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Want To Sell Your Construction Business Someday- Consider These Buyer Types Today

Posted by Shawn McCadden on Fri, Mar 27,2015 @ 06:30 AM

Want To Sell Your Construction Business Someday- Consider These Buyer Types Today


Buyer types for a residential construction businessIn a previous blog about selling your construction business I had suggested business owners write a for sale ad describing the business they plan to sell in the future. In this blog I describe the two typical construction business buyer types that became obvious to me as I worked towards selling my business.  By considering your target buyer you can make better decisions about what to do and put in place as you build your business to get it ready to sell.

 

First is the investor. 

This person will want to buy a business that pretty much runs on its own, needing little hands-on attention from the buyer. This buyer will be looking for time tested systems and industry best practices already in place and well documented.  This buyer will also be looking for a business that already has technology and software in place to proactively predict and measure business activities.  This buyer will also be looking to keep most or all of the existing employees in place. To attract this buyer type make sure you assemble a great team of high performing and self directed employees who work well together and embrace the systems and technology you will put in place.

finding a buyer for a remodeling businessThis investor buyer will need a leader/manager to run the company. Before offering your business for sale to this buyer type I suggest you transfer the leadership and the day to day management of your business to a well qualified employee over a period of time. During the evolution you can test and prove his/her effectiveness as a general manager in advance of selling.  By taking adequate time to accomplish this important consideration at my business both me and my employees felt good about and respected the new leader, before I fully transitioned out of the day to day.

Some key advantages of selling to an investor can include a high selling price assuming you have a great business with future growth potential.  And, this buyer will also have the funds or can get his/her own financing for the purchase. My experience proved this could be a great way to go, but due to the reputation of our industry, the pool of potential buyers was very limited. I think this is still true today, but may not be the case in the future.

The second type of buyer will be the owner operator. 

Likely an entrepreneur, this type of buyer will want to take over an existing business and jump right in physically working in the business.  This buyer will want to see steady profits and a strong customer list, but as an entrepreneur with energy to burn will also be looking for growth potential

buyers for a remodeling businessHaving systems and employees in place will be important, but you might want to assume that this buyer will likely change or evolve the systems you have put in place.  As a result the employees described above might not like and/or agree with the changes. In particular experienced management employees may not tolerate any loss of the independence they have already earned in performing their day to day roles. If you plan to sell to this type of a buyer, I suggest you assemble employees who desire to follow a leader and will go with the flow. 

Also consider selling to this type of buyer will not command as high a price when you sell. On the other hand you will likely find more potential buyers because of the lower price.

 

The best of both worlds?

The sale of my business was in several ways a hybrid of the two models described above. I ultimately sold to my general manger. He had already earned the leadership role and had participated for many years in the direction, growth and day to day management of the business. All of the practical experience he gained during that evolution prepared him to be a well trained, experienced and motivated candidate to buy and continue growing the business. To make the purchase practical I had to finance the sale. In my case I felt financing the purchase was worth the risk because the buyer had proven his competency, trustworthiness and ability to not only maintain the business, but also grow it in a strategic and manageable way.Subscribe to the Design/Builders Blog

 

Topics: Business Management, Success Strategies, Differentiating your Business, Retirement Planning, Business Planning, Selling your Business

To Sell Your Contracting Business Someday: Should You Build A Spec Or A Custom?

Posted by Shawn McCadden on Tue, Mar 24,2015 @ 06:00 AM

Selling a Contracting Business: Are You Building Yours On Speculation, Or Is It A Custom?

selling a remodeling businessSince selling my remodeling business in 2004, many remodelers have asked me for help and insight about how I did it and how they too could sell their businesses some day. They ask great questions. The challenge is that there is no easy one size fits all answer. In this article I will share a few big picture considerations to help guide you.   In a follow up article I will discuss typical buyer types you can consider as possible prospects to sell to.

 

What kind of business should you build?

Most remodeling businesses were not designed, they evolved. Each business will be unique because each owner is unique and has unique motivations that drive the evolution of his or her business. In addition, each buyer will be looking for specific characteristics when assessing which businesses to look for and ultimately buy.   These are facts that became clear to me as I thought about and planned for the eventual sale of my business.

Rather than share specifics about what I did, I think you will find more value in the related considerations I discovered that helped shape the direction I eventually went in. Perhaps by considering my suggestions below, you can make a plan for and evolve your business in a specific direction to increase its potential salability and value.

 

selling a residential construction business

Begin with the end in mind

First, I suggest it is best to be thinking of your exit strategy now so you can keep your future options open. By planning now you can identify what you will need to do to get your business ready for sale in the future.  The idea is to always be getting your business ready to sell, even if you never sell it.  If you do it right, in addition to the selling option, maybe someday it will be worth keeping. If you keep it you can collect the net profits, while someone else leads the business and manages the day to day.

Put your strategy in writing

To get started, I suggest you write an ad today to describe the company you will be offering to sell some day.  When writing your description, think about the things that will make the business worth more money and at the same time more attractive to your target buyer.  By writing the ad I suspect you will be able to identify and list the positive characteristics your business already has and should work to keep. Then you should list those characteristics you will need to work on and or add to make your for sale ad valid by the time you want to sell. 

 

Consider who you will sell to

buyer for a remodeling businessIf you’re considering selling your business some day you will need to consider the types of buyers out there as well as their typical motivations for buying one business versus another.   In my next blog I will discuss the two typical buyer types you will want to consider as you make you plan and write your for sale ad.

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Topics: Success Strategies, Differentiating your Business, Business Planning, Sage Advice, Business Considerations, Selling your Business

As Designers, Are We Honest in our Business Dealings?

Posted by Shawn McCadden on Fri, Feb 20,2015 @ 06:00 AM

Guest Blog: As Designers, Are We Honest in our Business Dealings?

Honest marketing for contractors and designersIn the design industry we have many challenges besides meeting the concerns, wants, and needs of our precious clients. Many businesses have resorted to marketing on the basis of something for free. It prompts clients to want what is offered for free, however, at the same time, causes the knee jerk reaction question to arise, “How can it be free, what’s the catch”?This poses itself as one of the challenges most noteworthy; the honest perception of value that is created. For a certainty, most trends are to downplay, for market segmenting purposes, the true value of reputable trades or product.

 

As designers we need to realize that no sale is really complete until a successful installation of product or service has been provided for the paying, trusting client. This client in-turn may or may not be a super advocate for our business’ success, depending on the final result.

Wouldn’t it make sense as designers to present all services and products in the true light of actual cost, thus leveling the playing field by being honest in our business dealings? Is it not tantamount to lying to present design or trade services as something that can be commoditized for less than its true value, or for free, when we know it isn’t?

Bait and Switch advertisingTo advertise something for “free” in reality means something else needs to recoup the costs related to the “free” product or service. This is, in all respects, “Bait and Switch” by offering something for free that really isn’t. Doing so may call into question being honest in our business dealings.

“Bait and Switch” tactics are used all the time by many larger corporations and have severely damaged flooring installation, renovation, carpet cleaning, vacuum sales and services, design agent services, product value and the like. The result leaves well intentioned clients in a quandary of who, why and what they can trust.

All operations that work on lowest price marketing set everyone up for failure and feed our waste facilities with massive amounts of materials, due to bad decisions made as a direct result of unscrupulous enterprises who are in it just for the money and opportune themselves to the consumer disposition being taught today. It may be manufacturers, distributors, retailers, advantage driven designers and sales persons who are not honest in their business dealings. Full disclosure of what is lacking in the offer is skillfully sold over to reap unjust profits, at the expense of the honest and unwary, with no regard to the environmental impact.


crossed_fingers-wrLowest cost marketing is not being honest in business dealings, as it may not spell out the true reason something is less, or much less, as many products and services, on the surface, appear to be the same. The adage, “You Get What You Pay For”, is usually visited after the disappointment comes, once the bargain fails to meet the expectation and the delight for the savings is replaced by the sinking feeling, “I’ve been had again”. As designers, is this really the outcome we want our clients to experience, let alone, having to deal with it once exposed?

As designers, we should never want to feed the greedy price shopper mentality created by corporate opportunists and smaller businesses who buy into this mindset. By reflecting on true value all the way around, it makes good sense to present our services and that of others in the true light of costs and need. Today many are thinking in line with “save the planet”. This means as designers we want to be the forerunners in leading and educating by example. Therefore, let us be honest in our business dealings, and thus save our designer business services, giving due representation to great trades, products, costs, the environment and education of our precious clients while we are at it.

 

Ronald Preston

Guest Blogger: Ron Preston started into the trades at the age of 13 with tools purchased from savings acquired working seven nights per week. Today at 53 he enjoys working with people to bring their dreams to fruition and writes regularly to share his knowledge and thoughts. Let Ron know what you think about his guest blog and the opinions he offers.

 

Topics: New Business Realities, Differentiating your Business, Guest Blogs, Marketing Considerations, Opinions from Contractors, Customer Relations

Marketing System Considerations for Remodelers Looking to Break $1Million

Posted by Shawn McCadden on Wed, Jan 21,2015 @ 06:00 AM

Marketing System Considerations for Remodelers Looking to Break $1Million

marketing for remodelers to help grow the businessMost remodelers, but certainly not all, rely heavily on referrals and repeat customers as they grow their businesses.  This may keep a contractor doing a low volume of work busy, but relying so exclusively on referrals won't be adequate if you want to become a construction business owner, break the $1Million installed sales threshold and develop a constantly growing business.

The fact is waiting for the phone to ring, having no idea what type of prospect will be calling your business, or what types of projects they will be looking for is a risky and uncomfortable way to grow a business.  Remodelers who attempt to grow without a marketing system in place will experience a roller coaster like ride of sales volume from year to year as well as season to season throughout any one year.  Plus, when leads are slow business owners may compromise on their pricing and even who they allow to become customers.   Doing business this way can be very stressful and frustrating for the owner as well as the employees.

To successfully grow past $1Million at your remodeling company, and sustain that growth from year to year, a strategic marketing plan and system are needed. Here are several important marketing related considerations remodeling business owners will need to address if they want to get up to $1Million. They will also need to already have these things in place to profitably grow past $1Million and comfortably sustain that growth.

 

Decide your niches

Creating remodeling leadsThere are many customer types out there all with their own expectations when it comes to working with a remodeler. Successful remodeling businesses are those that strategically decide who they will be and who they will serve. If you choose to work for people who buy on price and expect more than they are willing to pay for, you will get more work from them.  And because people tend to hang out with other people just like them, your past customers will refer you to more customers just like them. Before you do marketing to grow your business decide and define who you want as your customer. Also, think about the project types that make sense for the business you want to develop and grow. For example pull and replace kitchens and bathrooms may not be sexy or all that challenging to you, but remember you are building a company and a team of employees to complete what your company decides to sell. If you decide to build complicated and or highly detailed projects you will need the appropriate systems and staff to estimate, sell and produce that level of project to the expectations of your targeted client type. Choose wisely.

 

Develop a marketing plan

Marketing is only a cost if you don't know why you are doing it and or if you are doing it wrong.   By having a marketing plan and a way to measure against the pre-established goals in your plan, the money you spend on marketing is more likely to be an investment with high ROI.  Keep in mind a list of marketing tactics you intend to employ is not a marketing plan. Tactics should only be considered and developed after you have decided what you want to accomplish.  To help with the delegation of marketing related tasks the business should also create a marketing calendar identifying not only when defined marketing tactics will be used, but also when supporting activities must be scheduled, delegated and completed to support the on time delivery of the tactics to be used.  I refer to this as "franchising" your marketing because your system and calendar will help you manage the day to day work and activities required to keep it going without the need for micromanagement of the staff doing it. By having a plan you can also estimate the cost of your plan and include that cost in your overhead budget and calculated markup for pricing jobs.

 

Be strategic about how you do your marketing

Target marketing for remodelers Your marketing should serve two very important purposes.  The first is to help your target customer type(s) find you. The second is to convert leads into sales. The marketing tactics you use should support these two goals. One marketing tactic that can be really effective at accomplishing both could be your company web site.  For example, done well, SEO can be used so prospects searching online for certain services and contractor types can find your business, and find it on the first page of search engine results. Goal #1 achieved. But once you get them to your site you also need to differentiate your business from other businesses in the marketplace or risk being seen as a commodity. As discussed above, if you know your target niches you can then offer them additional information about those differences and can include customer testimonials as to why those differences were important and mattered to them.  The right information will help prospects decide if your difference matters and they should contact you, or that your difference doesn't matter enough to pay for it and they should look elsewhere.  

 

Summary

With the right marketing in place growing a remodeling business past the $1Million threshold is much easier and far less risky.  Choosing the right customer types and job types will make it much easier to develop cost effective and highly targeted marketing tactics.  By franchising how it gets done the owner can gain more time to work on other high value activities that keep the business healthy, profitable and growing. The right remodeling consumers want different and they will pay more for the right difference.

 

(Note: This is the seventh article in a series of articles written specifically for remodelers who want to successfully break past doing $1M/year in installed sales. Click here to see a List of all the articles in the series.)

 

Topics: Business Growth, Differentiating your Business, Marketing, Lead Generation, Marketing Considerations, Breaking $1Million

Contractor Shares Sales Strategy, Justifies Emailing His Proposals

Posted by Shawn McCadden on Tue, Sep 30,2014 @ 06:00 AM

Contractor Shares His Sales Strategy, Justifies Why He Emails His Proposals

Milt Rye

 

Guest Blogger: Milt Rye is the owner of Ethan Home Repair & Remodeling, LLC located in the Greater Seattle, WA area.  Milt is a contributor to multiple construction resources, forums and discussion panels. Milt sent me the letter below to offer his difference of opinion to mine after reading my blog titled: Is A Contractor Really A Salesperson If He or She Hits Send?   

 

 

Shawn,

I thoroughly look forward to your articles, regularly take advantage of your online resources, information, and recommendations, attend your seminars, and fully embrace most everything you “preach”.  So thank you for your help in the ongoing success of my business.

That said, I am afraid I can’t totally agree with your premise that a contractor who emails proposals is just an “order taker”.  I think the approach must be governed by many factors that are geared toward that particular customer’s needs and personality. A true salesperson, in my view, is someone who can relate best to their customer, instill confidence in them, and communicate in the manner and frequency in which their customer is most comfortable.

Sales strategy for contractorsFor large ticket, complex projects face to face presentations are generally preferred simply due to the scope of the project. But if I have done my job correctly up to the point of presentation, I should already have the job. I should have already established whether they can afford the project and if they have selected my company. The bid is just a formality. Price is WAY at the bottom of issues, as is the method of delivery. For most projects, we would have already met multiple times up to the point of presentation and that’s where I do my selling. Whether I email the quote or hand deliver it is immaterial in my experience of selling projects for over 15 years. I personally prefer a face to face meeting, but have found it unnecessary in most instances and base that decision on the customer and their personality. I have never been the cheapest bidder and tell people up front that I never intend to be. Yet my closing rate/ratio remains extremely high.

 

Selling remodeling to busy clientsI find that our current speed of living in general is much faster than in the past and people get irritated with too many required face to face meetings. They most often prefer the email method so they can make a decision at 10pm after work is done, the kids are asleep and they can focus. Am I serving them or are they serving me?  I always ask what their preferred form of communication is and then I respect that.  If I have established myself as the contractor of choice, reflected in our discussions (phone or otherwise) that I have accurately heard them and understand their needs/wants, established a comfortable budget, and minded the details, why waste their time and mine with an unneeded additional meeting?  Let’s do this!

 

I am sure many contractors use email as an excuse to avoid a face to face meeting because of fear of rejection or other issues, and to hide behind the computer. They rarely follow up and basically throw mud on the wall and hope something sticks. Maybe those folks were your intended audience for this article.  

Others of us use email as one of many tools in the sales toolbox to great success and to close more deals, more often, and more profitably, than running all over the area chasing people for face to face meetings.   

Thanks again for your commitment to contractors. I just think your approach on this article was too general and did not do justice to the topic.

Regards,

Milt Rye

 

Note:

Contractor opinionsIf like Milt you disagree with something I post at my blog please feel free to let me know.  Milt did a great job explaining his viewpoint in a respectful and thoughtful way.  I must admit I agree with his approach as well.   When Milt emails his proposal he is doing so to confirm in writing the agreement he has already made with his prospect who has agreed to become a customer.  Milt is certainly not an order taker, but rather a great example for other contractors seeking to improve their sales abilities and results.  

Thanks Milt!

 

 

Topics: Sales, Differentiating your Business, Guest Blogs, Opinions from Contractors

Window Treatments Upsell and Differentiate Your Designs and Projects

Posted by Shawn McCadden on Thu, Sep 04,2014 @ 06:00 AM

Window Treatments Decoded: What to Use Where

Window treatments for contractors

 

When it comes to building a house, you've got it down. You've got your favorite brands of windows and insulation, and you know all of the best places to get quality materials. But when it comes to the finishes, making the right choices can be tricky, especially when it comes to so many window treatment options. Here's a breakdown of the various types of window coverings with the advantages of each to help make the selection process easier for your next project.  Consider adding them during the design stage to upsell your project, make your designs stand out and differentiate your offering.

 

Privacy and Plenty of Light

Cellular shades

Cellular shades are a type of hard window treatment that provide complete privacy while also allowing natural light to filter into the room. The shade's honeycomb design is constructed for maximum energy efficiency and provides a layer of insulation to help keep warm air inside. As windows typically account for 25 percent of heat loss in a home, states The Shade Store, this is an easy way to mitigate the problem while also softening up the look of the windows. Cellular shades are ideal in bathrooms, street-facing bedrooms or rooms that are prone to heat loss. While the light-filtering option is most commonly used, cellular shades also are made with heavier materials so they can double as blackout shades.


Timeless Design

Wood blinds are a safe choice of window treatment because they have a classic style that adds a rich, polished look to any room. This is an ideal option to use for a spec home or a house that's being remodeled as it has wide-ranging appeal. Wood blinds are made in a variety of wood finishes, so you can easily find them in the same material or stain that you're using in other finishes in the house. While a bit more expensive than standard horizontal blinds, wood blinds offer a higher insulation value and have a higher-quality appearance.


Form and Function

Roman Shades

 

If you are looking for the decorative impact of drapes with the functional advantages of blinds, roman shades are the ideal choice. Made from heavy, durable fabric, roman shades are an easy way to soften the look of a room. While available in lighter fabrics, most are blackout quality and are perfect for installation in a bedroom, says Houzz, or anywhere that privacy is of utmost importance. While roman shades look great, there are a few downsides. They are all or nothing when it comes to letting light in and they can be difficult to keep clean as dust accumulates.


Unmatched Elegance

Drapery brings a refined look into any room of the house. For the best results, opt to have custom drapery made. One of the main downsides of drapery is that it can be difficult to select a material that will appeal to all homeowners. HGTV suggests silk drapes to instantly wake up a dull room. Additionally, drapes can add a lot of depth as well as the illusion of height to a room. To make the ceilings seem higher and to make the room feel a bit more spacious, install the curtain rod close to the ceiling rather than just above the window.

 

Sleek Sun Protection

Solar Shades

Solar shades are the ideal window treatment option for rooms that have a lot of sun exposure. They offer UV protection while also reducing glare. This is a great option in rooms with a beautiful view, as the shades won't disrupt. One caveat is that solar shades do not provide privacy; therefore, solar shades are best in main living quarters of the house like the living room, great room, kitchen or dining room. Furthermore, this type of window treatment is a must if your clients have expensive art, antique furniture or other valuables that can be harmed from too much sun exposure.

 

Allison Wilkinson

 

Guest Blogger:  Allison Wilkinson is a WAHM, an explorer, an amateur chef and a fitness buff. You can find her Instagramming photos of her (adorable) son or researching everything from the latest parenting theories to healthy hacks for desserts.


Topics: Differentiating your Business, Design Trends, Guest Blogs, Design Options

Is A Contractor Really A Salesperson If He Or She Hits Send?

Posted by Shawn McCadden on Thu, Aug 28,2014 @ 06:00 AM

Is A Contractor Really A Salesperson If He Or She Hits Send?

Helping contractors sell

 

If as a contractor you take the time to go out and meeting with a prospect, then you simply email or snail mail your proposal to the prospect, I don’t think you are really a sales person.  If you do this I think you are an order taker.   Now there may be a few exceptions to this.  But, before you rationalize why your situation is an exception, ask yourself this question first.  Is your justification for emailing your proposals really a “reason” or, is it an “excuse”?

 

I will offer one exception.  

If you are a contractor who gets his or her work by being the lowest price; then emailing is OK.  Essentially you are a commodity.  You are no different than any of the other contractors the prospects has met with.  People who buy on price only need to know about your price, not about your value.

Is being too busy to properly sell an excuse or the reason you are not earning enough money?

 

Are you selling your price or your value?

Let me be blunt and right to my point.  If you email your proposal (price) to a prospect you are probably confirming with your prospect that you and your business are simply a commodity.   By not presenting your proposal you have lost the opportunity to accomplish these very important sales goals:

  • Sales advice for contractorsAnother opportunity to differentiate yourself, your business and your solution and become a trusted advisor.
  • The ability to address objections, questions and concerns.
  • The ability to make changes or clarifications so your prospect can buy with confidence.
  • The ability to ask for their business.
  • I am sure you could add a few more here yourself if you really think about it.

 

Let me offer a simple analogy

Why contractors can't sell

 

Let’s pretend you are a carpenter who needs a job so you can pay your bills and feed your family.  Let’s also pretend I just happen to have a job opening right now for a good carpenter.  You call me up to ask about the job.  I tell you I’ll be in my office this afternoon and offer you can either email me your resume or come on down with it and we can chat.  What would you do?  If it was me, and I needed to feed my family, I’d ask what time I could come by.

 

Summary

Selling remodelingIf you are having challenges selling jobs and or getting the price you need to earn a good living and save for retirement, and you have been hitting send, I suggest you start presenting your proposal and price. In fact I suggest, before you commit to do the estimate and prepare a proposal, you schedule a specific date and time with your prospect to come back and present it.  That way you will save yourself a lot of time doing estimates and proposal for people who only see you as a commodity.

 

Topics: Sales, Differentiating your Business

Creative Driveway Designs Bring Attention To The Rest Of The Project

Posted by Shawn McCadden on Tue, Aug 26,2014 @ 06:00 AM

Creative Driveway Designs Can Bring Attention To The Rest Of The Project

Driveway designs

 

 

The driveway is among the first things visitors and passersby see when they look at a house. Like the front door, the driveway creates a lasting impression and perception of the home and because of this; it's the perfect time to try something a little unconventional. Even more than the front door, the driveway has to be functional as well as visually appealing, as it’s a service area of the property. Plus, a really cool driveway design can bring the contractor more business from the customers' neighbors asking, "Who did your driveway?"

 

Not Their Father’s Driveway

Your clients may have memories of their dad brushing smelly black sealant on their childhood home’s driveway or patching cement cracks with a trowel and wet cement. But those are not the only options for driveway surfaces. A driveway’s appearance is limited only by your customer’s budget and (hopefully not) your creativity. Gravel, pavers, natural crushed shell, brick, basalt, permeable (or pervious) concrete and recycled materials are just some of the possible materials you can use to design a unique driveway.

 

Factors in Driveway Design

Contractors and consumers should take a few things into consideration when designing a driveway. Budget is an important factor during construction and installation, but don't forget driveway maintenance over time. The materials used to construct the driveway, as well as its style, should complement the house, not clash with it, as well as be durable with a layout that is logical and easy to navigate by foot and vehicle.

A driveway created with pavers can be one of the best values, providing beautiful design possibilities, with low maintenance and a long shelf life, commonly lasting 30 to 40 years. Crushed shell driveways offer soft colors and good drainage, while pervious concrete made with almost no sand deliver a light, porous surface to avoid run-off issues.

 

Mix N Match and Layouts

Creative driveway ideasTo help your work stand out from other contractors don’t settle for the same old same old when it comes to designing driveways for your clients. You can mix and match materials like asphalt and brick border, or broken concrete and gravel. Instead of a straight path from the street to the garage, consider a rolling driveway layout to add some sensuous curved lines to the property.

Hiring a qualified sub contractor to perform the work  is often the best route.  But if you would like to do all or even some of the work in-house you can rent the equipment you need to do it right. Compactors, electric hammers, and other equipment are readily available as long as you know what you will need.

 

Creative Borders

Driveway can help sell a house

 

Creative borders go a long way toward creating an attractive driveway. Liven up a traditional straight driveway by planting a low hedge on each side, plus a decorative flowering tree for more vertical interest, such as a dwarf flowering crabapple tree. Add interest with grass between pavers or broken cement. Use a homeowner’s favorite design element or theme to line or highlight the driveway with split logs and tree trunks or a mass planting their favorite flowers.

Beautiful, unique driveway designs add a visual highlight as the first part of a property to be seen and used before arriving at the front door. It’s worth the extra effort to think more about materials and plan a unique part of the property that everyone passing by will see and your customer’s will enjoy for years to come.

 

 

Heidi CardenasGuest Blogger: Heidi Cardenas is a freelance writer with a background in human resources, business administration, technical writing and corporate communications. She specializes in human resources, business and personal finance, small business advice and home improvement.

 

 

Topics: Differentiating your Business, Design Trends, Design Options

Three Ways To Handle “Your Price Is Much Higher Than The Other Guy”

Posted by Shawn McCadden on Thu, Aug 14,2014 @ 06:00 AM

Three Ways To Handle “Your Price Is Much Higher Than The Other Guy”

Why is your price so high

 

 

Any contractor who has worn the salesperson hat has experienced the “Your price is much higher than the other Guy” objection.    Some contractors freeze up when they hear this, perhaps falsely assuming all prospects are only seeking the lowest price.   On the other hand there are contractors who look at objections as opportunities.  These contractors, rather than see the objection as ending the sales call, see it as an opening to take advantage of.   A no may mean no, but an objection means “I am still thinking about it and haven’t made a decision yet”.


Next time a prospect tells you your price is higher than someone else’s try these tactics to keep the conversation moving and see if your prospect could justify paying more.  Notice I said “tactics”, not responses.  If you memorize the responses you may miss out on understanding why the tactics work.   The response is not a tactic, just a way to accomplish the tactic.   Make sure your responses sound like they are coming from you and fit the context of the conversation you are having with your prospects.  

 

How remodelers can address the price is too high objection

 

Tactics contractors can use to address the higher price question

Tactic #1- Find out if you are you being compared to a business the prospect would never hire?

Many home owners collect bids from contractors even though having met with them they would never hire them.  Then they still use that contractor’s bid as a point of reference.  This is like comparing the cost of a Ford to a Dodge pickup truck even though you would never buy a Ford.  To find out if your prospect is making a false comparison try asking something like: “Is there a reason you haven’t already hired that other guy?”  Depending on their response you might want to move to tactic #2 below

 

Tactic #2- Find out if they are still looking for something they haven’t yet found

How consumer choose a contractorFor many home owners choosing the right contractor to work with is just as important as the quality of the workmanship.   Consumers who have already done remodeling and had a bad experience with a contractor are great candidates for this tactic.  The purpose of the tactic is to get them talking about what happened last time, how it affected them, and how they will feel if the same thing happens again.   With this prospect first ask something like: “Is there a reason you aren’t working with the contractor who did your…?”  If this reveals you are on the right track says something like “Why haven’t you already hired one of the other contractors you have met with so far.”   Then, depending on their answer and the context, consider saying something like: “Were you hoping I could do something different than the other guys?”  Now, at least with this prospect, you’re back in sales mode!  Move to tactic #3.

 

Tactic #3- Help them discover that getting something different comes with a different price.

No one wants to pay more than they have to for anything.  Take gas for example.  It’s a commodity; you can get the same thing all over the place so why pay more for it if you don’t have to?  If you have been successful with tactic #2 above, to get tactic #3 started ask something like: “But you probably couldn’t justify paying more to avoid those disappointments, right?” 

If they say no, or they say yes, ask them the same thing: “What do you think we should do at this point?”  By asking this question you will either give them opportunity to pay more and close the sale, or you give them the opportunity to say it isn’t going to work so you don’t have to be the one to say it.   Using this tactic can help you avoid the risk of being accused of not wanting to work for them.

 

Think about this next time you are worried about your price and your prospect’s reaction. 

How to get good referals from remodeling customers

 

People who buy on price hang around with a lot of other people just like them.  When you get referrals from customers who buy on price it’s likely their referrals will want to buy on price as well.   When you get referrals from people who are willing to pay more to get something different, it’s likely their referrals will pay more to get different as well.  You just have to help them discover the difference they are looking for.  

That’s why you need to learn tactics; not memorize responses!


 

Topics: Sales, Differentiating your Business, Prequalifying, Creating Referrals

How and Why Contractors Need To Create Powerful Testimonials

Posted by Shawn McCadden on Thu, Aug 07,2014 @ 06:00 AM

How and Why Contractors Need To Create Powerful Testimonials

How contractors can get testimonials

 

Testimonials can be the most effective marketing tool a remodeler has and they are free!  They provide credible confirmation of your marketing message because they come from people who have actually experienced working with your company.   Fortunately, with some planning and the use of simple strategies, powerful testimonials can also be very easy to get. 

Selling and working on fun projects makes sense.  But working for the wrong clients can kill the fun in a project for its entire duration.   In this article I want to share how you can get and use testimonials as a powerful and effective way of demonstrating your company’s differences so you can attract both the right clients as well as the right projects for your business.

 

Think about what you are or should be selling

In his book “Selling the Invisible” Harry Beckwith talks about outside perception and inside reality. 

  • How Contractors can get testimonialsThe outside perception is what prospects come to think about your business by what they observe, much like looking at a picture. 
  • The inside reality is what they come to know about you and your company by actually experiencing working with you and your team. 

I can personally share with you that understanding this difference and putting it to work within our marketing strategy caused a significant improvement in lead quality and lead quantity at my remodeling company.   By sharing testimonials that revealed how we did business we attracted customers who wanted us for our way of doing business, not just for the quality of our work.

A picture may be worth a thousand words but a well written testimonial can paint a specific picture that has the value of gold.

 

Four important considerations for creating powerful testimonials

  1. I found that the best testimonials are short and concise, getting right to a main point.  Most importantly, they include the true emotions experienced by the customer as they worked with you and your team, and or as a result of how your company’s processes helped them achieve their true remodeling goals.
  2. They are told like stories and include concrete examples from the customer’s experience that back up the main point and make the testimonial memorable.
  3. I found that it is best to get testimonials in writing from customers sooner than later, while the thoughts are fresh in their minds and they are enthusiastic about what they are sharing with you. 
  4. Always be sure to get written permission to use their testimonials.  If possible, get permission to use their name or initials with the testimonial, as well as the town they live in.   Including the source makes the message all that more credible.

 

Summary

describe the imageIn a lot of ways testimonials are like referrals.  If contractors wait for them to happen they will get some referrals and some business.  On the other hand, if contractors are proactive in causing them to happen and are strategic about causing the inside reality they include, contractors can get great customers and a lot more business.

In a future article I’ll share some examples and some specific strategies you can use to cause and secure powerful testimonials.

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Topics: Differentiating your Business, Marketing Ideas, Lead Generation, Customer Relations, Books for Contractors, Creating Referrals