. 1) The market matters!! Having been in this business thru at least two recessions I have seen contracts cancelled overnight because portfolios have dropped by 30%. If you are depending on that job and it is next on your calendar you will be eating beans for awhile until you find one to take it’s place.2) Geographic areas matter! How well would each of us do if we were to move our business to Appalachia? My home town in the upper peninsula of Michigan WOULD NOT support my business because it is 100 miles from anywhere! Not to mention the fact that the winters are brutal and work slows to a trickle during that time. Next I would like to debate some of the things Richard says “Furthermore, it has surprisingly little to do with their business acumen.” (speaking of business success). That is nothing short of Hooey. Learn EVERYTHING you can about business. It is in my opinion one of the most important things you can do. Then he says “The primary reason they go broke is they don’t charge enough. It is that simple.” Lots of contractors don’t charge enough, I agree. However, you can only charge a premium rate if you are a premium ESTABLISHED confident contractor. For a relatively new contractor to charge premium rates is to take away one of the edges that new contractors possess… price! When McDonalds or Wendys or any business introduce a new product they most often offer price incentives in order to get customers liking their products and then eventually commited to them.Steve, there is no one easy answer to your question. There are lots of answers. Capitalize on what you have. First it is apparent you have hunger and desire. Those qualities SELL! You will have an incredible edge over the contractor who yawns as he presents his estimate.You wont be marketing to your customers the years of experience that you will have had. You will however be marketing your reliability and total commitment to the customer. You will be on time for appointments wont you? (especially if there is a mortgage due!) You will give them your undivided attention wont you? (if it is the only job you are working… what is to distract you?)Steve, most customers don’t know a header from a footer. They understand reliability, clean job sites, returned phone calls, and a pleasant manner. It will be CRITICAL for you to quickly develop a list of referrals. You need to keep that updated and present these peoples names at EVERY sales call. It will generate work for you. Get each client who is satisfied with your work to write you a letter of referral. Put a cover letter to it and circulate it thru the entire neighborhood (very inexpensive).Volunteer with Habitat for Humanity and other community projects. This is by far the most effective and low cost form of advertising there is. As an added bonus as you work side by side with people you will often pick up “How To” tips you can use in your business.Advertise judiciously . Yellow pages in my opinion is incredibly expensive and not cost effective. Neighborhood letters and a small ad in the “call an expert” section of the newspaper typically pays off for me. Get lots of face to face time with people..NETWORK! Adopt a pleasing manner as you do this. Help other people with their goals and they will gladly reciprocate.Long winded answer huh? Best of luck to you.OH YEAH!! Almost forgot. The next time you estimate a job that you are sure you will get… add 10% or so to it. That 10% will buy you time to get your feet underneath you.
*Tried to email you but couldnt get thru. Mine is [email protected]
*How ya doin Peter? OK, I'll concede that in "extreme" locations which determine a "locked in" market, geo. and market does effect ability to get top buck.On the fringes of the above is where I lived in Michigan - farmers and blue collar workers, and on Saturday and Sunday, everyone with a pick up did "side jobs." So how was I able to get 20% to 30% more on roofing and siding jobs than my competitors, and many other types of projects without anyone bidding against me? Peter mentioned "established." He's right, cause that is what allows a great reputation that in turns allows higher margins - if you justify those premium prices to the client - the old price vs. value thing.Wed. I want on a small job sales call for a concrete floor repair in a 2nd floor condo family room - carpet removed and to be prepared for vinyl floor tiles by the owner's son. The 30ish son was home. People from England. Anyway, the room was about 8 feet from the front door. I removed my shoes before walking in since I was out of "booties."Went there today to do the initial repairs prior to Monday's floating of areas of the floor with leveler. Today the lady of the house was there. As I was getting ready to leave she asked if I did carpentry. I said yes and she showed me a nook in the living room - about 18" deep x about 7' wide, and wanted shelving with door cabinets below - set up for a computer.Before walking out the door she said to me: "Aren't you curious why I didn't ask you for a price before having you do the carpentry work." I said, honestly, "Yes." She went on to say that her son told her about removing my shoes, noticed I insisted on putting a drop cloth (runner) from the door to the room to be worked on - even though she said not to worry about it since they were going to tile over the vinyl flooring. She also was impressed that I placed plastic over the archway from the room to the hall to catch any chips of concrete from going into the hall.She said in England they have some unkempt tradesmen in both looks and work habits, and said she didn't know what we called them here but there they called them "rogues."Anyway, she said that I was referred to her by her condo property management company representative, and after hearing about the shoe removal, seeing the runner down and plastic used, plus a thorough clean up of the room's floor, she just knew I wasn't a "rogue."During the work I asked if I could use her kitchen sink to get water instead of just going ahead and using it, asked again to use it to wash my rag and filled a bucket of water to wash my tools outside on the grass. I'd say that all had some impact with her also.It's difficult to explain a "system" of operating like the above and such work over a forum. Look how long just this simple example took. Next time I'll just email you so no one else has to read about boring stuff that they probably do themselves in their client's homes.
*Funny, that's how I've operated on the few jobs I've had. well except for the booties thing. the kitchen floor I recently did had the plastic, the drop cloths and the rest. I even redid what I was not happy with and the homeowner was satisfied with. the end result was a very good looking floor and an extra few bucks for the redo even though I told the owner that it was on me. I think maybe I've got it I just need more time to build the business. I hope I can survive that long.P.S. I'm calling her tomorrow to follow up and make sure everything is okay with the floor. maybe she'll be ready for that new toilet she had mentioned. (keeping my fingers crossed)
*Steve,You may initially perceive I am trying to sell you something. I hope that perception turns around as I share examples of how to improve business.This post is somewhat long because I am trying to establish a foundation of understanding, as well as, answer numerous questions or perceptions. You may want to print it rather than read it on the screen. I hope you make it to the end. I believe I have shared some valuable insights you can use. Feel free to challenge me or ask for more detail wherever you feel it is appropriate. What I hope you will see within my posts, like others who initially flamed me on a painting contractors board is that CCN is not successful until the contractor is successful. We can’t win unless you in.The initial flamers who thought I was just trying to get in their pocket eventually changed their perception as I shared what we call “Best Practices.” Today, some of them are trainers at CCN events and it is not because we are BS.I am not trying to sell CCN here, CCN doesn’t need to be sold, but I do use examples of CCN “Best Practices” to demonstrate the difference between a process that has “proof of workability” for what works best for remodelers compared to “Best Intentions” which often don’t work. By the way, the examples of “Best Practices” I will use are FREE. Also for FREE are tapes that are full of valuable contractor educational tips, as well as, give you an insight into CCN and how it helps a remodelers business. Simply send me your mailing address. [email protected] a contractor myself, and understanding the justifiable skepticism of contractors, I would not expect a contractor to invest in continuing education until they knew we were the real McCoy. We have plenty of “proof of workability” just ask for examples, or share your most difficult challenges and I’ll share what I believe is the “Best Practice” that will solve that challenge for you.A high percentage of CCN Members were attracted to CCN in the first place because they used our FREE examples. They tried the examples and they worked for them. That experience helped create a new paradigm for them.Once they realized we, and the CCN NetWork of successful and quality contactors were a far greater help than any magazine articles, bulletin board, seminars, or the other networks…..they joined CCN, because it was just good business. I fully realize we need to earn our wings with you and anyone else that think we are trying to get in your pocket. Just give it a chance.You have asked many questions and to make sense and have continuity I have copied your post and inserted comments. Hope this makes sense.Thanks……….RichardSteve Merrette - 01:00pm Sep 20, 2001 EST (#7 of 19)Although I'm not a "young guy", I'm 38, I am still new to this business. I have been trying different advertising avenues most of which is the merchandiser (local freebie). The type of people who respond there are cheapos typically and no matter how well you "sell" they are just intereseted in the lowest price. Richard – When we started out and had no money we discovered these giveaway papers are great forms of advertising, and the cost per lead was low compared to other options. I found that by using this low-cost medium the Client also thought we were low cost because of the nature of our the advertising so they bought.We know through “after sale surveys” that over 50% of our Members Clients DO NOT SHOP so they have no way to compare price. They simply do not have time to shop. Instead they buy on trust and confidence. A remodeler can build trust and confidence by educating a Client how to buy remodeling, educating them about options, educating them about contractor selection and qualification criteria, and educating them how to determine if the price is fair. Most remodelers working on “Best Intentions” bid jobs and do not educate the Client. This is understandable because they have never been taught or given a process for educating Clients.Most contractors starting out are not aware of these insights and they work from “Best Intentions” not “Best Practices.” Some think they will start a new business with low prices and when they earn respectability they will raise their prices to the appropriate amount. Most of these remodelers run out of gas before they are financially successful. In contrast if these same remodelers simply used “Best Practices” they would save a lot of money and time, and chances for success would be significantly higher. My guess the reason the give-away papers did not work for you is 1) Your selling process or lack of one, and 2) Your belief system that told you these were people that were simply looking for a cheap job. I am not knocking you. I understand how difficult it is to get a start-up going especially when there is little quality training available.What is always important to remember is that the Client was not born with a Remodeling Manual in their brain. They simply cannot ask smart, or intelligent remodeling questions, because they don’t know them. They only thing they know to ask is “How Much?” and “When can you do the work?”Because the Client is so fast to ask about price, remodelers without “Best Practices” training, assume the Client is a “price shopper” when in reality they are only asking the questions they know to ask. The remodeler then misperceives the Client’s motivation which triggers the development of a “belief system” that says, “Clients are price shoppers” or “Price drives the market.” Steve Merrette - 06:01pm Sep 21, 2001 EST (#14 of 19) I don't get it...I've cut it three times and it's still too short! Guys, I'm sitting here shaking my head. I don't doubt that it can be done but for the life of me how? I hear you talking about educating the clients. what are you educating them about? Richard – Great question. What we teach in CCN is a proprietary sales process called the 4P. The 4P was specifically designed for the craftsman-style of remodeling contractor that doesn’t want to sell, but knows they need to sell in order to have enough work at the right price.Here is an overview so you can develop you own sales process if you are so inclined.P1 – First we talk with the Client about the Problems, or Possibilities they have with remodeling. The biggest problem of all is selecting the right remodeling contractor. Remodeling is very different than most consumer purchases. With most purchases the client can drive, kick the tires, touch, feel the product before they buy it. With remodeling the Client has a dream in their head and the remodeler has to make that dream come real for the Client so finding the right remodeler is the biggest challenge for the Client.Next is the Possibilities or options they need to consider. A Problem or Possibility well defined is 50% solved. Defining the possibilities is a major step and is why we train remodelers to charge Design Build fees, instead of giving out free estimates.P2 – Is all the Products and options a Client may use to solve their problem or create their possibility. This is a key area where the “Best Practices” remodeler can stand heads and shoulders over their competition that believes “price drives the market.”Remodelers that believe “price drives the market” tend to bid using the least expensive material and least expensive labor, and try to build for their Clients the least expensive project. All remodelers have a Measure Call step in their process. That is where they measure the project. In contrast the remodeler that is trained in “Best Practices” conducts a through Measure Call and they spend far more time measuring the “Client and the client’s needs, desires and wants” than “measuring the project. This is a key area for developing differentiation. If you are going to have a different price then you better have a different job.It is because of this through Measure Call analysis, not impacted by “price driven mentality” that a totally different project is conceived. This project typically cost far more than the price sensitive contractor’s project, but it is a much easier sale because this project is what the Client wants.P3 – Is the People that are going to design and build the remodeling project. This is where the “Best Practices” remodeler explains his/her background in remodeling, proudly explains Certifications and Accreditations awarded them from manufacturers and centers of learning. This is where they discuss workers compensation and contractor liability insurance. This is where they share photographs of before and after pictures, Client reference letters, Satisfied Client Book, and whatever they have to establish trust and confidence and credibility.P4 – Is where Price is discussed and how the Client can determine if their price is fair and reasonable.I hope this outline gives you an overview of what we educate Clients about.Steve - for all practical intents the building process is the same. tried and true methods of construction applied. how does letting them know that I will use screws and glue differ me from the next guy who uses glue and screws? Richard – The building process is not the same. Most contractors build at code or below code. Both are bottom of the barrel approaches. They may be adequate but do they meet the Client’s needs, desires or wants? For example, with some Clients a 2x6 wall is better than a 2x4 wall because of efficiency or soundproofing. There are thousands of ways to differentiate a project. With “Best Practices” we strongly recommend to not bid what others are bidding. If you bid what others are bidding then you become the same. If everything is the same then low price wins. Why would someone pay more for something that is the same?You can differentiate even screws and the spacing of screws.Steve - Are you telling me that I should badmouth the competition? (which I never would anyway!)Richard – Bad mouthing competition is stupid and will cost more jobs than gain jobs. However, with “Best Practices” we educate the Client about how a project is professionally designed and built. As the Client starts to understand for themselves the differences between the professional contractor and the price contractor they reject the price contractor because they know the price contractor is not responsive to their needs.Steve - should I tell them that I use pixie dust to hold my construction together? Richard – Lying will come back to bite you. Also making any promises like start dates, completion dates, clean up, lack of inconvenience will also come around to bite you when you don’t expect it.You can only make promises for what you personally have 100% control.With “Best Practices” training we know we can’t predict start dates and completion dates there is simply too many variables that can make us liars.We can’t promise perfect clean up unless we are doing it ourselves.We can’t promise the remodeling experience won’t be painful, because it unexpectedly can become painful. We recommend underselling and under promising the project and then performing well above those expectations. All too often a remodeling contractor says “no problem” only to be hung on those self-serving sales words.Steve - Should I tell them that I only use XYZ brand of cabinets and that anything else is junk?Richard – With “Best Practices” we recommend whenever appropriate focusing your energy on specific brands that you have confidence in. Learn to covert the manufacturer features into Client benefits. Clients buy benefits not features. Be prepared to explain why you chose a specific cabinet over all others for their project.Steve - I see alot of philosophical talk here but nothing tangible. someone give a concrete example instead of all of this talking around things like is going on here.Richard – What we train is not philosophical talk. We train “proof of workability” “Best Practices.” A lot of the “Best Practices” were developed in my five businesses and they served as the initial foundation for CCN. By the way I sold those five construction businesses and they are still operating today.Over time the initial “Best Practices” have been refined and improved by CCN Members. There is no reason to reinvent the wheel to learn how to build a profitable remodeling business.Steve - I'm having a hell of a time even getting calls as I'm new. Richard – When I started in business I bought a company that was $100,000 in debt and had no cash. Fortunately I did not have to learn this business through “trial and error” or “Best Intentions” because I was in a network of highly successful contractors and their experience compressed my learning curve significantly.Nonetheless we had zero money for advertising. I discovered the best way to get leads was canvassing, telemarketing, job signs and circulars placed in doors. Today, 30 years later they are still the least expensive and most effective marketing methods for remodeling contractors.Steve - I can barely afford my home much less someone's "no money down, we'll teach you how to sell" programs. or am I to understand that the only people that you're interested in helping are the ones that are established and not just starting out Richard – I understand your frustration. I still quit once a week. My question to you is can you afford the highly expensive and time-consuming method of trial and error or “Best Intentions.”We have contractors joining CCN that are on their last legs and we have highly successful contractors joining because they are looking to get to the next level. We have helped many contractors without proper funding get their feet on the ground and then build a successful business. We worked out terms that fit their budget. We have helped contractors hundreds of thousands of dollar in debt get debt free. There is no magic. They just didn’t know any better. Once they got away from “trial and error” or “Best Intentions” and focused on “What Matters Most” they experienced their turnarounds. We have plenty of contractors you can call to verify this is true.Again, I am not trying to sell CCN here. I am just saying it is the lowest cost, fastest way to build a remodeling business. The best way to find out if that is true is to attend a CCN Quarterly Conference. The next one is in Palm Beach Florida January 10-13. Get exposed to “Best Practices” network with contractors that were in your shoes. Learn how “Best Practices” can accelerate your business.Steve - Richard? I understand that you are in the business to sell your "assistance" but that doesn't help when you come on here and tease us with "We can do this and we can do that". I charge more because I'm a professional?Richard – I doubt you will believe me but I am not out to sell CCN. I was taught a long ti
*Richard,i We know through “after sale surveys” that over 50% of our Members Clients DO NOT SHOP so they have no way to compare price. So how did they hear about YOU if they did not shop?References? Word of mouth? Phone book? Steve is new, and has not built up a base of references, nor does he have a base of clients that can refer him. He is running cold, so to speak. He needs to get people to know he is there, and THEN he can sell his company (or himslef) to the clients. But first, he's gotta get them to know who he is. That takes advertising, leads, and sales calls. Just a thought...James DuHamel
*thanks sonny as always your a scholar and a gentleman
*James - So how did they hear about YOU if they did not shop? Richard – When we started out we had no customer base, no referrals, no advertising (not even a yellow page listing) and no sign on our building. I opened start-up offices in both New Jersey and Pennsylvania so I know what it is to go through the start up phase.We generated our leads by canvassing and telemarketing offering free inspection and bids. In most cases the people that bought were not in the market shopping around until we helped them discover they had a problem.This is especially easy to do with roofing, siding and replacement window sales where you can see the need from the street. These prospects are also easy to identify because in most areas there are developments or sub divisions that were constructed at the same time. Therefore, if one house had a problem the same problem was usually obvious on other homes.Once we get a sale a sign immediately went up on the site and we canvassed and telemarketed the area again explaining the situation we discovered on a nearby home. This second effort was very effective because now we were working in their neighborhood.We then created low-cost circulars and they were placed in every door of the development or subdivision. We continually parlayed each success into another success.We had no option other than to do this and today this is still the most efficient and effective way to create new business.How did I know to do this? I certainly did not dream it up on my own. The contractors in the network I belonged to told me how to do it. Based strictly on their experience and my willingness to try within two years we were consider a significant player in a market filled with well-established contractors dating back to the early 1900’s. I eventually bought four of those well-establish companies after we took away their work and their key craftsmen because we had more work and better working conditions.With a new start-up advertising is normally too expensive and too ineffective. It takes too long to work. It places you into highly competitive situations where your credentials may not match up with other contractors in the market.The benefit of canvassing or telemarketing and creating a prospect not yet shopping is that WE KNOW WHAT THEIR OBJECTION WILL BE AFTER WE PRESENT OUR PROPOSAL.Almost always it was, "Well thanks a lot for bringing to our attention. As you know we had no idea until you brought it to our attention we had this problem. We have no other prices, so of course you understand before we cannot award a project this size we will need a competitive bid......you understand don't you?”When they said that I said to myself, “Hot dog I got this one. They will approve the proposal within the next 10-20 minutes.”How did I learn to close that situation without pressure? Again, I didn’t dream it up on my own. You can have the exact answer to that question by asking your CertainTeed rep to get you a copy of Closing Better Jobs, tape number 20-20-096 offered by the CertainTeed roofing division in their Business Resource Catalogue, or contacting CertainTeed at 800-404-9880.Don’t worry about lining my pockets I have already been well paid by CertainTeed and they sell that tapes for just $10 just to cover minimal costs.This one tape alone would more than pays for any cost whatsoever is involved with CCN and we release new tapes every month to our Members.Every day remodelers working with “Best Intentions” crumble and walk out of sales presentations without the order simply because they do not have the WordTracks necessary to help educate the Client why they can feel comfortable proceeding without needing to get another price.This probably weekly loss by not knowing how to close is huge dollars. Trying to learn and understand closing and then implement it on your own could take you a lifetime when you could simply learn from others and apply “Best Practices” tomorrow.Just food for thought………Richard KallerCertified Contractors NetWorkE-mail [email protected] http://www.contractors.net
*Agreed James.And it requires experience.Which will result in a reputation.And that requires going out and working your butt off.Lines like "pay your dues" come to mind.I've followed Steve's questions on how to gain clients and how to market and how to make money and in considering how to answer those questions, I've can only offer an answer from my experience. I have found everyone of my subs while working on jobs. All the people I do business with I met on a job, or observed working down thwe street, or next door or heard of.Much like the lady's observation of Sonny, she made her decision based on what she saw. And for her to see it, Sonny had to be there.So, all I can add is every job is an opportunity to "show off". People like watching us work. That's why they always put a peephole in the fence around a jobsite.My ears always perk-up when I hear about a guy who "knows how to work his butt off" "Go getter" "Highly skilled" "...and he's a nice guy"True, we must be good business people, but we are first performers.We perform work. We produce outcomes. And I think the advice here is good for enhancing our performances. But we are only as good as our last performance....
*Mark, your last sentence says it all: "But we are only as good as our last performance..."We are all on stage, and all the time. The next time you guys are near a bookstore, take the time to go in, find "The Experience Economy" and browse thru it. It's basis is that indeed, we are all "on stage". You might just buy it.
*"The Eperience Economy - Work is theatre & Every Business a Stage"Ok that's the one I read next Sonny.
*Richard, I will concede that you have proven me wrong. i would like to thank you for the information that you have provided. I would also like to apologize if I appeared somewhat hostile.As a few others here have pointed out I am new. top that with I am coming into this industry from working the last 20 some years as an electrical engineer and you have one huge double whammy that I must overcome.Much of what you said reminds me of my stint in marketing for a large German industrial manufacturer. seems to hold true even in this industry.Again thank you and if and when I ever get myself out of the financial black hole that I'm in right now, I might seriously consider looking into the CCN a little further. In the mean time I have a video tape to order...(hell what's $10 when your facing foreclosure anyway)
*Sooooo, what did you think about the book, Steve?
*Peter,Regarding you insights into my post. I have inserted responses to help clarify what I was writing. Thanks………RichardPeter - Next I would like to debate some of the things Richard says “Furthermore, it has surprisingly little to do with their business acumen.” (speaking of business success). That is nothing short of Hooey. Learn EVERYTHING you can about business. It is in my opinion one of the most important things you can do.Richard – I am certainly not against business acumen if that is how you perceived my post. Since we are in the business of training “business acumen” such a statement would be counter productive. Don’t you agree?What I am writing about is the real world of start-up remodeling. Unless a start-up remodeler is well capitalized and has a written business plan (which is rare) then based on our experience selling jobs and getting the right price is the first priority. The reason sales is first is that if the company does not have work priced at the right price then business acumen will have little impact because they will be out of business. Don’t you agree?Can business acumen somehow make up for a poorly priced project and turn a loser into a winner? If so, how?It is my training and experience that a fish swims from the head and in the typical start-up remodeling business the head is Sales. Jobs have to be sold at the right price and deposits are needed from Sales to support cash flow and business continuity. Do you see this differently?Once the Sales department successfully starts to sell out production capacity then the next natural priority is making sure the work is professionally and profitably installed, otherwise any profit gained in the sale will be lost.In the real world of start-up remodeling Sales and Production are the initial “critical success factors.” Once there is adequate cash flow from Sales and Production then of course fine tuning the process through business acumen is next in line. In the perfect world it should not be that way. I agree a businessman following business principals should start the business. The remodeler should have a written business plan and proper capitalization to weather the start-up period. However in the real world of start-up remodeling it is rare that we encounter such a situation. We are dealing with the real world of helping contractors stay in business and prosper. The root of most evil in the remodeling business is the lack of money, not business acumen. Now once a remodeler gets established then business acumen plays a major role. Peter - Then he says, “The primary reason they go broke is they don’t charge enough. It is that simple.” Lots of contractors don’t charge enough, I agree. However, you can only charge a premium rate if you are a premium ESTABLISHED confident contractor. Richard – I don’t understand. What is the rationale for your statement that new contractors are limited in what they can charge?Also, what is a premium? We teach contractors to bid based on their costs and profit expectations. The completed projects are then monitored comparing the estimate with the actual. This is how a company comes to the right price.How do you suggest they calculate a premium?Peter - For a relatively new contractor to charge premium rates is to take away one of the edges that new contractors possess?… price!Richard – Are you suggesting a new contractor sell on price? Are you suggesting they don’t have a lot of other edges over the established competition, such as, passion, need to be successful, no option behavior, willing to go the extra mile, greater focus on Client satisfaction because the early jobs are the ones that set the tone of the companies reputation?What was the Avis story they used to become a dominant player in the car rental business? Wasn’t it “We try harder?” Isn’t this a key reason why a start-up can clean the clock of the established company?What is that edge they are giving up? Are you suggesting they “buy” jobs in order to get started?Are you suggesting that “price” is a primary decision making criteria of the Client?I am not trying to be argumentative. I just don’t get your point.Thanks………Richard KallerCertified Contractors NetWorkE-mail [email protected] http://www.contractors.net
*Steve,I gotta pipe in here a minute. Things ain't what you think they are, and if you follow TOO closely to what these guys are telling you, you are going to go belly up in a short time.Here's the facts as I see them...Reality sucks. Reality is, you started out on the wrong foot in the beginning. Reality is, you are doing this cause you need money to pay bills, and you believed you had the skills and tools you needed to be able to get into this business and make some quick money to pay your bills. You like this type of work, and always wanted to be your own boss, and own your own company. That's good. That's a start. Problem was, and is, you CANNOT start a business without being prepared to start a business. You started your business out of need, and because you were in a bind financially. The one thing that is absolutely essential for a new business to even have a chance is called Operating Capital. That's cash that you have on hand that will pay your bills until your business gets off the ground and starts earning its own income. Average business takes a year for this to happen. You need income for a year. This income will pay your personal income (which will pay YOUR personal bills), your business overhead, your advertising, and your tool purchases. It will basically cover all your outgoing cash while your business gets off the ground. Reality... you don't have operating capital. You got debts and bills to pay. This is the eye opener, and reality of MOST of the people that here that started out in this business. Ask them, they'll tell ya. You ain't much different than most. Richard comes along and tells ya (and me) how he got HIS name out to the public, so that he could build up a client list, references, and a reputation. Read the list. What he did works, no doubt about it. But it takes some serious cash to do that. You don't have any. You got bills instead. So that route is out of the question.Sonny tells ya how to sell your value, and reach to the higher end client. You can't do that right now. You got bills, and no money. You HAVE to go for the lower end until you get some references, reputation, and experience as a contractor. That's just fact. You absolutely MUST get your name out to the public. The more it is in the public eye, the better the chance of you getting a call for a bid. There are cheap ways to do this, but they take lots and lots of effort on your part, leg work, long hours, and a little ingenuity. It can be done. Most here have done it.A lot of what I see here is good info, and would truly help a business. Problem is, it will help an already established business increase its' bottom line. It rely's on you already having an established customer base, reputation, experience, and references. It doesn't do squat for a new business starting out in the condition you are starting. I did something that most here did not. I am also in a different ballgame than most. I took advantage of that for everything it was worth. First off, I left a very high payijng corporate job to do this. There were many reasons, but freedom was the biggest. I have no children, which right there cut my personal bills down way below average. My house is paid for, my vehicles are all paid for, and I have no debt. When I started, I had some operating capital, a business plan, and a budget. I sold everything I owned that had a note attached to it, and lived off savings and operating capital for awhile. It still took awhile to start getting business rolling. I started out on much better footing than most, but I was also a statistic just like them. Like most here, I overcame the failure statistic. I worked my butt off, and I got my name out in the public at every opportunity. It took time to build up a client base, and a reputation. Now, about 90% of my business is repeat, or referal. They want me and my company, period. No biding, no competition, no nothing but a fair price, good work, and an honest man. They love it, they want it, and they pay for it.Now don't get me wrong. Listen to these guys and learn all you can. You WILL need this info. But, don't rely on this info to keep you afloat right now. You have bills right now, and very little business. Without money, you are gonna have to earn it somewhere else, doing something different. Hustle. It is all about hustle at this point in the game for you. Instead of spending money on video tapes and books right now, buy some business cards (or print up wour own). Go to Wal-Mart, grocery stores, shopping malls, etc... and pass them out to everyone you see. Leave some at the video stores, the lumber yards, the senior citizens center and anywhere else you can think of that has people. Print up flyers and go around the neighborhoods passing them out. GET YOUR NAME IN FRONT OF THE PUBLIC. Ads in the Business and Service Directory of your local newspaper is a good place. Stop at every new house you see being built. Talk to the Lead carpenter and the builders. Get your name out there, and let them know who you are, what you do, and how you can help them. Don't sit around the house thinking about this stuff, get out and do it. When you aren't on a job working, or working on a bid, you need to be out hustling. This WILL be a 24 hour a day task until you start to see some work coming in steadily. Get ready for it, expect it, and put your heart into it. If you are not ready to put that much time and energy into this at this point, then you seriously need to start looking for a job somehwere. If you are truly wanting to make your business a reality, and make a decent living at it, then you are going to put in some long, hard hours in the beginning, especially since you are starting out the way you are. Think about it.Just a thought (and a little ranting and raving)James DuHamel
*That's the one I read next. just started it this evening, I'll let you know.
*Steve,It was a pleasure. I hope it helps you get focus on “What Matters Most.”Do not hesitate to write or call if you have a specific problem.Best of luck………Richard KallerCertified Contractors NetWorkE-mail [email protected] http://www.contractors.netPS: We also have a couple very powerful Free tapes. If you would like them send me your mailing address. One thing is for sure it does not take a ton of experience to become successful in the remodeling business. It does not require a lot of trial and error experience. The people that have built a successful remodeling business based on trial and error may think that is the way it is done. There are better less painful ways.
*James,I find your post most interesting. Unfortunately, I did not find much “how to” maybe you could help clarify.Thanks…………RichardJames - Richard comes along and tells ya (and me) how he got HIS name out to the public, so that he could build up a client list, references, and a reputation. Read the list. What he did works, no doubt about it. But it takes some serious cash to do that. You don't have any. You got bills instead. So that route is out of the question. Richard – What list are you referring to? I recommended canvassing and telemarketing in targeted markets, or where you have work in progress. Are you suggesting there is something less expensive, and more effective?What would that be?James - Sonny tells ya how to sell your value, and reach to the higher end client. You can't do that right now. You got bills, and no money. Richard – Most of us know that the money in remodeling is in the high-end market. Why can’t a new start-up focus on that market first? James - You HAVE to go for the lower end until you get some references, reputation, and experience as a contractor. That's just fact. Richard – I am confused. Why would you suggest they work in the low-end where the margins are thin especially for a company that needs high margins from it's work to survive?James - You absolutely MUST get your name out to the public. The more it is in the public eye, the better the chance of you getting a call for a bid. There are cheap ways to do this, but they take lots and lots of effort on your part, leg work, long hours, and a little ingenuity. It can be done. Most here have done it. Richard – Do you have examples that have proven to work anywhere near close to the proven success of canvassing and telemarketing a targeted market, or a market where you have work in progress??James - A lot of what I see here is good info, and would truly help a business. Problem is, it will help an already established business increase its' bottom line. It rely's on you already having an established customer base, reputation, experience, and references. It doesn't do squat for a new business starting out in the condition you are starting. Richard – Can you explain for me why the proven methods for developing high quality leads for virtually no cost would work for an established company and not a start up? My experience with these methods was as a start-up. That is why we are here today over 30 years later.James - Now, about 90% of my business is repeat, or referal. They want me and my company, period. No biding, no competition, no nothing but a fair price, good work, and an honest man. They love it, they want it, and they pay for it.Richard – How does this information help a start-up today?How do you control a referral or repeat customer from getting another bid?How do you determine if they did or did not get a competitive bid?Are you doing Job Costing on these so-called no bid projects?Do they represent wages only, or wages and profit?James - Instead of spending money on video tapes and books right now, buy some business cards (or print up wour own). Go to Wal-Mart, grocery stores, shopping malls, etc... and pass them out to everyone you see. Leave some at the video stores, the lumber yards, the senior citizens center and anywhere else you can think of that has people.Richard – Have you bought tapes and books yourself and experienced how quickly they can shorten the learning curve?Have you actually gone to stores and passed out cards like you are recommending?Do you have any statistics that would suggest passing out remodeling cards at stores generates quality, remodeling leads? How do you know which person at the store is in your market and needs your kind of work?How many leads should you expect an hour from this activity?What average unit of sale should you expect from this activity?Thanks for your post and ideas.Richard KallerCertified Contractors NetWorkE-mail [email protected] http://www.contractors.net
*James,I find your post most interesting. Unfortunately, I did not find much “how to” maybe you could help clarify.Thanks…………RichardJames - Richard comes along and tells ya (and me) how he got HIS name out to the public, so that he could build up a client list, references, and a reputation. Read the list. What he did works, no doubt about it. But it takes some serious cash to do that. You don't have any. You got bills instead. So that route is out of the question. Richard – What list are you referring to? I recommended canvassing and telemarketing in targeted markets, or where you have work in progress. Are you suggesting there is something less expensive, and more effective?What would that be?James - Sonny tells ya how to sell your value, and reach to the higher end client. You can't do that right now. You got bills, and no money. Richard – Most of us know that the money in remodeling is in the high-end market. Why can’t a new start-up focus on that market first? James - You HAVE to go for the lower end until you get some references, reputation, and experience as a contractor. That's just fact. Richard – I am confused. Why would you suggest they work in the low-end where the margins are thin especially for a company that needs high margins from it's work to survive?James - You absolutely MUST get your name out to the public. The more it is in the public eye, the better the chance of you getting a call for a bid. There are cheap ways to do this, but they take lots and lots of effort on your part, leg work, long hours, and a little ingenuity. It can be done. Most here have done it. Richard – Do you have examples that have proven to work anywhere near close to the proven success of canvassing and telemarketing a targeted market, or a market where you have work in progress??James - A lot of what I see here is good info, and would truly help a business. Problem is, it will help an already established business increase its' bottom line. It rely's on you already having an established customer base, reputation, experience, and references. It doesn't do squat for a new business starting out in the condition you are starting. Richard – Can you explain for me why the proven methods for developing high quality leads for virtually no cost would work for an established company and not a start up? My experience with these methods was as a start-up. That is why we are here today over 30 years later.James - Now, about 90% of my business is repeat, or referal. They want me and my company, period. No biding, no competition, no nothing but a fair price, good work, and an honest man. They love it, they want it, and they pay for it.Richard – How does this information help a start-up today?How do you control a referral or repeat customer from getting another bid?How do you determine if they did or did not get a competitive bid?Are you doing Job Costing on these so-called no bid projects?Do they represent wages only, or wages and profit?James - Instead of spending money on video tapes and books right now, buy some business cards (or print up wour own). Go to Wal-Mart, grocery stores, shopping malls, etc... and pass them out to everyone you see. Leave some at the video stores, the lumber yards, the senior citizens center and anywhere else you can think of that has people.Richard – Have you bought tapes and books yourself and experienced how quickly they can shorten the learning curve?Have you actually gone to stores and passed out cards like you are recommending?Do you have any statistics that would suggest passing out remodeling cards at stores generates quality, remodeling leads? How do you know which person at the store is in your market and needs your kind of work?How many leads should you expect an hour from this activity?What average unit of sale should you expect from this activity?Thanks for your post and ideas.Richard KallerCertified Contractors NetWorkE-mail [email protected] http://www.contractors.net
*James, as well as listening to the ideas here I am also doing exactly as you suggest. I took a little of the money from one of my earlier jobs and had my truck lettered. I printed out a zillion business cards (avery has new ones that have no perforation and look like preofessionally printed ones) and have left them with everyone I can get to listen to me and a few who wouldn't. I have gotten to know a few local business owners and although I haven't got any business from them yet, they let me leave a stack of my cards at their cash register so that as people are paying they can't help but to see them. I just went to a pig roast one of the local building suppliers had and got to network a little there. (side note, the salesman at the supply house remembers my name and always says hi and treats me like one of the guys who's been buying there for years and I've hardly bought anything there yet. when things pick up you know they'll get my business) I'm working angles like I've never done before. although it appears that I am on here alot, it really a passing by the house thing. I'm on one side of town doing one thing, have to go over to the other side so I stop home, kiss the kids, check my email, interact with you guys, then go. then I come back do the same and go back to the other side of town. mostly because who or what I want to do seems to not be able to coordinate for just one time of the day but I am also driving my big blue dodge billboard and advertising the whole way. the paper for the town next to me was running a special pullout for home improvements so I got a business card size ad in that. good circulation and it goes into their sister papers as well. turns out they made a small typo, lower case i for improvements and when I talked to the salesman he said they would run another ad, corrected this time, in the main paper on saturday for free. As for the book(s), Sonny has been generous enough to loan me several of his books on business to read. I said elsewhere in the FHB site that I have never put so much time into anything before but that's ok, it's what I want to do. and don't worry I've got some shit jobs and have actually had a couple of ok ones. you are right though James, it's a matter of time and effort. I'll make it through.when I do make it through I'll have something to be very proud of.
*Ok guys it's starting to look like a war zone here. I am doing everything that makes sense to me and a few things that don't. I am following all reasonable suggestions here and hopefully it will pay off so that I can pick the jobs I want. I would rather have too many calls than not enough so I'm going to listen to all of you. some or all of this information will pay off. when it does I will be able to see what worked better for my intended target and follow those lines. everyone is different and what may work for one may not work for another. time will tell me what is effective for me but like I said in the mean time I'm going to try it all.
*Atta boy Steve.James DuHamel
*Ditto! The only way to go down is kicking, scratching, fighting and yelling. Of course, the only way to get up is kicking, scratching, fighting and - speaking softly. Fortunately, since you've already gone "down", it only gets better from here on "up." Unless you blow out two tires at the same time.BTW, my offer still stands about that ad in the paper.Give em hell!
*Richard,Welcome to Breaktime. It is a rough place, and sometimes an unforgiving place. It is also a place that is full of good information, good people, and differing ideals. Your ideals and mine differ on some basic points. That's a good thing as far as I'm concerned. It opens doors for good conversation and the exchange of ideas. This, in my opinion, is what it is all about here. First off, My information was for Steve, not EVERYONE here. Steve's situation is a bit different than most. He came off of a job as an engineer, making a good living. He has high mortgage, vehicle notes, kids, and bills. He needs money NOW. He started his business to make money NOW. The information I got about his financial situation, start up procedures, and need for income NOW comes from his many posts here at Breaktime. When a new business starts up, advertising is an important part. Money is needed for that. If you have none, you gotta make do with whatever method you can to get your name out in the public eye. Hiring telemarketers and canvassing personnel is not an option for Steve. It is a good source for advertising, but not in his case. What he needs right now is clients, references, and money. This is his number one priority. He has time to grow, and to follow some of the procedures you outline. Right now he needs to build his reputation, reference list, and he needs money.Steve works alone. He has no employees, which means he has no payroll (other than his own) to deal with. Payroll is a major overhead for a business - any business. He has no office, and very few bills associated with his business. His overhead is low at this point in the game. Because his overhead is probably at its lowest point right now, then right now is when he SHOULD be considering those "thin margin" jobs as you call them. He needs the references, the client base to build from, and he needs money. I don't consider them thin margin at all. I'm gonna say something here that I do not want you to take personally. By not being in the actual conracting business for many years, and your belief that higher end jobs are the money makers, how could you possibly have any idea what kind of margins these jobs produce? They actually pay quite well, and the margins are rather high. When he gets enough experience under his belt, he will develope a feel for the tire kickers. This knowledge and feel will keep the low margin jobs going to someone else. As far as my repeat customers or referal customers getting competing bids, I wish they would. I love bidding against my competitors. They sell the job, and I sell my company and myself. I win most of the time. And I do mean MOST of the time. Not because of price, not because of materials. I win because I sell my company and myself. When I leave a potential customer's house, they feel good about hiring me and my company. When I deal with a potential client, the client, myself, and my company are primary subjects. The project is secondary. For all my competitors, the project is primary, and the client and themselves become secondary. I offer customer service, pampering, and professionalism. My competitors offer price. How I personally market myself and my business will be a bit different than how remodelers and builders market themselves. I serve a different market. It requires different approaches, and different ideas. Did I do all those things I told Steve about? You bet I did. I also had an advertising budget. Most new companies do not. I never used all of my budget each month. I made sure I got my name out there everywhere I could think of. It paid off for me. Steve needs attention NOW. He needs to get jobs so that he can get a reputaion, list of references, and move up the ladder to more lucrative customers and jobs. I also do things that some of you would not consider doing. I will go out and do small jobs like changing out ceiling fans, replacing water heaters, repairing small holes in drywall, etc... These jobs are not big, but I make good money at them. I also get a lot of BIG jobs from the customer later on. Those are the money makers for me. I also present bid packages instead of bid sheets to my potential clients. Even for very small jobs. They love the professionalism, and the attention to detail I show, especially when it is a small job. After they see my package, everyone else's bid seems bland, and lacking. If they go for price only, I say good for them. They are consumers too. I am just glad that someone ELSE was the low bidder. For anyone to start a business without any operating capital, no business plan, and no direction or strategy, is basically for them to commit business suicide. The odds are already stacked against a person starting out properly. For someone like Steve to start out with nothing, have no operating capital and no direction or strategy, and then need money immediately, the odds are astronomical. I do not want to see him fail. I want to see him beat those odds, and become successful. In the meantime, he needs income NOW. I am sure that your methods, as well as Sonny's methods (hell, I use 'em too) will benefit Steve tremendously. But you and I both know it takes time to learn these strategies, implement them, and practice them until they become second nature. Steve doesn't have that time. He needs to concentrate on any work he can get his hands on. In the meantime, he can learn and implement these business strategies. With no operating capital, you gotta have cash to continue in business. His first priority right now needs to be cash flow. If he doesn't get the cash flowing, and has no operating capital to back him up, he won't last long enough to learn these strategies. This, unfortunately, is the real world of contracting.I specialize in home repairs for a reason. I wrote a business plan (which is ALWAYS being updated), did some market research, and found out no one was concentrating on the repair aspect of home improvements. By specializing for many years, I am now well known in my area. Everyone that owns a home will have to have repairs done sooner or later. Most are not able to do them themselves. 9 times out of 10, repairing/replacing rotten bathroom floors turns into a full scale bathroom remodel. I learned how to turn these repairs into major remodels. While everyone else is concentrating on major jobs, and ignoring these small jobs, I am cleaning up. When the economy goes south, all those big jobs are gonna be drying up. Repairs will still be just as necessary, and just as plentiful. Except I will be a specialist in this area, while others will be builders and remodelers trying to get into the repair market. When I passed out all those flyers and cards, odds were extremely in my favor that the person that received my cards and flyers were homeowners. If not, they knew a homeowner. Homeowners of every walk of life are my potential customers. Repairs are necessary, not a luxury. They always manage to come up with enough money to get their homes fixed. Those that can't, or won't pay to have them fixed don't call me. I know my job costs, my overhead, and all relevent numbers associated with my business, and each job I do. I have been in business since 1987, and I have learned a lot over the years that has helped me tremendously. Steve has an advantage in this day and age that I did not have. He has cyberspace, and a vast amount of lifetime experiences here and elsewhere that is being shared with him. When I started out, getting help was hard, if not impossible. People were not willing to share their information, strategies, or ideas with each other. Right now, Steve is my concern and my worry. If he is going to make it, he HAS to get some cash flow going. He needs work in order to do this. Building his reputation and a list of references takes time. He has got to really start humping anfd hustling in order to start bringing in work. Just my opinion...James DuHamel
*Sonny,I assume you are replying to Steve? James DuHamel
*Steve,No war zone, no chop busting, no insulting, and no fighting. Just exchanges of ideas. Exchanges of ideas get ALL of us thinking.James DuHamel
*I don't believe it. Another brilliant post by James. Two in one day.I'll add only one more thing, which I also mentioned to Steve in a email. In Chicago when I first got into this business as a handyman, in Michigan and here in Naples. I flooded the area with my name and took any and all jobs that came toward me, crappy, great projects and even many losers. And one more thing. I worked cheap. I did all of that for one reason. To quickly create a date base of happy customers.And as for James, and I'm sure others, small repairs become large projects or thes same people called my a few months later for a large project, and no bidding. I became the family handyman just like the family doctor, lawyer or accountant.Once I got ot the point that I was booked for at lest two weeks with work, I raised my charged rate by $3 per hour for a month or two. If I still had 2 or more weeks of work the rate went up another $3 per hour. Within a year I was charging more than double my original rate but the booked up for a couple of months and with my first employee. It continued from there.Sure, I operated at a loss for the first year or so but that's typical is is why the IRS allows and expects new compnies to operate at a loss for their 1st two years.About small jobs. I remember back in 1996 when son Tom chastised me for taking a job painting about 80 lin. ft. of base shoe to match the base cause it was a small job. A flooring company installed wood flooring in two rooms and the unfinished shoe. The owner said "While you're here would you take a look at something for me?"It just so happened that owner had a leakage problem, as did virtually every other owner in that same development - 36 villas at about $400K each and about 5-6 years old.. It turned out the builder didn't provide suffcient supervision. Leaks from non existent roof flashing. Grade angled toward the villas with subsequent leaks into the homes via capillary and hydrostatic action. Cedar 1" from grade was rotting. Brick entry columns supporting entry roofs that had no waterproofing behind the brick and NON- treated framing behind them that rotted. Four foot high areas of brick against framed bow window areas from grade to window sills that were framed as opposed to CBS like the rest of the home. No air gap from the brick to the framing. It was filled with white sand that acted as a sponge. Brick caps level or tilted toward the wall instead of away from it. The bottom line was an average of about $28,000 in damage each of those 35 of 36 units. The builder still owned the last one. The 3 liability carriers he had during the development stage paid for the repairs. After totaling up to about $980,000.00 in work done over about 15 months, Tom stopped saying anything about small repairs. "How do you like that?" I said to Tom. "A while you're here job that turned out to be $980,000.00 worth of work."As I told Steve, take any and all jobs he could get to get cash flow and exposure. Quickly flood the area with thrilled repair "customers" and turn them into "clients", because as clients they will never or rarely again bother getting other bids for future work.I did one thing many newbies don't do. On T & M jobs that I never did before or had limited experience with, I charged them how long it should have taken, not how long it did take. That way I maintained my integrity.Once a job is done, never look at the profit by job other than for job costing and to correct estimating errors. In other words, don't get greedy job by job. Take the Japanese approach and Build a business for the long term.Like the movie: Build it (a smart business) and they will come.Geez, for only "one more thing" I'll be this post is close to another 2 pager.
*James,Thanks for your feedback.You cover many issues please see insertions in the appropriate places.RichardJames DuHamel - 01:30am Sep 23, 2001 EST (#39 of 42) J & M Home Maintenance Service (Southeast Texas) Richard, Welcome to Breaktime. It is a rough place, and sometimes an unforgiving place. It is also a place that is full of good information, good people, and differing ideals. Your ideals and mine differ on some basic points. That's a good thing as far as I'm concerned. It opens doors for good conversation and the exchange of ideas. This, in my opinion, is what it is all about here. Richard – Where are the differences?James - First off, My information was for Steve, not EVERYONE here. Richard – If it was private why did you choose to use a public forum? Why didn’t you just use e-mail? Same effort…right?James - Steve's situation is a bit different than most. He came off of a job as an engineer, making a good living. He has high mortgage, vehicle notes, kids, and bills. He needs money NOW. He started his business to make money NOW. The information I got about his financial situation, start up procedures, and need for income NOW comes from his many posts here at Breaktime. Richard – What is different about his situation? According to my experience working as a consultant to contractors for 17 years it is typical, i.e., started a business with no written business plan, started a business without proper capitalization. This is about 90% of the start-ups. Was your start-up any different?James - When a new business starts up, advertising is an important part. Money is needed for that. If you have none, you gotta make do with whatever method you can to get your name out in the public eye. Hiring telemarketers and canvassing personnel is not an option for Steve. Richard – Why would extremely low cost highly efficient and effective marketing such as canvassing and telemarketing not be an option for Steve???I am totally at a loss with your comment since those two methods are key methods for driving home improvement leads when there is not a big marketing budget?James - It is a good source for advertising, but not in his case. What he needs right now is clients, references, and money. Richard – How does a start-up get references? Don’t they first have to do jobs to get references?How do they get money if they don’t start out with money? Don’t they have to do jobs?If they have to do jobs then don’t they have to have leads?If they have to have leads is there anything better that specifically targeted canvassing and telemarketing?James - This is his number one priority. He has time to grow, and to follow some of the procedures you outline. Right now he needs to build his reputation, reference list, and he needs money. Richard – I understand. How does he do that without first having leads?James - Steve works alone. He has no employees, which means he has no payroll (other than his own) to deal with. Payroll is a major overhead for a business - any business. He has no office, and very few bills associated with his business. His overhead is low at this point in the game. Because his overhead is probably at its lowest point right now, then right now is when he SHOULD be considering those "thin margin" jobs as you call them. Richard – Why would anyone think in terms of “thin margin” jobs when they can use exactly the same resources and do “high margin” jobs? Why shouldn’t he take advantage of his low overhead and quickly make profits?Am I missing something here? I am not trying to be argumentative. I just don’t get it. Why work backwards? Why do it wrong in the beginning and then do it right?Why not start out and do it right in the first place if you know what right is?James - He needs the references, the client base to build from, and he needs money. I don't consider them thin margin at all. I'm gonna say something here that I do not want you to take personally. By not being in the actual conracting business for many years, and your belief that higher end jobs are the money makers, how could you possibly have any idea what kind of margins these jobs produce? Richard – You obviously do not know me, or my business background as a contractor to make such a statement. You also must not know much about CCN and the access I have to actual financial statements. Chances are I have more financial information on contractors than anyone in the US because of CCN.For your information, I was in the contracting business for 30 years. When I sold my businesses it was a network of 5 companies. All of these companies still operate today.All companies had lineages back 30 years or more. They were not simple start-ups. The success of these companies triggered them to be picked to be role models in magazine articles and seminars by manufacturers sponsoring contractor-training programs.James - They actually pay quite well, and the margins are rather high. Richard – What do you call pay quite well? Does that mean they pay upon completion. If so that has been the tradition in the industry for decades. What do you call a high margin? We train our single line contractors to have a direct cost of approximately 40%, never over 50%. Remodelers, because they are not specialists tend to have higher costs. Of course new Members with CCN do not have these margins because they are working with incorrect data and incorrect expectations, thus the high failure rate of remodelers.Are you suggesting you have a gross profit in excess of 50%?James - When he gets enough experience under his belt, he will develope a feel for the tire kickers. This knowledge and feel will keep the low margin jobs going to someone else. Richard – What is that feel? I have sold in the home for 0ver 30 years. The last sale I closed was within two weeks when I was helping to train a Members salesman. The professionals in this business know “The best is the worst and the Worst is the best.” Are you aware of this expression? Do you know what it means? How do you qualify a prospect? We teach Members 29 questions to ask a Client in order to qualify them and to determine the appropriate sales strategy.James - As far as my repeat customers or referal customers getting competing bids, I wish they would. I love bidding against my competitors. Richard – Why do you love it? What does a competitive bid do for you?James - They sell the job, and I sell my company and myself. I win most of the time. Richard – Our experience indicates that if some one is closing “most of the time” they are “buying jobs” not “selling jobs” i.e., the price is way low. I have no clue what margins you are expecting but our data is based on millions of dollars of sales annually.James - And I do mean MOST of the time. Not because of price, not because of materials. Richard – How do you differentiate materials? Do you have proprietary materials others can’t buy? That was a key selling point for the Surfa-Shield dealers.James - I win because I sell my company and myself. When I leave a potential customer's house, they feel good about hiring me and my company. Richard – How do you know they feel good? Have they approved the proposal?James - When I deal with a potential client, the client, myself, and my company are primary subjects. The project is secondary. For all my competitors, the project is primary, and the client and themselves become secondary. I offer customer service, pampering, and professionalism. My competitors offer price. Richard – Sounds like a winning strategy. I am sure it works.James - How I personally market myself and my business will be a bit different than how remodelers and builders market themselves. I serve a different market. It requires different approaches, and different ideas. Richard – What do you sell? What is different about selling your products vs. national name brand high quality products? Do people buy products or the benefits the products provide for them?James - Did I do all those things I told Steve about? You bet I did. I also had an advertising budget. Most new companies do not. I never used all of my budget each month. I made sure I got my name out there everywhere I could think of. It paid off for me. Steve needs attention NOW. He needs to get jobs so that he can get a reputaion, list of references, and move up the ladder to more lucrative customers and jobs. Richard – Are you saying that passing business cards out in parking lots is a worthwhile activity? If so how many leads do you expect in an hour? What is the average unit of sale? What is the closing ratio?Based on my experience being first trained to canvass and then to telemarket I can’t see working parking lots even come close to efficiency and effectiveness. What am I missing about that idea?James - I also do things that some of you would not consider doing. I will go out and do small jobs like changing out ceiling fans, replacing water heaters, repairing small holes in drywall, etc. Richard – How would you know what I would do? Quite frankly, I think the handyman service can be extremely profitable and it is now going into boom years, especially if the economy slows down.James - These jobs are not big, but I make good money at them. I also get a lot of BIG jobs from the customer later on. Those are the money makers for me. Richard – I know small jobs can lead to big jobs, but how are small jobs moneymakers? I was taught decades ago if you play with pennies you make pennies. If you play with dollars you make dollars. James - I also present bid packages instead of bid sheets to my potential clients. Even for very small jobs. They love the professionalism, and the attention to detail I show, especially when it is a small job. After they see my package, everyone else's bid seems bland, and lacking. If they go for price only, I say good for them. They are consumers too. I am just glad that someone ELSE was the low bidder. Richard – Are you competing against people without proposals and without fixed prices, and instead they work off estimate sheets? How often does that happen? What market are you in?James - For anyone to start a business without any operating capital, no business plan, and no direction or strategy, is basically for them to commit business suicide. The odds are already stacked against a person starting out properly. Richard – You are correct the odds are tough as evidence by the high rate of remodeler failure or remodeler burn out. However, how do you explain the big remodeling companies and their roots? Most started out as small carpentry companies, often one-man bands.James - For someone like Steve to start out with nothing, have no operating capital and no direction or strategy, and then need money immediately, the odds are astronomical. Richard – Sorry, Can’t agree from personal experience. I started out about $137,000 in debt and had zero money. My initial cash flow was my 1/3 deposit.James - I do not want to see him fail. I want to see him beat those odds, and become successful. In the meantime, he needs income NOW. I am sure that your methods, as well as Sonny's methods (hell, I use 'em too) will benefit Steve tremendously. But you and I both know it takes time to learn these strategies, implement them, and practice them until they become second nature. Richard – How long do you think it takes to become an effective canvasser? My Dad taught me how in hours and he sold three of my leads on the same weekend I got them. Based on my experience there is absolutely nothing as fast as canvassing and as cost effective as canvassing. What is strange is the high number of people afraid of canvassing and that they would rather fail or not have work than to generate leads through canvassing.James - Steve doesn't have that time. He needs to concentrate on any work he can get his hands on. In the meantime, he can learn and implement these business strategies. With no operating capital, you gotta have cash to continue in business. His first priority right now needs to be cash flow. If he doesn't get the cash flowing, and has no operating capital to back him up, he won't last long enough to learn these strategies. This, unfortunately, is the real world of contracting. Richard – I agree and that is why I suggest canvassing and telemarketing, as well s, a one third deposit as the way to generate cash flow.James - I specialize in home repairs for a reason. I wrote a business plan (which is ALWAYS being updated), did some market research, and found out no one was concentrating on the repair aspect of home improvements. By specializing for many years, I am now well known in my area. Everyone that owns a home will have to have repairs done sooner or later. Most are not able to do them themselves. 9 times out of 10, repairing/replacing rotten bathroom floors turns into a full scale bathroom remodel. I learned how to turn these repairs into major remodels. Richard – Excellent strategy.James - While everyone else is concentrating on major jobs, and ignoring these small jobs, I am cleaning up. When the economy goes south, all those big jobs are gonna be drying up. Repairs will still be just as necessary, and just as plentiful. Richard – I totally agree.James - Except I will be a specialist in this area, while others will be builders and remodelers trying to get into the repair market. When I passed out all those flyers and cards, odds were extremely in my favor that the person that received my cards and flyers were homeowners. If not, they knew a homeowner. Homeowners of every walk of life are my potential customers. Repairs are necessary, not a luxury. They always manage to come up with enough money to get their homes fixed. Those that can't, or won't pay to have them fixed don't call me. Richard – Agreed.James - I know my job costs, my overhead, and all relevent numbers associated with my business, and each job I do. Richard – Do you mind sharing percentages? For example in CCN we recommend Direct Cost (labor & material, no labor burden) to be 40% maximum. Labor burden is probably in the range of 10% or Cost of Goods Sold 50%.We figure 5-10% for lead generation, 8-10% for sales cost, 25%-35% for overhead (this assumes the Owner will be paid the same as if he was working for an outsider doing the same work, not less because he owns the company) and 10% profit. I was taught o work inside these percentages over 30 years ago. They worked then and they work today except in rare cases. Owners that claim they can’t keep direct cost under 50% are generally not making any more than wages, little to no profits. Owners that say their overhead is far less than 25% are usually underpaid and they could work for strangers for more. Many find
*Richard, two things,1) what are you talking about when you say 1/3 deposit? are you talking about a deposit on a job or something else?2) Any chance you'd like to share with me those 29 qualifying questions? Please.My email is [email protected] if you are so inclined. if not I would understand as it is something for CCN members.
*Richard, two things, 1) what are you talking about when you say 1/3 deposit? are you talking about a deposit on a job or something else? Richard – Our standard cash terms are 1/3 with the order, 1/3 upon half completion, balance upon substantial completion, less any punch list items.Some states like California and New York have limitations on deposits so the terms are modified in those areas. The point is that the Client finances their job. We are not their bank. We don’t fund the job and then send them a bill at the end.2) Any chance you'd like to share with me those 29 qualifying questions? Please. Richard – I sent it to you.Steve - My email is [email protected] if you are so inclined. if not I would understand, as it is something for CCN members. Richard – It is for CCN Members and it is part of the CCN proprietary sales process. Please don’t pass it around. Feel free to contact me about if you have questions about the questions.Best of luck…………..Richard KallerCertified Contractors NetWork
*Thank you Richard.
*Richard,I'll answer all your questions as best I can.i Richard – Where are the differences? I don't think you should be advertising for new clients here. You do.i Richard – If it was private why did you choose to use a public forum? Why didn’t you just use e-mail? Same effort…right? Same reason you did when you wrote that entire post directly to me. E-mail- same effort, right? i Richard – What is different about his situation? According to my experience working as a consultant to contractors for 17 years it is typical, i.e., started a business with no written business plan, started a business without proper capitalization. This is about 90% of the start-ups. Proper working capital is one thing. No capital and needing immediate income is entirely different. Sorry you can't see the difference. i Was your start-up any different? Yes it was. If you would have read my entire post before answering the questions, you would have known (you actually did reply that you agreed with how I started my business, but it was later on down the post)i Richard – Why would extremely low cost highly efficient and effective marketing such as canvassing and telemarketing not be an option for Steve??? extremely low cost - man you have GOT to be kidding on this one. Telemarketing is NOT cheap. There are many effective methods that turn out as good, if not better leads than telemarketing, and fro a lot cheaper price. Give me a number in dollars for telemarketing. I have a personal opinion about telemarketers, so I'll refrain from answering any more about them. It really doesn't matter, when you have NO MONEY AT ALL, what you consider a low cost approach is still beyond reach. i Richard – You obviously do not know me, or my business background as a contractor to make such a statement. You also must not know much about CCN and the access I have to actual financial statements. Chances are I have more financial information on contractors than anyone in the US because of CCN. For your information, I was in the contracting business for 30 years. When I sold my businesses it was a network of 5 companies. All of these companies still operate today. This answer was in response to the question I asked about how you could actually know the profit margins of smaller jobs since you have been out of the actual contracting business for quite some time. Your answer tells me what I pretty much already knew. You don't know about the profit margins. you only know about the margins of your CCN members. There are many, many, many contractors out there that are not part of your network, who make very good margins on those small jobs. You cannot compare all of us with your members bad business judgements or practices. The way you are making it sound, we are ALL idiots about running our business, and need your expertly designed guidance to get s through, and make us profitable. My opinion on how you are presenting yourself and your company.i Richard – What do you call pay quite well? Does that mean they pay upon completion. If so that has been the tradition in the industry for decades. First off, I do not talk about my personal profit margins, or dollar amounts on a public board. I notice you don''t wither, so we'll let that one go. Secondly, if a job takes more than a couple of days, I charge per stage. I get my payments as I go. I get the FINAL payment upon substantial completion. This method is what I consider the tradition in the industry, at least around here. How you do it where you are may be different.i Richard – How does a start-up get references? Don’t they first have to do jobs to get references? How do they get money if they don’t start out with money? Don’t they have to do jobs? If they have to do jobs then don’t they have to have leads? If they have to have leads is there anything better that specifically targeted canvassing and telemarketing? Yes they have to get jobs to get references. In Steve's case, and in a lot of cases just like him, you gotta take what comes along, and go from there. Try this scenario on for size, and see if it finally starts to sink in. It is Tuesday morning. Mortgage is due Friday. Truck note due next Monday. Need to buy groceries, need to pay the utility bills. No money. Shit job comes along that will pay $800 and take 3 days to complete. Does he take it, or does he try to canvass for a better job with a better bottom line, and hope it comes in the nest day or so? I still say take the shit job, and any more of them that come along until you get the bills payed, and get out of the stress situation. This ain't a "I'd like to be a contractor some day, how do I go about doing it" scenario. It is a "gotta have cash NOW" scenario. You deal with established contractors and help them to grow their business into a more profitable venture. That's good. Here, we deal a lot with people just like Steve. Gotta have money NOW types who need some help and advice from people who, when they started out, were just like him.i What do you call a high margin? We train our single line contractors to have a direct cost of approximately 40%, never over 50%. Remodelers, because they are not specialists tend to have higher costs. Of course new Members with CCN do not have these margins because they are working with incorrect data and incorrect expectations, thus the high failure rate of remodelers. I call a high margin job any job that made me a heck of a lot more than it cost me to do it. I was taught in business school that any business, no matter WHO they were, or what they sold, should try to keep their direct cost hovering somewhere in the 35% range. Your numbers sound about right, or close enough.As for the reason for failures of remodelers, you don't deal with the failures. You deal with members. Outside of your membership, I personally don't think you have correct information about why a business failed. You may assume, or speculate, but you have no hard proof. Now the IRS, they have proof of why MOST business fail, regardless of what the business is. Top reason, according to them, is the owner did not know enough about how to run a business. Second reason is lack of operating capital to see them through. I too can only speculate. i Richard – Why would anyone think in terms of “thin margin” jobs when they can use exactly the same resources and do “high margin” jobs? Why shouldn’t he take advantage of his low overhead and quickly make profits? Am I missing something here? I am not trying to be argumentative. I just don’t get it. Why work backwards? Why do it wrong in the beginning and then do it right? Your definition of thin margin jobs differes from mine, evidently. You think smaller jobs only have thin margins. I don't.If "starting out right in the first place" is the priority of your CCN, why don't you tell your members that have only been in business a very short time to get out of the business until they write a business plan, set up advertising, and have enough operating capital to carry them through? THIS method is the correct way of starting out ANY business. It just sounds like a contradiction to me.Evidently you are missing something here. You said yourself that CCN isn't for everybody. Whenever someone here (me for example) tries to let you know that maybe your ideas and methods aren't such a good idea "at this time" for someone like Steve, you actually do get argumentative and try to sell your network even harder. We learned here a long time ago that everyone is different, and everyone operates their businesses a little different. We set them up to fit our personal goals, and the way that best fits and suits us. We share our methods with each other. We NEVER try to tell anyone here that we have the only method that works. By sharing like we do, we get everyone thinking. Thinking brings about changes for the good in some businesses. i Richard – Why do you love it? What does a competitive bid do for you? Eliminates the competition. Next time the customer wants some work done, the other competing bidders are not even considered. I am. I get the call to do some remodeling or repair work. If I am not the winning contractor, I probably didn't want the job anyway. I consider those customers as cost concerns only typoe of customers. It is rare I lose a competing bid. i Richard – Are you saying that passing business cards out in parking lots is a worthwhile activity? If so how many leads do you expect in an hour? What is the average unit of sale? What is the closing ratio? Based on my experience being first trained to canvass and then to telemarket I can’t see working parking lots even come close to efficiency and effectiveness. What am I missing about that idea? Yes I am saying it is an effective marketing activity, at least for me. You actually agreed with me later in my post.As to number of leads, I get more than I can handle. I consider that a good thing. Having more than I can handle means I get to choose the best ones, and refer the rest. What you are missing about that idea is the fact that I have a different type of business than what you are accustomed to dealing with. I spoke about it in my post, so I won't here. These people are my key market, and I talk to them directly. When I give them a card, they get to see me, talk to me, and ask me questions if need be. They get that all important first impression right then and there. Even if they are wanting more than one bid, I have the advantage becasue I have already talked to them, and they know what I look like, and what my demeanor is. All other contractors, or at least most of them are coming in blind. Being first to make personal contact goes a LONG way.I am tired of writing, so I'm gonna stop here. As you can probably see, we don't see eye to eye on a lot of things. I do, however, feel that we share the same overall outlook of trying to make this industry more profitable, and making conractors better business people and better money makers. We just see the path a little different sometimes. Cheers,James DuHamel
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This subject gets comments in many different threads so I thought I'd give it it's own thread.
This from the current issue (got mine today) of Remodeling Magazine (www.remodeling.hw.net), an excerpt of article by Linda Case entitled "Build Profitibility."
I quote Ms. Case:
"If you don't know how to make money in this business, here's the reality:
You can be the highest quality remodeler in your town and go broke.
You can provide the best service - the best product - and go broke.
Your clients can adore you, enjoy your great service and product, and help you go broke.
Your clients can then refer their friends and co-workers and help you go broke even faster.
Being technically good at what you do will not, in and of itself, make you money.
These are many wise words for newbies and those a just a little older than newbies. Please, don't think you've covered all the bases. You don't.