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3 Financial Strategies for a More Scalable Construction Business

Posted by Shawn McCadden on Tue, Feb 07,2017 @ 05:00 AM

3 Financial Strategies for a More Scalable Construction Business

Scaling a construction companyAs 2017 dawns, the outlook for the construction industry is optimistic. Despite setbacks experienced during the Great Recession, the industry is set to add 790,400 jobs over the decade of 2014 to 2024, accounting for the majority of new jobs in the goods-producing sector. Real output will grow 2.8 percent annually during this period. In 2017, total U.S. construction starts will increase 5 percent, reaching $713 billion, anticipates Dodge Data & Analytics.

For contractors, this is great news, but it also presents the challenge of scaling up to meet growing demand. Scaling up requires not only hiring more workers and buying more material, but also adjusting your financial strategy to cover your increased overhead expenses without hurting your cash flow and profits. Here are three financial strategies for successfully scaling up in 2017.

 

Scale up Revenue while Scaling Down Costs and Expenses

A scalable remodeling business model is designed to allow you to increase revenue while holding both job costs and overhead expenses down. To be scalable, your financial plan should aim for gross profit margins of 40 percent or more (minimum of a 1.67 markup).

Scaling a remodeling companyTo achieve this level of gross profit margin, one fundamental strategy is increasing your revenue. The key to increasing your revenue is improving your marketing and sales. One of the most efficient ways to improve your marketing is by improving your positioning through a better unique selling proposition (USP): a brief statement that summarizes what you offer customers that your competition doesn’t.

To refine your USP, narrow down your ideal target market. For instance, is there a certain neighborhood or a certain type of building that would be more profitable to specialize in? Research what your target market is most seeking in a construction contractor. For example, are they price shoppers or are quality or service bigger priorities for them? Craft your USP to emphasize what your target market most values and make sure all your marketing material reflects your new USP.

Along with increasing your revenue, the other half of keeping a high profit margin is keeping expenses low. Many construction businesses fail because they can’t cover the cost of overhead. Finding ways to reduce the money you must pay for running your business is key to minimizing your expenses. Taking the time to research different organizational charts, industry best practices, project management methods, business management software and employee compensation strategies based on performance.   Investing in these areas now can help your business reduce overhead through efficiency of operations as well as economy of scale as the business grows.

 

Maintain Efficiency through Automation

3D Automation for remodelersAnother effective strategy to lower job costs is automation. Automation can help you lower the costs of materials by helping you plan more precisely to avoid unnecessary waste. J.E. Dunn has partnered with Autodesk and Microsoft to develop Lens, a cloud-based software tool that combines 3-D virtual modeling with instantly-calculated cost estimates for each component of your building project.

Although not common yet in residential remodeling, another way automation can help cut materials costs and waste is by using 3-D printing. 3-D printing allows you to select from a wider range of cost-efficient materials, while speeding up the building process. Last year, Chinese company Huashang Tengda was able to assemble a 3-D-printed house in just 45 days.  Remember, many said nail guns would never catch on!

 

Keep Costs and Expenses Down with Outsourcing

Outsourcing for remodeling contractorsOutsourcing is another proven way to cut labor costs both in the field as well as the office. Many successful large companies outside our industry have used outsourcing effectively to streamline their labor expenses. For instance, Google relies heavily on revenue from pay-per-click advertisers who pay to have their results featured in search engine rankings. Maintaining its advertising revenue requires a large sales support team, which Google has outsourced. Amway is another company that outsources its sales, relying on a distributor model to promote direct sales.  In our industry many contractors already outsource activities such as design, engineering, building permit procurement, sales, lead intake and prequalification, RRP demo, specialty trades and even general carpentry.

As these examples illustrate, you can outsource functions that are part of your core business if it is more efficient to delegate them to specialists than to maintain in-house talent. For instance, there is no need to pay for the expense of in-house 3-D drafting when you can easily outsource it. With the right plan and system you can also easily outsource routine peripheral functions such as bookkeeping and payroll.

 

Topics: Margin and Markup, Technology for Remodelers, Success Strategies, Cash Flow, Marketing, Guest Blogs, Marketing Considerations, Prequalifying

Only For Contractors Who Want to Use Marketing to Help Them Make Tons of Money

Posted by Shawn McCadden on Sun, Jan 29,2017 @ 05:00 AM

Only For Contractors Who Want to Use Marketing to Help Them Make Tons of Money

JLC LIVE 2017In March I will be presenting two seminars for contractors at the JLC LIVE trade show in Providence RI.  Both seminars will be marketing related and although they certainly will have value individually, the two are very complimentary towards creating an effective web site for your business.  Additionally, both are offered on the same day making it easy and cost effective to improve your marketing knowledge all on the same day.  Below I share the seminar descriptions as well as why I am offering these topics.  If you want to get better qualified leads for profitable projects, from your ideal customers, I invite you to join me.  Better yet, think of it this way.  If you are not there you better hope your completion isn’t either!

Both seminars will be held on Thursday March 23, 2017 at the Rhode Island Convention Center in Providence, RI.

 

JLC Show seminars by Shawn MccaddenSeminar #1: 7:30-9:00 AM

The first seminar, titled “Web Site Bootcamp for Beginners” will be an overview of how to get started and what to include if you are planning your first web site.  I put this session together because I see way too many contractors get sucked into paying for worthless web sites that might look good, but don’t do a dam thing towards causing qualified leads or profitable sales.  It will also be very helpful if you are not happy with your current web site and or are trying to figure out why it doesn’t help create lots of business. At this JLC seminar I will also share what I consider to be the “secret weapon page” you should have on your web site.

 

Seminar #2: 1:30-4:40 PM

Mccadden Seminars at JLC LIVE 2017The second seminar is actually a 3 hr. workshop with plenty of time built in for questions and interaction.  The workshop is titled “Choosing and Targeting the Right Customers and Project Types for Your Business”.  I put this JLC Marketing Workshop together to help contractors become much more strategic about the marketing they do and how they do it.  If you plan to do any marketing this workshop will help make sure you and anyone else involved has a clear understanding of exactly what you are trying to solve and or accomplish with your marketing.  That way you can make sure your employees and or marketing provider you work with can be held accountable to the purpose of the marketing they help you with, not just pay them for doing it even if it doesn’t work.  I’m even including a sample marketing plan in the handout so we can review and discuss it together at the workshop.

Scroll down to see the full description and learning objectives for the two seminars.

I hope I will see you there!

 

View JLC LIVE 2017 Show dates, location and hours

View the 2017 JLC LIVE Conference schedule

Register for JLC LIVE

 

McCadden Seminar Descriptions for JLC LIVE 2017

Web Site Boot Camp for Beginners (90 Minutes)

Every remodeling business can benefit from a well done website if it wants good customers to find and buy from it for reasons other than price.   If you have been putting off doing a website for your remodeling business because you have no idea where to start, this boot camp is for you.  Don’t worry if you don’t know what SEO means or you don’t know the difference between HTML and a URL.  This will be a down to earth presentation using language and examples every remodeler will understand. 

Learning objectives: By attending this seminar you will:

  • Identify what you need to know and consider before going forward with your website.
  • Learn to identify what you can and should do yourself and where you will need help
  • See how easy it can be to maintain and add to your web site if you have the right tools
  • Learn how to get the right people to find your website and tell others about it

 

 

Choosing and Targeting the Right Customers and Project Types for Your Business (3 Hours.)

Many remodelers and builders have come to realize that their businesses can no longer be all things to all people and that trying to do so makes it almost impossible to differentiate themselves in today’s marketplace. Smart consumers don’t want generic. They want different and they are using the internet to find, research and prequalify which businesses they will work with.

By strategically targeting specific customer types and project types your business can benefit in many ways and increase profitability at the same time. This seminar is designed to help you understand the many factors that you and your business can take into consideration if you want to successfully and profitably target, market to and attract a strategic niche.

Learning objectives: By completing this class you will:

  • Learn several powerful areas to explore and consider when identifying your target customer and niche
  • Learn how earning gross profit can depend on what you sell and how you sell it.
  • Find out how the internet and your website can help the right prospects find you and your business

 

Topics: Contractor Training, Differentiating your Business, Marketing, Web Site Related, Lead Generation, Marketing Considerations

How Contractors Can Build and Better Their Client Relationships

Posted by Shawn McCadden on Tue, Jul 05,2016 @ 05:00 AM

How Contractors Can Build and Better Their Client Relationships

Ways Contractors Can Build Better Client RelationshipsThough going above and beyond with the project at hand is usually the No. 1 priority for contractors, creating and cultivating client relationships follows closely behind in position No. 2. Any business owner and manager knows that building and maintaining great relationships with clients — otherwise known as relationship marketing — is key to a company’s success. Many companies, however, do not employ a dedicated customer relationship manager (CRM). But that doesn’t mean relationship marketing should be pushed to the wayside. We’ve gathered four tips on how you can help cultivate positive relationships with clients right now:

Connecting the Dots

One CEO says her best tip is to be a connector. In other words, when meeting a potential new client, or even a current client, ask yourself what you can do for them. Aside from the job or project at hand, perhaps you’ve gleaned from the conversation that he or she could use a referral to a good painter, or even something as minor as a good place for lunch. Giving clients or potential clients access to your network can help them gain confidence in your advice. Always having an “I can help” attitude, even if it doesn’t directly benefit you, will leave a positive effect on people...and could result in more business or a referral one day.

Get Clear

Experts also agree that clear communication goes a long way in keeping clients happy. They say to be upfront from the very moment you meet with clients or potential clients so you can bid in a fair and accurate way. Also, be sure you are completely clear on client expectations and that they are clear on what you can deliver to ensure a united vision. Additionally, using layman’s terms with clients who may not have excessive construction experience can help them understand better and not feel awkward by asking for clarification.

Further, deciding from the start who the point of contact will be on both ends, as well as determining the preferred mode of communication — whether text, email or phone calls — can help avoid ambiguity.

Number One

Thanking remodeling clientsAnother best practice is to treat every client like your most important client. Since satisfied clients are more likely to refer you, it is wise to provide each and every client with your very best service, no matter if they are bringing you the largest payment or the smallest. Just like in life, you never know who people know, and who they may (or may not) refer you to. Not to mention, today’s startup could be tomorrow’s Fortune 500 Company. So provide service accordingly.

Tokens of Appreciation

While offering clients your own company swag — pens, T-shirts, etc. — is a nice way to share your appreciation and get your name out there, it is wise to consider doing more. Sometimes, even the smallest form of a “thank you” is deeply appreciated by clients. Don’t underestimate the power of something as small as a hand-written thank-you card. However, if you’d like to go above and beyond, an unexpected gift delivery at the end of the project or on a holiday can send a bigger message of thanks.

An unexpected delivery can brighten anyone’s day. Perhaps you know that your client is a wine enthusiast or enjoys a good microbrew. As such, a gift delivery with these items offers a personal touch. If you’re unsure of what to send, custom gift baskets full of luxury spa items, gourmet chocolates or sweet treats and cookies are always a safe bet. Beautifully designed and wrapped, FTD gift baskets offer a touch of class and will be something your client is sure to remember and appreciate.

 

Sheryl Coonan

 

Guest Blogger: Sheryl Coonan is a lifestyle, fashion and business writer from metro Detroit.

 

 

Topics: Business Growth, Differentiating your Business, Marketing, Marketing Ideas, Guest Blogs, Building Relationships, Marketing Considerations, Customer Relations

How Contractors Can Build & Protect Their Brand Reputation

Posted by Shawn McCadden on Wed, Sep 09,2015 @ 12:59 PM

How Contractors Can Build & Protect Their Brand Reputation

Brand building advice for contractorsFor contractors, brand reputation can make the difference between winning and losing a big contract. A case in point is DuPont. Over the past two decades, DuPont has built a reputation as a safety leader in the chemical industry, enabling its Sustainable Solutions unit to generate $3.9 billion a year training other companies in workplace and environmental safety. Now, that income is at risk after a series of fatalities, lawsuits, investigations, and fines have led the Occupational Safety and Health Administration to place DuPont on its list of severe workplace safety standards violators. Subsequent negative publicity has DuPont's clients questioning the company's safety reputation and whether or not they want to continue using them as a contractor.

DuPont is big enough to take a hit and recover, but for a smaller contractor, even a few negative online reviews can quickly add up to significant lost business and revenue. Whether you're a large or small contractor, it's in your best interest to keep an eye on building and protecting your online reputation.

 

Building Your Good Name

International consultancy and construction company Mace has won Building Awards Major Contractor of the Year recognition by committing itself to putting its clients first and providing superior quality and high delivery standards. As this illustrates, customer service is the foundation of a good reputation.

Construction management consultant Paul Netscher identifies ten variables that affect your company's reputation, all of which boil down to delivering superior customer service. At the top of the list is delivering projects on time. Delivering on promises instead of overpromising and underdelivering, rectifying mistakes, honesty, and quality are also high priorities.

Overall, satisfying and exceeding your client's expectations is the foundation of building a good reputation with your customers. Making a corporate commitment to achieving this ideal is a first step towards building a solid reputation.

 

Promoting Your Brand Reputation

How contractors can build their brandDelivering superior customer service lays a foundation for a good reputation, but in today's digital environment, it's also important to get customers to talk about you online. What customers say about you on sites such as Google Places and Yelp has a huge impact on your online reputation.

Your customers will definitely talk about you if they're not satisfied. Contractor Nation writer Richard Fencil says the biggest reasons people complain about contractors online include shoddy work, rudeness from company representatives, high or misquoted prices, not following through on promises to get back to customers, and keeping customers on hold too long. To avoid these issues, train your staff how to communicate with your customers

You should also take proactive steps to ask satisfied customers to post reviews of you online. For instance, after a project is completed, a sales representative can contact the customer to see how it went and ask for a review. Marketing representatives, office personnel, and project managers can also take opportunities to ask for reviews.

Providing online tools on your website to make it easy for customers to review you will increase your odds of getting good reviews. Amazon is a great example of how automation can facilitate customer reviews.

 

Managing Your Brand

Building your brand's reputation is one thing, preserving it is another. Within your organization, you have to make sure everyone's on the same page about your brand's core message and understands what image is to be projected to customers. Outside the organization, you need to make sure that your brand image is being communicated consistently in all your contact with your customers, both online and off. You also need to monitor what customers are saying about you online in order to ensure that your message is being received, that complaints are being addressed, and that any negative publicity is being met with a positive response.

Managing all this manually can be challenging, especially considering all of the contact you make with your customers and with all the websites and social media platforms that are out there. To make this easier, WebDAM offers brand management software which gives you a single interface to make sure your brand's image is being maintained consistently throughout your organization and across all marketing channels.

 

Handling Complaints

How contractors can handle online complaintsOne of the biggest keys to protecting your brand's reputation is how you handle complaints. The most important step is to listen. Empathize with the customer's situation. Make sure you understand what the problem is before you attempt to resolve it, and make sure they agree with any resolution you propose before proceeding. If you can't resolve the issue yourself, find out where to best direct their complaint. The International Association of Professional Contractors provides more detailed guidelines for responding to customer complaints and negative online comments.

 

 

Topics: Differentiating your Business, Marketing, Marketing Ideas, Guest Blogs, Marketing Considerations, Customer Relations

If One Of These People Asks, Can You Explain How Your Remodeling Company Does Business?

Posted by Shawn McCadden on Mon, Aug 10,2015 @ 01:01 PM

If One Of These People Asks, Can You Explain How Your Remodeling Company Does Business?

How a contractor does businessMost contractors can't explain how they do business, they just make things happen.   In a smaller remodeling business, say up to about $5-700K of installed work, this may get you by.  But as you grow your business, particularly if you want to grow past $1M in installed remodeling sales, the list of people below will want and or need to know how you do business.  

Would you be able to explain it to them?  Or will you let them tell you how it will happen?

To grow a successful construction business these people in your path will need to know how you do business: 

Prospects:  
If in the past they have had a bad or good experience with another contractor, savvy remodeling customers already know what worked or didn't work for them and their project. Before they hire you they will want to know how your business operates.
Customers:  
If they have already bought from you without knowing how you do business they may have bought on price and have already assumed how you will do business. It’s probably not the same way you are assuming.
Employees:
lead carpenter system workshop click here If employees don't know how you do business they will be challenged to take on responsibility as the business grows because they will never be able to assume what you want them to do or say at job sites and or with customers.  If they take the risk of doing so, and then you chastise them for what they did, they will probably never take that risk again and or may look for a different job.
Recruits:
Finding good employees these days is challenging.  Finding a real lead carpenter or production manager is near impossible.   Try this example.  You find a real lead carpenter, and while interviewing that candidate starts asking you questions about how your business and your lead carpenter system work. Will they gain confidence in working for you or will they come to realize they should look elsewhere?   Good lead carpenters know what they need from the business and how it should happen so they can actually produce projects on their own, from the job site.  (Check out this Lead Carpenter System Workshop for business owners)
Architects:  
Explaining how you do business to an architectBe careful here.  If you don't explain how you do business before winning the bid on an architect driven remodeling project you might just be told how you will do business.  Examples include how and when you will be paid, what will be considered a change order vs. what you should have assumed to be included, what margin you can earn on change orders, and what hoops you will need to jump through before receiving progress payments and final payments.  Be sure to carefully read any AIA Contracts before signing them.
Sub Contractors:
Good trade subs are hard to find. If you find a good one but don't clarify how you do business with your subs before you hire they will likely be telling you what they expect after you are already committed to them.  At that point you may have no other choice than to suck it up if you want to keep your job on schedule and your customer happy.   A lack of clarity and consistency regarding your payment policies is probably the most common reason subs will lose interest in working with you on your next project.
Vendors:
Again, be careful here. Be sure to explain how your sales process works and how you price materials before sending prospects and clients to vendors to pick things out.  By doing so they can become part of your sales team.  If you don't, in a sincere effort to help you, they may actually create problems for you.  Examples might include quoting wholesale prices, giving pricing breakdowns, or suggesting products you prefer not to use.  If the prospect never even shares you sent them there, and you didn't let the vendor know they were coming, the vendor may even recommending a different contractor just so they can be sure to get the sale.

 

Can't explain how you do business?  

Thinking of growing to or past $1M and need a defined way of doing business that works for you?  Consider joining our upcoming Construction Business Owner Peer Group and Education Program.  By participating in the 4-month program you'll get structured education to help you as well as great insight and suggestions from your peers.  

 

Topics: Working with Vendors, Business Management, Recruting, Employee Advancement, Business Growth, Differentiating your Business, Marketing, Marketing Considerations, Prequalifying, Breaking $1Million

Now Might Be a Good Time to Remodel How and Why You Do Marketing

Posted by Shawn McCadden on Tue, Jun 16,2015 @ 10:03 AM

Now Might Be a Good Time to Remodel How and Why You Do Marketing

marketing ideas for remodelersOn April 2nd, 2015 I presented a half day marketing workshop titled "Choosing and Targeting the Right Customers and Projects Types for Your Business". The workshop was billed as the keynote session for the Builders Association of the Twin Cities (BATC) annual trade show in Minneapolis.   At the workshop I shared new ways contractors can think about and do their marketing so they can attract their desired customer and job types. It’s what I call strategic marketing.   For those of you who missed the workshop here are some of the key points we discussed at the workshop.

 

BATC Builders and Remodelers Show information Take advantage of the timing 

The economy and residential construction are both picking up.  At the same time the majority of attendees agreed with me in that we are not yet confident that the pace of the current surge will be sustainable considering the uncertainties businesses and consumers still have about the economy.  With that in mind this is however a good time to take advantage of the surge to concentrate on developing market share in a strategic way.  It’s my opinion that most contractors would benefit from becoming a specialist in what they do and how they do it.  After all specialists typically command higher prices than generalists.  And, true specialists are always in demand, even in down economic times. Now is a good time to specialize, as long as you also work on branding to establish and maintain your position as a specialist in your desired market areas.

 

Here are some specific tactics contractors can consider and use to strategically build market share

Pick your customers, don't let them pick you:

marketing strategies for remodelersStop taking just any customers and jobs.  Be selective about who you will let become your customers.  For example why not only work with people who would say they are "working with" you, not those who would say you are "working for them".   Also, be selective about the project types you go after.   For example why not attract people who want high quality products.  If you sell using one markup across all cost categories the gross profit dollars earned on material intensive projects due to higher price point products is an easier way to meet overhead and net profit goals, both now and in the future, particularly when compared to selling and producing labor intensive projects.

Stop competing, differentiate:

I don't understand why contractors think they have to compete and or be competitive.   For most construction business owners competing means bidding. Home owners who seek bids are typically like auctioneers, except they are looking for the lowest price, not the highest.  And, rather than try to be better than your competition, why not seek to be different from your competition.  Being different attracts attention and consumers who want different also know they have to pay more to get different.  
One key to being different and attracting positive recognition for it is to concentrate on how you do what you do to demonstrate your difference, rather than work on what you do to differentiate.  One example of potential differentiation could include offering true Design/Build as an alternative to the traditional design-bid-redesign and bid again game. Another example would be helping prospects develop project specifications with the agreement that you will come back to present your proposal and solutions, but you will not leave them behind unless they sign your proposal and give you the required deposit.  

 

Being different comes with pros and cons

If you decide to use these example strategies many prospects will go away.  However, the ones that see value in your differences will become cogs in your new referral generating machine and will pre-sell the value of your differences to their referrals so you won't have to.  I call those types of referrals "layups".

 

Think of how you do marketing in a new way

marketing for remodelersThe old traditional marketing methods of trying to find prospects who want your services now and interrupting them to get their attention no longer work.  Today consumers are the ones deciding how they will find and qualify their project ideas as well as the contractor they will work with.  Instead use inbound marketing tactics that help consumers find your business.  This should be one of the two primary purposes of your marketing and can be accomplished on your web site using SEO tactics and good content on your site’s pages as well as your blog.  The other primary purpose of your marketing, particularly at your web site, should be to help prospects decide if what you offer and how you do business are right for them.  In other words your marketing should help them prequalify themselves so they either want to contact you or know they shouldn't.

 

Final Thought- Marketing shouldn't just be limited to creating leads

At the workshop I also shared one more new way to use your marketing; to advance the sales process.  Consumers want to gather information and ideas about their project, but they want to be sure they are getting accurate and useful information.  Savvy contractors are now using the content at their web sites to educate consumers before they call to setup an appointment with a contractor.  This saves both the prospect and the contractor a lot of valuable time.  In addition to offering project and product related information, you can also educate them about how and why you do business the way you do. Sign up to join our mailing list  This can not only speed up the sales process, it can also help clearly differentiate your business and therefore improve the quality of your leads.

 

 

Topics: New Business Realities, Contractor Training, Success Strategies, Sales Considerations, Differentiating your Business, Marketing Ideas, Web Site Related, Marketing Considerations, Customer Relations, Business Planning

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

Contractors Are Unknowingly BUT LEGALLY Giving Away Their Identity To Lead Gen Companies

Posted by Shawn McCadden on Wed, Feb 18,2015 @ 06:00 AM

Contractors Are Unknowingly BUT LEGALLY Giving Away Their Identity To Lead Gen Companies

Lead Generation services for contraciorsI constantly read forum posts about contractors’ being shocked to discover they are being re-directed away from their own company when searching for their own company online, and then are directed to a lead generation service. The issue is rampant – but unfortunately, the situation is typically inadvertently created by the contractors’ themselves.

 

 

So let's just jump to some research we did at MyOnlineToolbox

We never intended to focus on the specifics of Lead Generation Terms & Conditions.  The issue started to intrigue us when a handful of our contractor website marketing clients were having challenges getting website leads.  We discovered through our research that these contractors signed up to one or more Lead Generation Services over the years.  The contractors simply did not realize how hard it was to literally compete against themselves based on how well the Lead Generation companies were using their information against them.

Problems with Contractor Lead Generation servicesWe read the Terms & Conditions of numerous Lead Generation companies.   It is important to note that every lead generation company views anything you submit to their site for content as their own. That includes your business biography, services, testimonials and pictures.  The terms sometimes have a permutation of wording that states "the contractor agrees that a consumer MAY NOT be directed back to the contractor if the contractor does not have the appropriate spending limit and other limitations".

We think it is fair to replace MAY NOT with WILL NOT when money is not to be made.  And considering the whole issue is already ambiguous, we also wish someone could explain what "OTHER LIMITATIONS" means since we feel the limitations are definitely directed against the individual contractor.

And, to make matters worse, the terms also state the contractor agrees the lead generation company can take the content (reminder: your Business Bio Information that you submit) and use, copy, reproduce, and sublicense any content on your profile page to drive traffic to the content.  But they do not have to pass the consumer to the contractor.  

So let's guess what the lead generation company will do next... You wonder?

 

We interpret the situation this way:

Concerned_contractor-wrThe contractor is asked to sign up, pass along his/her identity to the lead generation company, and the lead generation company can use the information anyway it wants if you do not pay them forever.

Just imagine if every contractor knew up front, in big bold explanation what he is giving up when he agrees to join a lead generation service (for free or paid, doesn't matter).  But many times we feel the contractor is being misled into not only what he is getting for free, but also what he is not getting and how their company information may no longer be used to their company’s benefit

It begs to wonder why anyone would agree to one way terms with something as important as their business identity.

 

Maybe we are wrong

If we are wrong about this let’s hear from a lead generation company who feels we are wrong and can offer a specific explanation as to their terms and conditions to ensure contractors know the difference between your services and other lead generation services.  But it would also be nice to hear that, unconditionally, your company would never use a contractor's business data to drive traffic to your site in order to then connect a potential consumer with different contractor.  

 

For more information

Unfortunately we discovered so many ways information is used against a contractor that it was easy to organize and share our findings with a visual understanding.  We do that here in a few short videos lumped together as Say No To Lead Generation Companies.

 

Advice for choosing a contractor lead generation serviceSo in summary, there are only two ways to win at getting more online lead opportunities:

  1. Do not sign up for any Lead Generation Services to avoid content being used against your company over a period of time.  And if you feel so compelled to try a service, then by all means just read the Terms & Conditions first since you may have second thoughts.
  2. Have your own website and learn the basics of website marketing (referred to as SEO Search Engine Optimization).  A little bit of website tweaking will give you years of ongoing opportunities.  It is not that hard all.

 

Brian Javeline

 

Guest Blogger: Brian Javeline is President & Co-founder of www.MyOnlineToolbox.com, providing business software and the industry’s popular Contractor Website Online Marketing Education Class.

 

 

 

Topics: Web Site Related, Lead Generation, Guest Blogs, Marketing Considerations, Creating Referrals

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

3 Financial Myths That Compromise a Contractor's Long Term Success

Posted by Shawn McCadden on Tue, Nov 26,2013 @ 06:00 AM

3 Financial Myths That Compromise a Contractor's Long Term Success

Contractor financial mistakes

 

Here is my list of the top three myths I see that compromise a contractor's ability to achieve long term financial success.  These areas definitely affect a contractor ability to profitably grow a business, as well as the contractor’s personal financial health, including retirement funding.

 

I must be competitive with my pricing

Contracors using competitive pricingIn my opinion when any business seeks to be competitive it typically becomes a commodity.  By that I mean the buying public looks at that business and or it’s offering as being the same as their other choices.   When consumers see a product or service as a commodity they ultimately make their choice between available options based on price.   By trying to remain competitive contractors playing in this sandbox become bidders in a reverse auction where the loser is the one who wins. 

To prove my point, ask any contractor who sells their services through a bidding process if they will have the money they need to comfortably retire at 65 without working again.  There will be some exceptions, but I bet the majority will tell you their plan is to work until they die.  What would their significant other say about that plan?

Also, keep in mind that nine out of every ten contractors will eventually fail.   By being competitive contractors are most likely joining the ranks of contractors who will eventually fail.   Rather than compete, why not differentiate your business?   Check out an article I wrote on this subject for Remodeling Magazine

 

 

I can't raise my prices; I'm already the most expensive contractor in my market.

I hear this one all the time from contractors.  Most of the time it comes from contractors who have no idea of their true cost of doing business and guess at what markup to use.  This is referred to as the WAG method, or the "Wild Ass Guess" method.  Based on the fact that they are guessing at what price they should charge I would also suggest they are guessing about being the highest price in their market.   Did they do or hire someone else to do market research to back up their claims?  I doubt it. 

Buyers are liarsWhen I ask how they know they are the most expensive most contractors tell me their prospects are the source of their assumptions.   For those using their prospects' feedback to determine their price point in the marketplace remember, buyers are liars.   The 11th commandment states that you can lie to a sales person and still go to heaven!

One of my contractor coaching clients told me he was the most expensive in his market and would not be able to sell anything if he raised his prices.    After I helped him do his first business budget and determine the markup he needed to use to cover his true overhead costs and make a profit, he went out that night and closed a deal at his new higher pricing.  Check out this article I wrote for remodeling magazine about the benefits of having confidence in you numbers.

 

I can only charge what the market will bear

Remodeling salespersonNow, if a contractor has done market research, for his or her local market, this may be true.   Savvy contractors, those who know what price they need to charge, will sell at higher prices up to the point that a majority of protects stop buying.  I would consider this to be true market research.  However, these business not only know how to determine the true costs of doing business, they also typically have professional marketing programs to help them get in front of specific prospects and they employ professionally trained salespeople who know how to sell.

Contractors using the WAG method to price their work also typically do not have a strategic marketing plan.  Without targeting a specific market of customer types, how can a business owner know what price point the market will bear?  Without professional sales skills, how would a contractor know if the reason for not selling at higher prices is due to the market or to his/her selling skills?

Also, what market are they referring to; the one they are proactively pursuing or the one that randomly ends up knocking on their door?  Are they using professionally trained sales people or are they using order takers?   One way to differentiate between sales people and order takers is that sales people present their solutions in person.  Order takers typically hit send.   If you use the hit send method I don’t think that counts as a valid way to test what the market will bear.

 

Want to be able to charge more for what you do? 

Check out this blog about why some contractors can raise their prices but most can’t.

Marketing workshop for contractors

 

Looking to target specific customers and work types?

Check out this all day Marketing and Sales Workshop

 

 

 

Topics: Sales Considerations, Differentiating your Business, Financial Related Topics, Retirement Planning, Earning More Money, Lead Generation, Marketing Considerations, Business Planning