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What Happened When I Stopped Providing Free Estimates

Posted by Shawn McCadden on Sun, Jun 28,2015 @ 07:00 AM

Guest Blog: What Happened When I Stopped Providing Free Estimates

Mouse_trap_free_bait-wrIf you are still running free estimates and playing a numbers game of leads to appointments to sales then I have something valuable to share. In the past I believed that if I did not actively pursue new clients, and provide free estimates, I would have no income. It was a numbers game; 5 leads - 3 appointments  -1 sale. Sound familiar? In this article I share my lesson in letting go; finding the faith to trust a system to qualify prospects, and the positive impact it can make for your business as well as your cash flow.

 

How I discovered the solution that worked for me

For me, it was getting increasingly difficult to find and schedule client meetings with my increasing responsibilities of being a Mom with a terminal illness. Running from lead to lead was taking up the time I needed to run my business and finish the contracts that we already had in the pipeline. Holding on to how I always did things was holding us back. I needed a temporary solution to what was a temporary situation.

Then, one late fall morning while catching up with reading emails and industry updates, I came upon an article about a remodeling business joining with another remodeling business to create a winning partnership.

Inspired by that article I decided that if I could temporarily give up running the leads to create the sales opportunity I would then be able to concentrate on design, closing the deal and project execution.   Doing so would be the temporary solution I needed to solve my current challenges. It worked. I found a design firm with a great front end sales system and at the same time was struggling with project management and finding responsive sub contractors. And, fortunately there would be no conflict, as they only needed to temporarily fill this need as they were relocating out of the area in six months, one year max. It was a good fit, they were looking to hire a per contract designer/project manager. The fact that I already had a top notch construction team in place sealed the deal.

 

The results

How contractors can stop giving free estimatesAs a result of that temporary relationship I learned how to create a trained support staff at my own business and secured steady work for my team. By learning how to use and sell paid consultations our leads turned into project development retainers which then turned into profitable construction contracts. That temporary relationship was also a big success for the partnering firm; they had a record earning year and made a lot of money.

When I stepped out of my business and worked within a sales process for another firm it forced me to stop chasing down those leads that after too much investment of my time proved to be unqualified. As an owner, I would not have had the faith that charging for estimates would actually provide a constant flow of better customers. I was too invested in my previous training and experience as a sales person. I was dead wrong.

 

The change was an emotional one; here is how I did it

First I had to stop thinking of my role as being an in-home salesperson. Second, I had to better and fully understand why our clients were actually hiring us.  Finally, I had to set up a marketing and sales system that could drive value and was not contingent upon my making it through the prospect’s front door to get the “opportunity to do an estimate".

 

Here are the steps I took and worked for me:

Step 1. I optimize my online profiles to convey value; value to my target prospects.
Step 2. We made it easy to see reviews and then contact us.
Step 3. The first phone call replaced the in-home appointment.
Step 4. We added “homework" for the prospect to do and the use of a “paid consultation"
Step 5. We offered prospects a retainer to act as their very own personal consultant and helped them develop “their project”.

 

The result of adopting this system has been life changing

How to stop giving free estimatesI no longer run around from appointment to appointment. I now have the time to focus on creating more ways to provide paying prospects with value early in the process. Our business is running with more consistency and cash flow has increased. For every consultation I go on now we have a 70% close rate to a full construction contract, a 20% conversion to a design/material contract and about 10% of our prospects don’t move forward.  

Since returning to concentrate in full on my business and my new sales role gross sales have increased over the last twelve months by more than 75%. This is because we now focus on our ideal client. We actively seek clients that have budgets that match our business model and refer the other prospects to contractors that are better suited for them. Cash flow problems have all but disappeared.

It starts with faith. It took trusting a system, knowing who our client is, and having the time to create opportunities to provide value.

 

Cynthia MurphyGuest Blogger: Cynthia Murphy, CKBR, is a Certified Kitchen and Bath Remodeler and co-owner of Murphy’s Design, LLC. She operates a Design Studio in Fairfax Virginia. She will be launching her blog called “Home Design Labs” in June and hosting an industry specific interview podcast called “The Social Home Pro” this summer on iTunes and Stitcher radio. If you would like to connect with Cynthia you can contact her via her website, blog or you can email her at cynthia@murphysdesignllc.com.


Topics: Business Management, Estimating, Differentiating your Business, Earning More Money, Lead Generation, Guest Blogs, Prequalifying, Opinions from Contractors, Estimating Considerations, Customer Relations

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

Five Remodeling Business Myths That Get In The Way Of Growing Past $1M

Posted by Shawn McCadden on Wed, Jan 14,2015 @ 06:00 AM

Five Remodeling Business Myths That Get In The Way Of Growing Your Business Past $1M

Myth_or_Truth-wrThere are many remodeling business myths that seem to have become truths for way too many remodelers. That’s too bad. Believing those myths may be holding them back from being able to grow their businesses. Allowing these myths to remain in place will definitely prevent remodelers from successfully growing their businesses past the $1 Million installed sales threshold.

 

Schema leads us to believe what we experience as true

In an April 2010 Remodeling magazine article I defined and discussed schema. We all have our own schema. Schema is our way of interpreting things and information based on our past experiences.   Without previous experience with something one cannot have schema in that area. We can also have a limited schema about certain subjects if our experience in those subjects is limited. With limited schema our definition of what is true may also be compromised. In other words, if you have schema, but it is limited, you may end up believing something to be true, even though it is a myth.

 

I suggest the video below makes my point

 

 

Here are five remodeling business myths that are easily debunked with some schema

Myth #1: I have to be competitive on price to sell jobs:

If you don’t do marketing to expose how your business is different you will be perceived by consumers as being the same as most other contractors. That puts you into price competition to get jobs. Check out these two articles and try what is suggested to gain some new schema on this topic: Generic Contractors Are Fading Away, Brand Names Are Shining and Why Some Contractors Can Raise Their Prices But Most Others Can’t

 

Myth #2: Home owners won’t pay for estimates:

Most contractors say they can’t charge for estimates in their market place because all the other contractors do them for free. First, that is not true, many contractors successfully charge for estimates. Second, remember your mother: “If all the other kids jump off the bridge on the way to school does that mean you should jump off too? Maybe learning some ways to do it and them giving them a try could change your perspective about charging for estimates. This article can help get you started: Tips For Contractors On Ball Park Pricing and Charging For Estimates

 

Myth #3: Contractors have to wait until each phase of work has been completed before getting paid for each phase:

pocket_change-wrAgain, will you jump off the bridge, too? Will Delta Airlines let you pay after you land?   Completing remodeling services without being paid for them before you do them is in my opinion foolish, and a huge risk for most remodelers.   It instantly creates cash flow challenges in a business where cash is king. Breaking $1M without good cash flow might be the death of your business. Here is how you can create payment schedules that keep you ahead of your customer: Payment Schedules That Create And Protect Cash Flow

 

Myth#4: There are no good employees out there to hire:

Finding good employees is tough and doing it well requires a well thought out recruiting process. However most remodelers get bad employees because they don’t establish well thought out job descriptions before seeking to hire. When that is the case the job description is often being created during the interview, perhaps by the candidate. Check out this article published in JLC magazine for some help in this area: One Simple But Powerful Tip For Hiring The Right Employees 

 

Myth #5: If I give my employees too much training they will leave and start a business of their own and become my competition:

I personally found just the opposite happens. If you don’t give them enough insight and schema regarding what it takes to own, run, lead and finance a business they will leave to start their own. In addition to the training offer them leadership positions at your business, along with a good performance based compensation package. Doing so will make it more likely they will stay. These two articles will offer you some options to address this myth. The first was published in Remodeling magazine: Shared Responsibility: Advantages of Creating a Team of Leaders and Helping Employees to Think Like Owners

 

Looking to gain some schema?

By participating in the Construction Business Owner Education and Peer Group Program beginning in March you can gain the knowledge you will need to try new ways of doing things. The program also includes one-on-one assistance and coaching to help and guide you as you work through the changes.

 

(Note: This is the fourth 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 that have been published.)

 

 

Topics: Success Strategies, Worker Training, Business Growth, Opinions from Contractors, Leadership, Sage Advice, 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

Contemplating the Difference: Fixed Cost and Cost-Plus Contracts

Posted by Shawn McCadden on Thu, May 08,2014 @ 06:00 AM


Doug Hanna

 

Guest Blogger: Doug Hanna is president of S&H Construction, Inc. located in Cambridge MA.  His firm specializes in residential and historic renovations, custom home building, renewable energy, landscaping and site work.  Doug was recognized as the 2013 “Remodeler of the Year” by the Builders & Remodelers Association of Greater Boston (BRAGB). 

 

Contemplating the Difference: Fixed Cost and Cost-Plus Contracts

As a general contractor, I often find myself involved in good – natured arguments with some of my fellow builders regarding the advantages and disadvantages of “fixed cost“ versus “cost plus/time and materials “ contracts. There are distinct arguments for each model, depending on the type of job, the type of structure, as well as the nature and level of completion of the plans and specifications. Having used the cost-plus/time and materials (CP/T+M) contract for the last thirty years, I am somewhat biased towards its benefits.

Difference between T&M and fixed contract constructionHowever, I understand the allure of a fixed-price contract for both the owner and the contractor.  Fixed cost is most appropriate with a very thorough, well-defined set of construction documents (plans and specifications) and even more so if those complete documents are produced for new construction. In a less well-defined job with plans in progress, or in an older home, cost-plus/time and materials may be more appropriate simply because there is too much that is unknown to be able to estimate with full certainty what it will take to perform the work.

On most projects of any size, no matter which contract is used, anywhere from 50 to 90 % of the work will usually be done on a fixed cost basis by subcontractors. CP/T+M jobs are generally “open book”, meaning that the owner has complete access to estimates, proposals and invoices for the entire project. Still, there can be a somewhat more open-ended aspect to CP/T+M contracts, and some people simply are not comfortable not knowing exactly what they are going to pay up front.


Risks and rewards for both options

There are more risks for a contractor operating under a fixed price contract, but there is also the possibility for more profit.  Fixed price contractors are more likely "bidding to the plans", meaning the bid is based strictly on the plans as they are, even if they are not fully developed. This is only natural. If contractors are only getting a fixed amount, they must base their estimate strictly on what the plans show. If you proceed with a project having only rough sketches or incomplete plans, it is very likely there will be changes (change orders). The more changes there are, the more things cost, with an attendant extension of schedule.

Difference between Cost Plus and fixed contract constructionAgain, if you have fully developed plans and specifications, and especially in new construction, where most factors are known and manageable, fixed price makes sense. With phased design, where plans are being developed on a fast track as construction proceeds, and especially in renovation work, it’s my opinion that CP/T+M is the better choice.

Try to become as educated as possible on the contract options available and get a good tight set of plans and specifications from your architect. Then do your homework when it comes to the contractors you invite to bid on your project. There are excellent contractors in both the fixed cost and the cost plus/ time and materials worlds. 

 

Topics: Contracts, Guest Blogs, Opinions from Contractors

One Craftsman’s Thoughts On Traditional Carpentry and Work Ethics

Posted by Shawn McCadden on Thu, Mar 27,2014 @ 06:00 AM

Mike Ushka

 

Guest Blogger: Starting his working career in the mid 1970’s, Mike Ushka is lifelong craftsman.   Mike has spent the better part of nearly 40 years dedicated to traditional American carpentry and building.

Today Mike spends most of his time facilitating residential remodeling in Fairfield County Connecticut.

In this guest blog Mike shares his history and his thoughts regarding craftsmanship and work ethics.

 

One Craftsman’s Thoughts On Traditional Carpentry and Work Ethics

Having come from descendants of the 18th and 19th century, I was given the privilege of a mechanical upbringing that was rich in history.  Not to be confused with what we know today as "The Yankee Craftsman" who has every tool and vehicle that NASA can muster at his fingertips to get a table built.  I am referring to classically trained carpenters who are well seasoned, with an appreciation and respect for their craft.   Carpenters with an understanding of why things are done the way they are, and how they used to be done before battery powered yellow tools took over.

Old Time Craftsman being lostMy Great Uncle's brother was a custom wood worker and built everything from tiny jewelry and cigarette boxes with minute inlay and detail, to a full spectrum of furniture and woodworking.  He built his shop in the cavernous basement of an ancient brownstone five blocks from the harbor in Philadelphia. In this shop he had every true carpenter's tool of the day including an entirely leather belt driven coping lathe that he built himself.  Every tool had a place and there was a place for every tool, all sharp, oiled and at the ready. From my uncle I learned the necessary task of stone sharpening; honing the edges of every tool, from chisels and planes.  I also learned how to sharpen each tooth of a circular blade and the art of "setting" the teeth of each handsaw in the shop, positioned teeth down and stacked front to back in the handmade wooden tool boxes that cuddled every tool.

I started my first paying job when I was nine years old in the early 70's.  I was clearing lots to build homes by the time I was thirteen, having become fluid with the chainsaw and sharpening the chains by eye without a jig.  By fifteen I was framing houses after school and on weekends, nailing off plywood and sheathing by hand, sharpening the "non-carbide" circular saw blades, hatchets and chisels by hand every night at home before returning to work the next day.


At that time the jobs at hand were conducted as poetry in motion.

There was no wasting of time as there were only so few minutes in the day.  Each minute was precious as this was our livelihood.  Once on site to frame or trim a building the job was set up in minutes. Pouches on, saws and hammers in motion, there was no time wasted. If you had to move it was for a purpose and you never left your work area or task unless every possible thing that could be done was complete; and then some. By the time I was seventeen and out of trade school I was into full blown house construction.  My skills as a fine wood worker had peaked and the jobs ran seamlessly.

Traditional CarpentryEventually the first miter boxes, buck saws and smaller radial arm saws arrived and we started to move away from the hand tools like the Yankee screw driver, the brace and bit and the miter knife. We started to use nail guns, carbide blades and a plethora of modernized tools to save time and money; not knowing that we would forever kill the "Traditional Carpenter".  I witnessed men become unwilling to use a hand tool.  They were unwilling to know, understand or simply feel the joy of building something you hoped would be there forever, built with your own two hands. Those days are gone.


We now live in the care free age of “get to work late” and chat over “five buck coffees’

If the nails won't set, the gun must be broken (send it out to fix it.)  “I can't do it yet the screw gun is still charging...If the miter is close just caulk it...I can't work the power is out...I need a table saw to rip that stud...Who has the hammer?...The header must be level...The floor must be level...I can only work eight hours, you can't make me work more than 8 hours...where's the laddervator?  Step flashing?  It's not my job to clean up after myself”--AND SO ON !?!?!

 

Best of both worlds

Building without power tools

As an experiment a few years back I decided to take a modernized crew and show them the light. The only power tools I allowed to frame a house were circular saws (without the $800.00 green attachments) and a sawzall (even I won't bitch about this as I hacked off a billion rafter tails with a hatchet as a kid.) The rest were hand tools. We not only finished the job in a fraction of the time with a much higher quality level, all the men had an earnest appreciation for not only what they had accomplished, but for themselves as well. They all went on to be better craftsmen, still working with the ethic that I had instilled in them that cold winter we built that house by hand.

 

Today I am a building and remodeling contractor enjoying the mature end of a proud career as I manage and consult in all levels of construction in New England.

 

Thank you for the opportunity to share this story and my opinions,

Mike Ushka Sr.


Topics: Worker Training, Guest Blogs, Opinions from Contractors

Know Who You Are, Then Build a Contracting Business That Works For You

Posted by Shawn McCadden on Sun, Feb 16,2014 @ 01:10 PM

Peter Schneider

 

 

Guest Blogger: Peter Schneider, Peter Schneider Builder Contracor, Inc. has 20+ years experience and knowledge of residential custom building managing each project hands-on. He's been featured in national trade magazines and local publications and he's served on the Board of Directors of the Fairfield County Home Builders Association.  Peter offered this guest blog topic after reading my blog article titled: "Are You Less Of A Contractor If You Sub Everything Out?" I think Peter's message is a valuable one for contractors to consider.

 

Contractors; Know Who You Are, Then Build a Contracting Business That Works For You

Subs vs employeesUpon a little reflection I’ve realized there are a lot of ways to organize a contracting business, none of which are the “gold standard” and all of which either purposely or inadvertently express the personality of the owner.  At your inner core are you a manager or a craftsman? Are you a little of both? Are you neither?  Generally, I’ve noticed successful people have figured out who they are and how they add value to the equation.  Then they’ve set up a business system to capitalize on their strengths.  

If you are good with your hands, and want to be left alone to do your work, you probably will be a good one-man show type of contractor who can keep busy working for a few General Contractors. I work with carpenters, tile guys and drywall tapers that operate like this – most of whom survived the 7 year long down-turn OK.

If you can teach others a trade like framing, painting, drywall, etc, you can assemble a crew that will make you a nice profit, but you will need someone to run the “business” end of things, at your direction, leaving you free to estimate and sell and manage production. Profitably managing direct employees is a job unto itself and in my opinion is only appropriate when you have a crew that specializes in one type of work.

Peter Schneider Builder Contractor CrewIf you are excited about putting a team of specialized professional craftsmen together to construct a series of varied job types where organization & management are key elements of production & profitability, you’re a good fit for a general contractor operation. A GC set up is generally best for larger jobs like a custom home, a larger addition, or a whole house remodel job. Sometimes smaller jobs that require a higher level of craftsmanship like a special faux finish on walls, or custom built in cabinetry, or precision stone work are best left to the specialist sub contractor.  Higher end bath remodels are also a good fit for a GC with a loyal team of trade contractors. You absolutely must develop a team that you work with regularly so you can be assured of consistent quality and integration between trades.

For me, I’ve noticed the comparatively greater value of leveraging my time providing work opportunities for, and coordinating the activity of other professionals. 

There are inescapable sales, marketing and overhead costs of running a business not directly associated with performing your revenue producing activity. A good GC-Sub relationship takes this into account, or at least I like to think it does in my case.

 

 

Topics: Guest Blogs, Building Relationships, Subcontractor Considerations, Opinions from Contractors, Business Planning, Sage Advice, Business Considerations

OSHA Visits Contractor 3 Times in 33 Days, Subs Don’t Want To Come Back

Posted by Shawn McCadden on Tue, Feb 11,2014 @ 06:00 AM

OSHA Visits Contractor 3 Times in 33 Days, Subs Don’t Want To Come Back

Mark Scott of Mark IV Builders

A remodeling contractor in Cabin John, MD was visited three different times by the same OSHA inspector within a 33 day period on a Washington DC project.  The fines come to a total of $8000.  However he was told if he is willing to pay up within 15 days, not put up a fight about the charges, and make the required corrective actions, our government will give him a 25% discount.  The citation letter he received from the OSHA inspector also let him know that information about the citation would be published on the internet at www.osha.gov after 30 days.

Mark Scott, president of Mark IV Builders, told me he chalks it up to just another cost of doing business.   Fortunately for him his business is large enough to absorb such costs.  However it has put some fear into his employees as well as his sub contractors.  Both were found in violation of OSHA requirements when the inspector stopped by.  One sub, who was also cited for the same violations and fines, doesn’t want to come back to the job site, fearing additional visits and fines. 

 

All considered “serious violations” by OSHA, here are the violations as well as the fines for each:

  • OSHA Inspector visits contractor 3 timesOne employee was found using a table saw without using safety glasses.  This offense came with a $1200 fine.  The inspector noted the violation was corrected during inspection.
  • Another employee was working without a hard hat in an area where possible head injury could occur due to falling or flying objects.   This violation triggered a $1200 fine.  The inspector noted the violation was corrected during inspection.
  • Three sub contractor employees were each found to be using separate damaged extension cords.  Again, another $1200 fine.
  • A sub contractor was observed working more than 6' off the ground without proper fall protection in place, in two different areas at the job site.   This triggered a $2800 fine.
  • A sub contractor was standing on the top step of a 4’ step ladder.  This offence came with a $1600 fine.
  • Both employees and subs, while doing drywall installation, were found to be using a GFI wall outlet without a cover plate on it.   For some reason no fine was assessed for this violation.

 

What will the company do differently?

Unlike many remodeling businesses Mark IV has already embraced worker safety and OSHA requirements.   All company employees have the safety equipment needed to do their work as well as the required training to use it.  In fact Mark told me he worked with his insurance company to make sure he was in compliance and has several letters from them stating what an excellent job his company has done in regards to worker safety.     

I asked Mark what he plans to do differently now after having been written up and fined.  His answer was; “Not much.  My employees have the equipment and know what they should and should not be doing.  It’s part of playing the game of being in business”.   

One thing Mark says he will do is look into how his company and his employees should handle and manage future OSHA visits. 

 

What does Mark suggest to other contractors?

OSHA Targeting residential constructionMark shared that his first experience with OSHA was back in 1979 when working as a project supervisor. An OSHA inspector showed up at the job site with three books under his arm.   Mark said the inspector greeted him with; “You’re going to get a fine today.  I’ve got three books here and I’m sure I can find something in one of them”.  

In Mark’s opinion OSHA has no intention of proactively helping businesses comply.  He suggests taking advantage of what your insurance provider has to offer to help with worker safety and OSHA compliance.  In his experience most of the help offered has been free and can even help manage a contractor’s insurance costs. 

Check out this OSHA compliance checklist for contractors.


Topics: Worker Training, OSHA Considerations, Subcontractor Considerations, Opinions from Contractors, Government Regulations

Are You Less Of A Contractor If You Sub Everything Out?

Posted by Shawn McCadden on Tue, Jan 28,2014 @ 06:00 AM

Are You Less Of A Contractor If You Sub Everything Out?

Contractor opinions about using sub contractors

 

One contractor seems to think so...

“It is not a trend, it's simply a lame category of builder that is trying to be the "business man" builder; a middleman, if you will.”

 

A trend I have definitely seen in the past several years is that many more contractors have moved away from using employees for their production work and are using sub contractors to get the work done.  These contractors are often referred to as “paper contractors”.  Some say using subs is the way to go, others disagree completely.  Contractors as well as home owners both have varying opinions on the use of subs, that’s for sure.  But, they do get to make their own decisions on which way they want to go.

Regardless of personal preference, does choosing one way over the other make you more or less of a professional contractor?  Assuming you run a legal and legitimate business I don’t thinks so.  I have personally worked with and or have interacted with contractors using both methods.  With the right business systems in place a contractor can do a great job for his/her customers using either method and can make a good profit for the business as well.

LinkedIn Discussion ModerationThen, in a LinkedIn discussion about markup posted by Gerry Gerber, I found a comment that really stopped me in my tracks.  The discussion was posted to the Contractor Talk GroupThe commenter seems to indicate that contractors without employees, those subbing out all of their work, are not good business owners.  From his comment I also assume he thinks of such a business model a “ponzi scheme”.  In fairness to the commenter I suggest you check it out to get a full context of the discussion and his comment before you make your own conclusions. 

As an FYI, I tried to leave a comment myself but the discussion group leader must be moderating the comments before they get posted.  As of the publishing of this blog my comment hadn’t yet been posted, although many others had been.   I offered my opinion about this practice in a previous blog post.   

 

Here is the portion of the comment that jumped out at me:

“The only reason you find the need to rely more on subs to do the lion’s share of work is that you are not able to do it yourself or run a company that can do that in house. I imagine that you must consult with others that fall into this same category in order to claim that it is a trend. It is not a trend, it's simply a lame category of builder that is trying to be the "business man" builder; a middleman, if you will. It's one who wants a large percentage of revenue and profit, but can't do any of the work. I've seen plenty of them in my day. Most are semi-retired builders...or living off their wife's income in between ponzi schemes. In my opinion, that is a poor business model for the client; too much overhead and not enough production or control of the project.”

 

So, what about your opinion?

opinions about using sub contractors

 

Do you agree with commenter?  Do you see it differently? 

Everyone’s entitled to their opinion and business owners can decide for themselves how they want to run their businesses.  I hope you will offer your opinion.  I also hope you will do so professionally.

 

 

Topics: Production Considerations, Subcontractor Considerations, Opinions from Contractors

Contractor Gets Advice From Competitor About Selling At Cheap Prices

Posted by Shawn McCadden on Sun, Jun 02,2013 @ 06:00 AM

Jeff Fierstein is the General Manager at Byers LeafGuard Gutter Systems

 

Guest Blogger:  Jeff Fierstein is the General Manager at Byers LeafGuard Gutter Systems located in Grass Valley California.  Jeff had posted a comment to a discussion I started at the NARI LinkedIn group The discussion was about a blog I posted titled: “Why Some Contractors Can Raise Their Prices But Most Others Can’t”.  I decided to use his comment as a guest blog, thanks to Jeff for allowing me to share this with you.

 

Contractor Gets Sage Advice From A Competitor About Selling At Cheap Prices

Advice for contractors about selling

When I was a young man a competitor of mine, several years my senior, named Tommy O’Connell pulled me aside. He pulled a $100.00 bill out of his wallet and told me he always kept that bill in his wallet, “Never sell from an empty wagon” he said. I was young and didn’t much care for Tommy so I thought he was full of crap, but he explained that if you’re broke and need a sale too much, you’ll have a tendency to sell too cheap. That was actually sage advice. In this economy, there are many contractors that are living hand to mouth. Without the skills they require to sell their services at the price they deserve, they resort to “selling” a cheap price. They either don’t understand that to stay in business they need to include a profit, or simply cut corners and provide a sub standard job. This may be a good indication why an overwhelming number of home improvement contractors fail within their first two years of business.

 

Never sell from an empty wagon“Never sell from an empty wagon”

 

In our early days, we would bid like crazy, leave bids on the doorstep, and wait for the mailman to come. The only thing that saved us from ourselves was our bid package was detailed enough to outshine the competition who was also waiting for the mailman.

 

We’ve all heard it, what got us here, isn’t going to get us where we want to go.

Today, the only way we would leave a bid on the doorstep is under duress. Sure there are exceptions to the rule but unless we get a chance to explain our bid in detail and ask for the business, we might as well not bid. We spend a great deal of effort to train our sales force how to build value and ask for the order. We know that there is competition in our field but generally find them easy to outsell at the price we need to be around tomorrow.

For those concerned about selling against contractors that sell too cheaply...

 

An eagle doesn’t hunt flies

There is an ancient roman proverb that comes to mind; AQVILA NON CAPIT MVSCAS
“An eagle doesn’t hunt flies”

 


Topics: Sales, Guest Blogs, Opinions from Contractors, Business Planning, Sage Advice