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Shawn McCadden

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Should You Participate In LinkedIn Discussions If They Are Moderated?

Posted by Shawn McCadden on Tue, May 14,2013 @ 06:00 AM

Should You Participate In LinkedIn Discussions If They Are Moderated?

LinkedIn discussion moderation

 

Recently I have noticed that several different discussions in the groups I follow on LinkedIn are now being moderated.   When I submit a comment I get a message that my comment will be reviewed by the moderator before it is posted.   I have decided I will no longer participate in these moderated discussions.  The problem is I haven’t yet figured out how to tell if a discussion is being moderated until I hit the submit button.  Does anyone know if there is a way to tell if a specific discussion or group is moderated?

I understand that some moderators with good intentions may be trying to eliminate the non-professional comments and personal attacks.  If you frequent LinkedIn groups with contractors as members you have probably noticed that there are some members who resort to foul language, unprofessional comments and even personal attacks.  I have also noticed one particular commenter who seems to always find something wrong with someone’s opinion and proceeds to kill the purpose of any discussion simply by participating.


Top two reasons why I have decided not to participate

  1. social media moderationFirst, my feeling is that they are not discussions if someone can decide whether or not they want my comment to be part of the discussion. I say this because I have noticed both on LinkedIn and on several different national newspaper sites I visited and commented on the moderator limits the comments to only those that support their own opinions and or to control the direction of the conversation.  We live in a free country where our freedom to express our opinions differentiates us from many other countries on this planet.  It pains me to see that some are trying to take that freedom away from us to serve their own purposes and or to purposely mislead readers.
  2. My second reason is because unless comments are posted instantly, and someone reading the comment can in turn instantly respond with another comment, it’s not a discussion.  Instead it becomes a collection of thoughts.  Think about it.  Unless the moderator is sitting at his or her computer waiting for the next comment, there will be gaps in time between when the submit button is clicked and the moderator reviews the comment to decide to post it or not.  This being the case I have already noticed that the comments, when eventually approved, become out of order and out of context.   That’s not a discussion.

LinkedIn discussions are being moderated

 

I think both reasons above are actually starting to reduce the conversations at these sites and is already compromising our industry’s ability to openly share information and help each other.  This is a very bad thing for our industry.

 

 

I see and offer three options to address this concern about discussion moderation.

  1. LinkedIn could make it obvious to group members which discussions are moderated. I think this should be done in an obvious way right within the discussion’s description at the top of the page.  If every discussion posted to the group will be moderated, I think that needs to be obvious as well.  Also, to avoid wasting time, I think all moderated discussions should somehow be flagged within in the emails we all receive as group members letting us know about new discussions and new comments on existing discussions.  If done this way we can decide for ourselves if we want to participate or not, in a discussion and or a group.
  2. Bad behavior on LinkedInIf group members are behaving in an inappropriate and or unprofessional manner, there should be a defined way to have their ability to participate in the current discussion instantly terminated.   And, if they have been terminated from a certain number of previous discussions, perhaps they should be permanently removed from the group, maybe even from LinkedIn.
  3. The last one I offer is the one I hope doesn’t become the default choice.  With this third option those of you who feel the same way about this as me will have no choice but to discontinue our participation and or membership in a group that allows moderation of comments before they are posted.

 

We can be frank, but we must remain professional

Social media for contractorsI hope those of you reading this see my purpose in writing this as a genuine attempt to protect the value we get and enjoy from productive and professional discussions at social media sites and online discussions.  To protect and facilitate discussions where all members can openly share advice and opinions without the risk of attacks and being subjected to foul language.   As one frustrated commenter put it, LinkedIn should be a place where we can safely ask questions and as true professionals safely help each other improve our businesses and our lives.  If you have a suggestion to help accomplish this, I hope you will add it to the list I offered above.

 

What say you? 

Free speech on LinkedInIf you agree something must be done about this concern please make others aware of this blog post so they can speak their views as well.  Although I will post this blog to LinkedIn discussion groups, I cannot know for sure or control whether they are being moderated or not.   If you find this article via LinkedIn, rather than post your comment on LinkedIn, post it here.  I promise I won’t moderate the comments you leave here at my blog, every comment will be posted right away.   I have and will however delete inappropriate comments and or comments with foul language.  My blog use policy can be viewed here.

 

Topics: Social Media for Contractors, Shawn's Predictions

Seven Ways Contractors Can Prequalify a Good Web Site Designer

Posted by Shawn McCadden on Sun, May 12,2013 @ 06:00 AM

Seven Ways Contractors Can Prequalify a Good Web Site Designer

Contractor website designer

Having and working on my web site has been a very rewarding and educational experience.  Because the web site company I worked with helped me design the function as well as the appearance of my site it quickly became the primary source of new business for me and my company.  Because they helped me select my hosting service and my content management system (CMS), and because they trained me on how to use my CMS, I can create pages, edit my content and even optimize my site for SEO on my own without needing them to do it for me.  When I want to add a new function to my site they are there to help me do so and will also teach me how to use and maintain the new function.

 

Win-Win!

Website designer for a contractorAll this leads to my ability to help my targeted customer types find me and find out what it will be like to work with me as their coach or mentor before they contact me about my services.  The experience of getting  my own web site up, learning about using it as a marketing tool and the success I have had using it as a tool  has also given me the ability to help my contractor coaching clients get on the right path with their own web sites!

 

Do you have the right web site and web site designer?

choosing a web site designerIf your business doesn’t yet have a web site, or the one you have isn’t helping your target customers find you like mine helps me, don’t make the mistake of working with the wrong web site designer.  Here are a few “red flags” to watch for as you either work with your current designer or as you interview one to work with.

  1. Never work with a designer who doesn’t offer a CMS or requires that he or she be the only one who can add to or edit your web site.
  2. Never work with a designer unless their offering includes a way to measure your web site efforts and results (analytics) and you have access to those analytics on demand.
  3. If they don’t ask you about and include any calls to action and landing pages, you will probably end up with an on-line brochure that won’t generate quality leads.
  4. If the price seems too good to be true, don’t work with them.  Either they don’t know what they are doing, will only be creating an “on-line brochure” or they will get you on “extras” after you’re stuck working with them.
  5. Contractor web site helpIf they offer to help you with SEO, but never ask you who your target customers, job types and market area are you may get visits to your site but you will probably never be able to covert those visits into paying customers.
  6. If they don’t insist you include a blog they probably don’t understand SEO for contractors.  Also, make sure the blog is part of your site, not linked to another site or service.
  7. Never work with a designer who wants to own your URL (web site address).

I hope you found this article helpful.  Please use the comments area below to share your own good experiences and or your own “red flags”.  If you want help planning the purpose and function of your web site, or help with selecting a web site designer, send me an email me now.

 

Other related articles and information about websites for contractors

Hate Contractor Lead Generation Services?  "Rather than buy all your eggs, why not get some chickens?"

On Your Contractor Web Site, Qualify, Don’t Disqualify Your Prospects

If You Won’t Offer Gen Y Prospects What They Want They Will Go Away

 


 

Topics: Marketing Ideas, Web Site Related, Lead Generation, Marketing Considerations

Is He Or She Really A Lead Carpenter? Probably Not!

Posted by Shawn McCadden on Thu, May 09,2013 @ 11:47 AM

Is He Or She Really A Lead Carpenter?  Probably Not!

What is a lead carpenter

 

I was involved in the creation of the NARI Certified Lead Carpenter Program.  NARI did a great job putting that program together.   When the certification was created it included a definition for what a lead carpenter really is.  Unfortunately even though experts on the system helped define for our industry what a lead carpenter is, many remodelers and construction companies have ignored that definition and have decided to create their own definitions.   Without endorsing and enforcing a common definition across our industry every carpenter can have the title of lead carpenter.  This waters down the title and leads to confusion for employees, employers and, more importantly, consumers.  Also, I don't think it’s fair to true lead carpenters, those who have achieved the skills and experience to be a true lead carpenter, if we allow impostors to receive and use the title.

 

NARI Definition of Certified Lead Carpenter

Certified Lead Carpenter“A lead carpenter is involved in tasks and has responsibilities beyond the technical production aspects of a project. He/she is responsible for customer contact and communication, supervision of subcontractors and employees, managing the job site, scheduling, and safety issues. The success of a remodeling project during the production stage is the primary responsibility of the lead carpenter.”

 

NARI’s Certified Lead Carpenter Training Program lists the following seven basic responsibilities for a Lead Carpenter:

  1. Lead Carpenter dutiesCustomer Satisfaction
  2. Material Take-offs, and Orders
  3. Job Site Supervision, Protection, Cleanliness, and Safety
  4. Carpentry Labor
  5. Supervision and Scheduling of Subcontractors
  6. Building Code Inspections
  7. Project Paperwork

 

Job Description for a Lead Carpenter

An Overview of the Lead Carpenter System

 

Are you misleading your carpenters and your customers?

Just because your carpenter is the most experienced at the job site, and or is the highest paid employee at the job site, those characteristics don't make him or her a lead carpenter and does not justify giving him/her the lead carpenter title.  Plus, unless your business setup and systems have been specifically designed to support a lead carpenter system, how could a true lead carpenter actually perform their job duties?  

Project estimate for lead carpenterFor example, if your business can't or won't share the job estimate and pricing with a lead carpenter, how could he or she manage a project to meet the budget?  If the project specifications are inadequate, and or the business doesn't have a sales to production handoff process, the lead carpenter will need to be micro managed and or will need to constantly interact with the sales person who sold the job to know what to do and what to do next.  

 

If you hire a real lead Carpenter will he stay?

Lead Carpenter compensationI am also aware of true lead carpenters who were hired as lead carpenters only to find out that they couldn't act as lead carpenters at the business that hired them because of the reasons shared above.  When they find these conditions at their new job they quickly realize their opportunities for career and compensation growth are dramatically compromised.   So many left for a different business and opportunity where they could use their skills and continue to advance their careers.

With the economy showing signs of improvement, and as the volume and pace of remodeling and construction increase, there will be high demand for the skills and responsibilities a true lead carpenter can bring to the job site.  Businesses without true lead carpenters in the field will have much higher overheads than those that do.  In a competitive marketplace businesses using a real lead carpenter system with true lead carpenters will definitely have a competitive and a profitability advantage.

 

When to Implement The Lead Carpenter System?

 The Benefits of Implementing a Lead Carpenter System(2 Videos)

 

Is he a lead carpenter

 

So, is he or she really a lead carpenter? 

Does your business really have a Lead Carpenter System?

 

Topics: Careers in Construction, Recruting, Lead Carpenter System, Customer Relations, Business Planning

11 Common Traits of People Who Buy On Price

Posted by Shawn McCadden on Tue, May 07,2013 @ 06:00 AM

11 Common Traits of People Who Buy Remodeling On Price

Selling remodeling on price

 

Consumers who buy remodeling on price typically don’t care about anything else but price; until they become customers.  Then after your remodeling or construction company has them as customers they seem to always want more than they agreed to pay for. 

 

There are two main types of prospects who buy remodeling on price. 

  • The first is those who are driven to pay as little as possible.   These people typically apply this logic with everything they buy.   They are also much more likely to lie to you, your employees and your subcontractors if it suits their purposes for saving money and or getting more than they paid for.
  • Customers that buy on priceThe second is those who, lacking insight, simply don’t know what else to consider when deciding between contractors so they base their decisions on the bottom line.  These people may actually be willing to pay more when selecting one contractor over another, but the contractor must be a true sales person to help them discover other more important things to consider.  

It also takes a true sales person to distinguish between those who buy on price on purpose and those who buy on price due to a lack of insight.  Most contractors are terrible salespeople, so most contractors have to sell on price.

 

For those who have been selling on price

My purpose of writing this blog is to provide contractors with some motivation to embrace sales training so they are not destined to sell on price forever.   Check out my list below of the common traits of those who buy your services on price.  If these things are happening to you it’s your own fault.  When you think of yourself as a contractor first and a sales person second, you doom yourself to a career that will probably pay you less than per hour than your employees earn.  If that is already happening you have three choices:

  1. Sales Training for remodelersDecide to do something about it and get some professional sales training and coaching.
  2. Decide to do nothing and recognize that you and your business are commodities
  3. Or, avoid thinking about it and stop reading this blog post before you feel any worse about your situation

 

People who buy solely base on price have these common traits

I encourage you to use the comments area to add any others you feel should be on the list.

  1. Contractors selling on priceThey see remodeling as a commodity where every contractor and proposal are the same, not a service where one company does things differently than another.
  2. They always seek to get more than they paid for.
  3. They don’t like to give big deposits or commencement payments; they expect the contractor to finance all or most of the job until the final payment.
  4. They lied to you and think it’s just fine to do so.  This often leaves them wary and concerned that you will lie to them as well, creating a need for them to always be suspicious when interacting with you and your team.
  5. These people won’t like discussing change orders at all, won’t pay for change orders at acceptance and or will want to negotiate their cost at final payment.
  6. These people try to get free stuff out of you and your team after you start their job.  If you give in on this they will want more free stuff.  They are also likely to forget about the free stuff you already gave them when you want to charge them for any extras or change orders.
  7. Contractor sales trainingThey will typically dispute your payment schedule, make scheduled progress payments late and delay your final payment as long as they can.
  8. They will only buy from you again if you are the cheapest of the contractors they speak with.
  9. They get closer to their own retirement at your expense and limit your ability to retire.
  10. They will often find some way to blackmail you into reducing the final price.

 

These people hang out with other people just like them!

selling remodeling on price

 

Here's one last thing to think about if you sell to people who buy on price; they hang around with other people just like them.   If they refer you they will probably be referring you to other prospects who also buy on price.   When they do so, based on their own experiences working with you, they will often coach the referral on how to lie to you and get stuff for free.   They will also often identify what your business’ weaknesses are so the referral can watch for them and use them to blackmail you into some type of money related concession before they are done with you.

 

 

Topics: Sales, Sales Considerations, Earning More Money, Lead Generation, Prequalifying, Customer Relations

Five Ways To Think Like A Business- For Construction Business Owners

Posted by Shawn McCadden on Thu, Apr 25,2013 @ 06:00 AM

Melanie Hodgdon, Business Systems Management

 

 

Guest Blogger: Melanie Hodgdon is a Certified QuickBooks ProAdvisor who has been providing financial analysis and QuickBooks training for contractors since 1994. She’s the co-author of A Simple Guide to Turning a Profit as a Contractor.  Melanie and Shawn often coordinate their efforts when helping remodelers develop financial systems for their businesses so they serve the contractor, not just their accountant.

 

Five Ways To Think Like A Business For Business Owners

How to think like a companyI work with many companies in transition. The steps from being a “guy and a truck” to having an office and a bookkeeper and field employees are frequently challenging, but the milestones are pretty easy to identify. Ray the Remodeler used to work out of his house, but now he’s got an office. Bill the Builder used to pound nails, but now he does sales and supervises a crew. A less easily-measured but potentially even more important milestone is when the owner is able to recognize and maintain separation between himself (his personality, his idiosyncrasies, his strengths and weaknesses, his preferences, and his habits) from the company for the sake of the business.

 

See yourself as a business ownerAdding the trappings of a business (office, staff) without shifting attitudes about the business has held many owners back and limited the potential growth of their companies. As long as they see themselves as remodelers, rather than owners of businesses that deliver the service of remodeling, they risk seeing their businesses as extensions of themselves, reflecting their own strengths and weaknesses. They also tend to see their companies as being so unique that they can’t be run using best business practices.

 

Have you ever said anything like this?

  • “If I used that kind of markup in my area, I’d lose all  my customers”
  • “Yeah, I’d love to job cost my labor but I could never get my guys to fill out timecards accurately.”
  • I’m just too busy to keep up with the paperwork, so I really can’t count on my financials.”
  • “Sure I’d love to hang up my toolbelt, but there’s nobody else who can do what I do.”
  • My customers would never stand for me creating change orders for all the little extras we do; I just either eat it or try to make it up somewhere else.”

 

If you have, this is exactly the kind of self-defeating head talk that will keep your business not only dependent on you, but restricted in scope and sophistication to the limitations of your energy.

 

Here are some suggestions:

  1. You are not your business. Don’t allow your personal limitations to hold it back. So you stink at paperwork. That shouldn’t doom your company to have paperwork that stinks. Hire somebody who just loves paperwork to take care of it for you, but only after you have determined what information you want and worked with him/her to make sure their method of data entry is going to get you what you want.
  2. Chasing profit, not dollarsChase profit, not dollars. When owners start talking about how much their sales have increased, I remain unimpressed. Sales are nothing. Profit is where it’s at. Let’s say your volume is $600,000 in year 1 and $900,000 in year 2. A 50% increase, right? Wonderful, right? Maybe yes, and maybe no. If in order to sell and produce 50% more you had to hire a production manager, an estimator, and a salesperson and that caused a significant increase in your overhead, you could wind up with a lower net margin at the end of year 2. You might even end up with fewer actual dollars of profit to say nothing of the added stress of running more or bigger jobs. Know what numbers to watch, how to interpret them, and what to do to improve them.
  3. Plan for growth. Contractors who wouldn’t build a dog house without detailed plans all too often “build an addition” on their business without even a napkin scribbling. In other words, they add personnel, equipment, or practices but fail to integrate them into an overall plan. The result can be as disappointing as buying twenty 2x6-8’s when what you really needed was ten 2x6-16’s.
  4. Avoid basing business decisions on your gut. Thinking like a company instead of an individual can protect you from making decisions that, deep down, you know are bad. Do an “at cost” project for a friend? Hard for you to turn it down, but a justifiable decision from the standpoint of the business. Hanging on to those dead weight employees because you dislike conflict? It may be hard for you to let them go if you’re thinking like a kind uncle, but much easier if you’re thinking like a business.
  5. Stop trying to do everything yourselfStop trying to do everything yourself. If you haven’t already figured this stuff out on your own, hire somebody who has helped hundreds of contractors understand their numbers, replace habits with systems, and achieve a healthier relationship with their business. Comments from my clients reveal that many contractors struggle with the business side of things.  Would you like to move “…from being clueless & frustrated to confident and comfortable….”? Would you find it “…refreshing to speak with someone who actually knew what they were doing, understood what (you were) trying to accomplish, and just made it happen.”? Are you sick of being “…lost in a sea of numbers…”?

 

If your business had a voice, would it be offering you the very same advice?

 


Topics: Business Growth, Financial Related Topics, Earning More Money, Mentoring/Coaching, Guest Blogs, Business Planning, Sage Advice

Success Guide For Contractors Seeking To Do 203K Loan Work

Posted by Shawn McCadden on Tue, Apr 23,2013 @ 06:00 AM

Paul Lesieur is a 203K consultant

 

Guest Blogger:  Paul Lesieur is a 203K consultant/contractor and writer within our industry.  If you are interested in learning more about the 203K opportunity you can go to his  websites www.203kloanmn.com and 203kcontractor.  There you can also find some links to the HUD website where you can learn more.

 

Success Guide For Contractors Seeking To Do 203K Loan Work

Doing a 203K EstimateTo do a successful quote for a 203K loan you must write a detailed line item bid, you should do this anyway but what works best is to break out your costs.

Here are some examples of how to write specs into your bid:

  • 1000SF of 3 tab asphalt roofing @ $1.26SF for materials is $1260 and $1.86SF for labor is $1860 to total $3120.00.
  • Or remove old washer and dryer and install owner’s new appliances for 2 @ $120ea labor to install for $240.00.
  • Remove 80SF of sidewalk and replace with 80SF of new concrete sidewalk @ $20.00 a SF = $1600.00

The better you detail the better chance you get the job and make money. On the Streamline 203K your bid is checked by the lender who likes to see details.   The bank will not accept a bid that says simply "Paint house $5000" or "Reroof house $8000". When I am the 203K consultant and get this kind of bid from a contractor I disallow it.

 

Successfully Pricing and Getting Paid When Involved With A Full 203K Loan Project

A full 203K loan uses the services of a 203K consultant. The consultant writes up a scope of repairs which always includes the minimum health and safety requirements of the FHA. After the minimum standards are called out the homeowner can add anything they want as long as their loan is approved for that amount.  NEVER do your bid before the consultant does the work write up, you will probably end up doing it again when the appraiser gets done. The consultant does a scope with prices attached and then you bid using his mandatory items and the homeowners’ desired items.

 

You the contractor then bid the job.

Pricing is what the market will bear.  I have thrown out bids that were too low, and occasionally items that were too high.  So charge what you need to be profitable and assume everything is negotiable just like any other job.

 

Your first draw can be called whenever you feel you want some money.

203K ConsultantThe consultant then inspects and approves your completed work. If you are installing vinyl windows at $1000 each and I get there and five are installed I will allow payment for five windows or $5000.  The five windows you say you will do after lunch don't count and the fact they are sitting in the living room means nothing to the bank. These draws (up to 5 are allowed) cost the homeowner $150 to $250 each, so we try to use them to the best effect.  If you run out of money consultants will do more draws but the consultant will get a check from you the contractor when he visits.

 

You will get paid!

  • Information about 203K LoansNo payments are disbursed unless you show proof of permits.
  • On a streamline 203k which is under $35,000 you will get 30 to 50% down and the rest after the project is complete. The Streamline 203K allows for 2 payments.
  • The Full 203K which can go up to $365,000 or higher allows no down payments. This means you need to be strong enough to operate until the first draw.
  • All draws are subject to a 10% holdback which is released 30 or 35 days after the last draw.
  • It takes on average 7 to 10 days to get a check which is mailed to the homeowner with your name and theirs on it.

 

Change orders

Change orders are allowed and are most often used for upgrades by the homeowner or hidden conditions.  If you mis-measured you’re out of luck, HUD does not pay for your mistakes. Get detailed or stay away from these jobs.

This type of work goes best when you are part of a team that knows what they are doing and as a 203K consultant I find you can't always count on that being the case. Educate your buyer by being the answer person for their 203K.


Problems?

Problems that come up most often are inexperienced 203K consultants and inexperienced lenders new to selling 203K loans.

Also, homeowners who are first time home buyers who don't understand the difference between a $40,000 quote and one for $19,000 for what they think is the same scope of repairs. Educate your subs and clients and you will have fewer issues.

Regardless of the issues I have not had any problem large enough to make me want to leave this program. There is billions of dollars of work out there to fall under the 203K loan program and for any contractor willing to adapt a good opportunity is waiting.

 


Topics: 203K Loan Info, Success Strategies, Earning More Money, Guest Blogs

Three Thoughts for Contractors by Cowboy Legend Will Rogers

Posted by Shawn McCadden on Tue, Apr 16,2013 @ 06:00 AM

Three Thoughts for Contractors by Cowboy Legend Will Rogers

Will Rogers

 

 

Will Rogers, who died in a 1935 plane crash, was one of the greatest political sages this country has ever known.  He is well known for his quote:  “Don't squat with your spurs on”.  He also shared many other thought provoking but less popular sayings.   For a little fun I offer these three and what I think they could offer for advice to contractors



“Never miss a good chance to shut up”

Many contractors, me included, have probably had an occasion where we opened our mouths and wished we hadn’t.  Other times we open our mouths, and even though we may not realize it, others we interact with wish we hadn’t! 

Never miss a good chance to shut upHere are a few times when saying nothing might just be the best thing to say:

  • If your customer has already decided to buy, shut up.  Don’t risk giving him/her a reason to change their mind.
  • If you ask your prospect or customer a question, shut up.   Give them time to think and answer the question.  If due to the silence you keep talking or offer them answers to choose from you might not get the real answer.
  • If you have chance to disparage your competition, shut up.  More times than not the person listening to you will begin to think less of you for doing so.  Instead of talking bad about what they do or don’t do, talk about how you do what you do.

 

“Always drink upstream from the herd”

Will Rogers Quotes

 

When starting their businesses too many contractors look to what other contractors are doing and assume they should do the same.   The fact is that 9 of 10 contractors typically go out of business within 10 years of getting started.   The odds of copying the right contractor’s strategy are only 1 in 10. 

Here are a few things drinking downstream of other contractors can do to your construction business:

  • Use the wrong labor rates and markup to price your jobs assuming you need to be competitive.
  • Assume because another contractor quoted a price to a prospect you must be able to do it for that price as well.
  • Getting and using legal advice from online contractor discussion groups without consulting legal counsel before you do so.

 

“If you find yourself in a hole, stop digging”

Contractor Financial problemsA good number of contractors at one time or another find themselves in a financial hole.  Rather than figure out how they got there, they just keep working, often assuming by working harder or longer hours they will eventually get out of the hole.  Unfortunately many of them just dig a deeper hole and eventually the hole is so deep they can’t climb out so they stay in it.  Sometimes the hole can even cave in all around them and bury them and their businesses.  If you want to avoid the most common reasons contractors get into financial trouble check out this previous blog post.

 

Bonus saying:

Here’s one more from Will Rogers just for fun.  I’ll let you be the one to determine what this means to you!

 “There are three kinds of men:

  1. The ones that learn by reading.

  2. The few who learn by observation.

  3. The rest of them have to pee on the electric fence and find out for themselves.”

 Quotes by Will Rogers

 

Topics: Business Financials, Margin and Markup, Sales, Fun Stuff, Starting a Business

The Five Biggest Financial Mistakes Contractors Make

Posted by Shawn McCadden on Sun, Apr 14,2013 @ 06:00 AM

The Five Biggest Financial Related Mistakes Contractors Make

Having worked with hundreds of remodelers to help them improve their businesses and achieve their goals has exposed me to the common reasons their businesses run into financial problems.   Here my list of the five biggest mistakes I see contractors make that lead to money problems, and some suggestions on how to avoid or prevent them.

  1. Guessing at the markup used to determine selling price

Wild ass guessPricing your work without knowing the true cost of being in business is referred to as using the "WAG" method, or “Wild Ass Guess” method.  Unless a business knows what markup to use to determine the right selling price it puts itself at risk of actually buying jobs instead of selling them.   Unless you know your minimum required markup to cover overhead, how do you know how low you can go when the prospect wants to negotiate?

Don't Put Your Business at Risk by Guessing At What Markup to Use

 

  1. Using different markups on different cost categories without knowing the impact on required gross profit.

2.	Using different markups This is like a Super-Sized WAG!  Unless you use a single across the board markup on all estimated costs, you will need to be very accurate when anticipating how much you will sell of, and how much you will markup, each category of costs your business includes in estimates throughout the course of the year.  Most contractors who do this have no idea how to do so.  Keep in mind that if you do drop the markup on one item you will need to increase the markup on another to make up for the drop in gross profit dollars on the first one.  One contractor I know said he believed contractors who use this method have what he called “Head Trash” about money.  He went on to say they should “get over it” and should learn how to sell.

 

  1. Not factoring for the cost of non productive time in the labor rate used when estimating.

Most contractors have no idea how to handle this one.   Using the wrong labor rate can have a double negative effect.  Not only will you not charge enough to cover labor costs, you will also lose the markup on the missing labor dollars! To bring in the money you need to pay your employees when they are not producing work you need to include that money in the billable hours they do work. 

How to Cover the Cost of Non-Productive Time in Your Estimates

 

  1. Not estimating and job costing apples to apples.

Accurate job costingFirst, this assumes the contractor even does job costing, most don’t.  As one example I estimate that fewer than 10% of contractors can job cost their labor costs the same way they estimate them.   If you use a burdened labor rate to estimate the dollar cost of task hours, your total labor cost will include things like workers comp insurance, non-productive time and employee benefits.   If you use QuickBooks for job costing, and you enter employee time card information into QuickBooks, typically only the employees wage and employer paid payroll taxes are expensed against the job budget in job cost reports.   This will falsely make the actual labor cost appear much lower than the labor budget from your estimate.   To solve this, use my free labor cost worksheet to calculate your true burdened labor rates for each employee and then work with a QuickBooks expert who knows how to set up the software to include labor burden assumptions in job cost reports without affecting the accuracy of your P&L.

 

  1. Not factoring for actual costs at time of production when estimating

Anticipating construction cost increasesIf you sell work that you won’t be starting for some time, in your estimates you will needed to include the actual costs you will incur at the time you produce the work.   If you don’t do so the extra costs will eat away at your planned net profit until it’s gone.  If the extra costs exceed your anticipated net profit you will need to use your own money to finish that customer’s job.  Keep in mind that some reports anticipate many construction materials will increase in cost as much as 25% this year.

 

Anticipate increases and include them in estimates before jobs are sold

 


 

Topics: Business Financials, Labor Costs, Margin and Markup, Financial Related Topics, Earning More Money, Estimating Considerations

How To Make The Ladder Of Opportunity Happen At Your Business

Posted by Shawn McCadden on Thu, Apr 11,2013 @ 06:00 AM

How To Make The Ladder Of Opportunity Happen At Your Construction Business

Note: This is the last article of a 3 article series on this topic (Click for article #1 or for article #2)

Turnkey business model for contractors 

Let’s use the example of creating a “Turnkey Business”

If you want a turnkey operation, which is one that runs without the need of the owner’s participation, the employees need to be self-motivated rather than motivated by the owner, their manager or short term measured motivation programs. Even if turnkey is not part of your vision, a single owner can’t wear all the hats of a continuously growing company. Vacations, health, and emergencies will at some point require the owner to delegate responsibilities to key employees.

 

Learn the “whys”

Employee motivationsThe best way to find out what will motivate team members is to ask them. While interviewing recruits or existing employees, find out not only what motivates them to grow, but also why. Connecting the “why” to the “what” can help get you, your business and that employee to where everyone wants to be much faster for two reasons.

  1. The first is the simple fact that adults choose to commit and follow through on their goals for their own, sometime selfish, reasons.
  2. Second, if the business, the marketplace or life changes at some point, knowing the why can help us find alternate ways to accomplish the long term company vision while still maintaining motivation.

 

Managing employee growth requires scheduled reviews

To help facilitate success support employee career advancement planning and implementation with a structured employee review process.  Be sure your review process identifies where the employee is today, where he or she is headed, and where you both expect them to be along their career path by the next scheduled review meeting. 

 

Generating a vision for where they will be is not enough

Career paths in construction

 

Work with the employee to identify the plan required to get there.  Include what the employee needs to do, as well as the company’s commitment and the necessary steps to help make it happen. 

Implementing a ladder of opportunity may require that the employee train and mentor his or her replacement.  Be sure the company provides "training of the trainer” early in each employee’s career path.  Education then becomes part of the company culture and facilitates constant growth among workers. 

 

Write down and maintain records of the employee review process.

Cosntruction employee performance reviewInclude in your record keeping not only the reviewer’s comments, but employee’s feedback about how well the company helps him or her to get there.  If your process includes writing down what has been agreed to at this review, both the company and the employee will know what to do between now and the next review.  You will also both know what you will be discussing at the next review.  This helps minimize the typical fears experienced by both the reviewer and the employee when anticipating the next review meeting and what they should talk about during the next review. 

If the review process is well thought out, properly documented and followed throughout each employee’s career, you have created a ladder of opportunity!

 

Related articles:

Article #1 of this series: Successfully Grow Your Business By Creating a Ladder of Opportunity For Employees

Article #2 of this series: How To Create A Ladder Of Opportunity For Your Employees

Government to Contractors: Start Hiring Convicted Felons!

Mentor Me, Please - Gen Y Business Owner Offers Peers Advise

Contractors: How To Work With Generation Y From One Of Them

Gen Y Member's Advice To Peers: How To Develop A Good Work Ethic

 

Topics: Hiring and Firing, Success Strategies, Worker Training, Careers in Construction, Recruting, Team Building, Employee Advancement, Business Growth

Hate Contractor Lead Generation Services? Why Not Get Some Chickens!

Posted by Shawn McCadden on Tue, Apr 09,2013 @ 06:00 AM

Hate Contractor Lead Generation Services?  "Rather than buy all your eggs, why not get some chickens?"

Lead generation services for contractors

 

 

On discussion groups liked LinkedIn, contractors and remodelers have been bantering about on-line lead generation services.   It seems for every business owner who speaks negatively about using them, there is another who shares stories about how these services have been great for their business.  For the purpose of this blog post I won’t get into the pros and cons of or any specifics about one service vs. another.  Instead I’d like to offer an alternative; take control of your destiny and create your own leads.

 

What’s the problem?

In my opinion way too many contractors are abdicating their marketing responsibilities to lead generation services without a full understanding of how those services work.  Then they complain they don’t like how they work and or how they are being treated when they seek customer service to resolve problems.   Many others complain that the quality of the leads is very poor and or the same leads are being sold and distributed to way too many other contractors, increasing competition.  Still others complain about negative customer reviews that are libelous and the service won’t help remove them or go after the customer who posted them.  

 

Why should these business owners be surprised?  

Just a little research on the internet is all it takes to find out what many other businesses have already found; that’s how those services conduct business!

Lead generation service for contractorsWhat is sad to me (and really ridiculous if you think about it) is these business owners are doing the same thing many remodeling consumers do.  They hire a service provider to take care of something for them without first being clear on what they expect, or, what they can expect will actually be included if they buy.   Then, rather than take responsibility for their own lack of due diligence before buying that service, they rationalize why it’s the service provider’s fault they are not happy and want their money back.  You can find lots of evidence to back up this reality by reading just a few of the articles on the“Dietz Angie's List and Yelp Reviews Lawsuit Updates” page of my web site.  The page is full of links to articles and blog posts about the nightmares many businesses have experienced with lead generation services.   It also has links to helpful information regarding what to do if you are already having problems with contractor lead generation services.

 

What’s the solution?

I suggest business owners work to generate their own leads.   Not saying they shouldn't also use a lead gen service, just pointing out that those services often have a history of changing their business model and many have gone out of business.  If your lead generation service leads go away, you might not have any leads at all unless you are creating your own leads as well. 

 

"Don't put all your eggs in one basket" 

Contractor lead services

 

Good quality leads for targeted customer and project types might well be the most significant factor when it comes to creating and growing a healthy and profitable construction or remodeling business.   Without a way to create a sustainable flow of high quality leads the business has to wait for leads to show up out of the blue.   If you wait for leads to happen, or for a lead gen service to send you leads, your business has little or no control over who will be inquiring for your services.   Also, you won’t know whether or not they are the right prospects for what you offer, how you perform your services and or what you have to charge to provide them.   Essentially, you might get leads, but after you get them you will need to still figure out which ones are qualified and which ones aren’t.  Prequalifying leads after they contact you, instead of before they contact you, wastes a lot of everyone’s time.  Think about it.  Are you and or your sales people visiting with people who would have disqualified your business if your business took control of how its leads were generated?

 

"Rather than buy your eggs, why not get your own chickens?"

Best lead generation for contractorsInstead of the old outbound marketing methods of buying ads, buying email lists, paying for lead generation services and praying for good leads, consider the new wave in marketing; “Inbound Marketing”.  Inbound marketing focuses on creating quality content on your business’ web site that pulls people toward your company and product.   By aligning the content you publish with your target customer’s interests, you naturally attract inbound traffic that you can then convert, close, and delight over time.  If visitors to your contractors web site don’t like what they find out about your business and how you do business, they won’t call you or waste your time.  In addition to creating high quality leads, done well, inbound marketing can also help you increase the number and quality of referral leads from those customers you have delighted. 

 

best lead generation for remodelers

When you own the chickens you know where the eggs came from, and after eating the eggs...

You still have chickens still laying more eggs!



Topics: Success Strategies, Business Growth, Differentiating your Business, Marketing, Marketing Ideas, Dietz Lawsuit Related, Web Site Related, Lead Generation