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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

Is Your Business Ready For The Expected Surge In Remodeling Spending?

Posted by Shawn McCadden on Fri, Dec 23,2016 @ 03:58 PM

Is Your Business Ready For The Expected Surge In Remodeling Spending?

Puzzle pieces on money-WR.jpgRemember back in 2006 before the great recession how much work there was for remodelers?  Remember how busy you were and how easy it was to sell your services?  And, back then, there was a good supply of experience workers and subcontractors.  Then the recession came and things changed forever.  Well, the remodeling economy has become healthy again and is predicted to get even better for the next year.  According to one article in Qualified Remodeler magazine the Harvard Joint Center for Housing Studies predicts an 8% increase in remodeling spending between now and the end of 2017.  That means a lot more work for remodelers, but only if they and their businesses are ready for it.

Below are three things to consider if you want to be ready to take advantage of the surge in sales predicted to begin in the first quarter of 2017.  How you address the third one could make or break your ability to take advantage of the surge.

 

Decide what your price point will be:

Raising remodeling pricesWhen demand for services picks up so does the market price for those services.  If you have been selling on price and as a result haven’t been making enough money to live the lifestyle you desire, both today and when you eventually retire, now is the time to start charging more.  And, in addition to raising your prices, be careful how much work you say yes to. The point here is to make sure you don’t pre-sell a whole bunch of work at your current margins.  If you do you will prevent your business from being available to sell and complete work when demand and therefore job prices rise due to supply and demand. Although having a good backlog of work can be comforting, coming to realize you could be making a lot more money may lead to strong regrets.  Also, keep in mind that material and subcontractor costs will also climb due to supply and demand.  Make sure you estimate direct job costs based on when you will actually do the work, not what it would cost if you were doing it today.

Related article:

Why Building a Backlog of Work Could Cost Some Contractors a Lot of Money

 

Be selective about customers and job types

Targeting the right remodeling clientsThe surge in spending will lead to a surge in job leads. This will afford remodelers the opportunity to be much more selective about who they will allow to become customers as well as what job types they will accept from those customers.  Remember, the customers you serve will be sending you referrals. Those customers hang around with other people just like them.  If you work for customers who beat you up on price and micromanage how you do business, their referrals will likely want to do the same.  To avoid working for the wrong customers first define the profile of your target client.  Then, armed with that information, make sure you also have a great prequalify process to help you filter through you leads.  When it comes to job types be selective there too.   If you have been doing so I suggest you stop allowing customers to buy their own materials.  It may save money for them to do so, but at the same time it costs your business if you cannot get any margin on those materials.  Instead concentrate on material intensive project types like kitchens and baths.  Earning gross profit by selling more and more expensive materials is much easier than trying to do so by selling and managing labor.

Related article:

25 Sample Questions Contractors Can Use For Prequalifying Prospects

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Get your production resources ready

Carpenters_with_nail_gun-wr.jpgSelling the work and selling it at high margins is one challenge.  But in my option that’s a much easier challenge these days than trying to find and keep enough quality production staff and trade subcontractors to keep up with the work, and complete it with quality. Don’t wait until you already need the help to start looking for them.  Instead, recruit good workers now and test them out to be sure they are right for your business and your business is right for them. During the winter months many employees are let go or laid off by contractors who lack good sales and marketing skills. This makes the winter a good time to look for prospective employees because there are more to choose from and because their options of available jobs are limited. Use the next few months to vet out the good ones and send the underperformers back out looking for jobs. Using this strategy it’s likely you will be able to produce the work you sell much easier while your competition has to do the best they can with the workers you passed up and or let go.

Related article:

Afraid To Hire Employees For Fear Of Running Out Of Work For Them?

 

Topics: Sales, Hiring and Firing, Business Growth, Prequalifying, Creating Referrals

Great Way to Filter Through Leads and Get Better Remodeling Customers

Posted by Shawn McCadden on Wed, Jun 01,2016 @ 05:00 AM

Prequalifying Remodeling Leads

 

With the Remodeling marketplace booming this spring and predictions of close to a 10% increase in remodeling spending this year over last there will be plenty of work out there for remodeling contractors in 2016.   With the surge in mind I have been coaching my contractor clients to be smart about how they do business.   I have been stressing that they should take advantage of this surge by being selective about the customers they choose to work with and by raising their margins now before they get too booked up and regret becoming unavailable.  If this makes sense to you and for your business read on to find out how to do fewer sales calls but at the same time close higher margin deals.

 

Agree on an agenda before committing to a sales call

Before you even commit to a sales call get your prospect’s commitment to discuss and commit to an agenda for the first sales call.  Doing so can help you control the sales call as well as how your valuable and limited time will be invested.  

The agenda should include the things they want to accomplish as well as the things you want to accomplish at that first meeting.   If you can’t or won’t agree to what they want to accomplish, or they won’t agree to what you want to accomplish, then simply let them know you won’t be able to help them. 

 

These three things should be part of your agenda

After you hear and approve of the items they want on the agenda ask permission to share the items you want on the agenda.  You can include anything you want on your agenda but make sure at a minimum you get a commitment to discuss these three things before asking them if it still makes sense to invite you over:

 

Can we talk about why you want to do your project?

How to prequalify remodeling leadsYou will need to know this info to create a unique solution and to have confidence in what you suggest to them when discussing options.  You will also need to know this information to avoid becoming a commodity contractor by just giving them a price on what they thought they needed.  You know, just like pretty much every commodity contractor does every day.

 

Can we talk about your budget for this project?

Let them know you will either need to get a realist budget from them in order to help them, or that you can let them know what they should assume for a budget.  But, be clear that a requirement of getting together will be to discuss and decide if there is a fit between their budget and the scope of work they would like completed.

 

Can we talk about how you plan to make your decisions?

how remodelers can set a sales call agendaYou need to get their commitment to discuss how they will decide about important project details as well as which contractor they will ultimately partner with.  If you don’t know how they plan to make these decisions how can you possibly help them make decisions and why should you be surprised when they don’t or can’t decide? 

If they don’t know how they plan to make decisions think of it as your job to help them figure that out.  That alone can help differentiate you from the commodity contractors.    

      

Setting the agenda shows you’re serious and filters out the commodity buyers

Many of my consulting clients are now using what I call “the agenda step” as a way to prequalify who they are willing to visit.  By creating this agenda they essentially give their prospects some homework to do to get ready for the visit.  After my clients get good at setting the agenda they experience much better close ratios and they all report selling to much better customers.  They also report most of these better customers are also willing to pay higher prices.  

After setting the appointment several of my clients even send a follow-up appointment confirmation email documenting the agreed agenda.

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One more thing to keep in mind

Good customers who are willing to have honest discussions and are willing to pay more for “different” hang around with other people just like them.  After successfully putting the agenda step in place at your business, like my clients, you will probably get referrals to more good customers who will pay more for different.

If you want some help improving your sales results contact me today!

 

Topics: Sales Considerations, Differentiating your Business, Earning More Money, Lead Generation, Prequalifying, Creating Referrals

Three Ways To Get Fewer Leads But Close More Remodeling Sales

Posted by Shawn McCadden on Tue, Jan 05,2016 @ 06:00 AM

Three Ways To Get Fewer Leads But Close More Remodeling Sales

Increase_sales-wrIf you have been getting business by providing free estimates for everyone who calls your business you are most likely wasting a lot of money making time. Are you really an expert in your industry if you have been letting those who buy from you tell you how to run your business?  If these things have been happening to you it’s time to recognize the value of your time and expertise.  It’s also time to limit offering them to only those who find value in what you offer, how you do so, and are willing to pay you well for your expertise. Here are three ways successful contractors reduce their lead flow, improve the quality of the leads they get, and sell more jobs at higher prices. Yes, it is true, read on!

 

#1: Describe your process on your web site and find ways to entice visitors to check it out.

Do you have a define process for how you do business?  If not, create it. If you do have a define process document it with words and pictures and put it on your web site.   By explaining how you do business on your web site you can save a lot of time and make more money because:

You won't have to explain it to everyone you meet, over and over again. If they have not yet checked out how you do business when they call your office send them a link to the "How we do business" page at your web site. Additionally mutually agree to when you will then call them back to see if they still want to meet with you.

contractor web site marketingBecause the information is presented in writing at your web site prospects won't be able to interrupt you as the typically do when you try to explain your process to them at live sales calls. If written well they will either recognize that your process works as a solution for them, or they will know why it’s not right for them. This can help you eliminate defending your process as you try to explain it to them live and in person.  If they don't like your process after checking out your web site they won't waste your time.

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

 

#2: Charge for creating specifications and a fixed price proposal

Another thing to explain at your web site is why estimates are free but a fixed cost proposal from you requires paying a fee.  Think about it.  An estimate is just a guess. Any experienced contractor should be able to provide a best guess estimated cost range for project types he or she has past experiences with.  In a logical way explain why you charge to go past a free estimate.  If they still call you selling your services to create the proposal will be much faster and easier.  If you want some guidance on what to write read on below. If you don't have a web site read on anyway to find out how you can still do this live and in person.

If they want a fixed price why not help them recognize what it will take to get to a fixed price. Help them discover, say and agree that plans and or specification will be needed before you or any other contractor can determine a fixed price for them. Help them identify whether they will need plans to visualize the project before being able to confidently commit.  Help them decide if they need help finding and differentiate between product options and their price points. Help them recognize the effort and hours you and your trade partners will need to dedicate to preparing a proposal for them.  If they recognize the need for these things you can then ask them if they would like to discuss your design and specification process; as well as how you charge for it.

Related article: Tips For Contractors On Ball Park Pricing and Charging For Estimates

 

#3: Require a return visit to present your proposal and get their decision

Remodeling sales tips to close more salesEven if you are not ready to charge for them, before committing to preparing plans, specs and a proposal make an agreement with your prospect. Let them know that to prepare a proposal for them you require coming back to sit down with both of them to review, discuss and get a yes or no decision on your proposal and about working with your company.   Remember, you will have more time to do this because by being more selective you will be creating fewer estimates and proposals. Those who won't meet with you probably aren't interested enough in working with you anyway.  Perhaps they were just hoping for more free ideas from you before hiring the cheapest contractor or performing the work themselves. If they won't commit to meeting with you to review your proposal that's one less you have to do; freeing you up to concentrate on those prospects who respect you as a professional and value your process.

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

 

I know there will still be lots of non-believers after reading this article.

By committing to fewer estimates and proposals you will gain the time you need to put together and present proposals that differentiate your business from other contractors. By being different you will attract clients who want different.  Consumers who want different know they have to pay more to get it. Those who don't want different buy from the commodity contractors who sell on price

It was definitely my experience as a contractor that the three pre-qualification tactics I suggest here help reduce leads, increase lead quality, and at the same time increase sales.  Please help me out. If you have had success using similar strategies please share your successes here. I am hoping that third party endorsements from those of you who have experienced similar success will help me win over a few more believers!Subscribe to the Design/Builders Blog

Topics: Sales, Estimating, Differentiating your Business, Marketing, Prequalifying, Plans and Specifications

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

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

Four Considerations for Contractors Offering Design - #4 is Most Important!

Posted by Shawn McCadden on Thu, Mar 12,2015 @ 06:00 AM

Four Considerations for Contractors Offering Design - #4 is Most Important!

How a contractor can sell designWith a well thought out strategy for offering design services contractors can differentiate their businesses and attract better quality clients and projects.  However if their offering is not well thought out contractors can lose a lot of money and waste a lot of time.   

If you want to offer design services consider these four important areas before you go for it.  If you are already offering design services, these same considerations can help you validate and or think a bit more strategically about your offering.

 

#1: Compensation

Nothing is free, neither is design.  Even if you offer it for free to prospects doing so still adds to your business overhead costs.  Charging each customer for their design is one option.  If you don't charge consider how many free designs you will complete to sell one job and add the anticipated costs for doing them to your overhead budget before you determine your markup.  How you choose to go forward with this consideration should be based on the targeted customer type you identify in your marketing plan.  

Offering design comes with risks. I also strongly recommend getting Design Liability Insurance and adding the cost of coverage to your pricing strategy. 

 

#2: Create a clearly defined process

To control costs and manage customer expectations you need to decide what level of service you will offer, and whether you will offer your design services at a fixed price or on an hourly rate.   At my business I used a fixed/defined process and price strategy limited to concept design.  This was because as a Design/Builder our goal was to quickly get to a contract for construction.  Completing the plans for permit application only happened if we built the project.   For our target customer type that process worked well and kept the upfront cost of making decisions and getting to a fixed price quote down for our clients.

The image below shows the first half of the Design/Build process I share with my clients.

Design build process example

 

#3: Ownership of the plans

Consider whether you are selling design services or plans.  If you sell plans your clients may see their project as a commodity and may want to use those plans to collect bids from other contractors. Allowing that to happen also definitely increases your design liability.  My recommendation is to differentiate your business by selling personalized design services, not plans.  Then, only offer design services to prospects who intend to hire your business to complete the project.  Plans for permit can then be created and shared with them after they commit to construction.

download shawn's free sample design build retainer agreement

Marketing design services for contractors#4: Use a supporting marketing and sales strategy

After thinking through and deciding on the considerations mentioned above the business will need a way to market and sell their offering.  The right marketing should help define your offering so prospects can prequalify whether what you offer is right for them, or not.  Doing this will help attracted your targeted prospect and save salespeople a lot of time on sales calls. This is because by doing so prospects will only need to clarify and confirm your offering when they request to meet or speak with you, you will no longer need to introduce and explain your offering. 

Your web site is a great tool to use for marketing and explaining your design services. And, if the information is on your web site, you can direct prospects to it from the other marketing tactics you use, or when they first call your office to inquire about a project that requires design.


Other Design related articles you might find helpful

Managing Risks With The Right Design/Build Insurance Options

Design and Spec Considerations for Remodelers Looking to Break $1Million

All Plans and Specifications Will Be For The Exclusive Use Of …

As Designers, Are We Honest in our Business Dealings?

10 Ways Some Architects Do A Disservice To Contractors & Home Owners

Design Options for Design/Builders: Partnering for Design

Design Options for Design/Builders: In-House Design

 

Topics: Design/Build Process, Marketing, Prequalifying, Plans and Specifications, Working with Design Professionals, Insurance Considerations

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

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

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

Why is your price so high

 

 

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


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

 

How remodelers can address the price is too high objection

 

Tactics contractors can use to address the higher price question

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

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

 

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

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

 

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

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

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

 

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

How to get good referals from remodeling customers

 

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

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


 

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

Content Marketing Options For Contractor Web Sites

Posted by Shawn McCadden on Thu, Jul 17,2014 @ 06:00 AM

Content Marketing Options For Contractor Web Sites

Content marketing for contractors

 

Content marketing has become a great way for remodelers to attract prospects to their web sites.   By publishing content that your target customers would liking be searching for, and optimizing that content for SEO purposes, a business can help those prospects find and visit their web site.   Just getting them to your site won’t ensure a sale, but if you can get them to your site you can use additional content to help keep them there.  Content marketing alone won’t turn those prospects into customers, but if you can keep those visitors on your site you might be able to accomplish two very valuable marketing and sales goals.


Two goals for content marketing

How contractors can use content marketingThe fist would be to pre-educate prospects about your business, your products and or services, and how you and your team do business.   This can save a lot of time during the sales process.    By pre-educating them at your site on a variety of considerations using additional content, you will not have to spend as much time doing so at a live sales call.  Busy contractors can speed up the sales process and gain more time for other business activities if they invest in publishing the right content.

The second thing it can help you accomplish is prequalification.   Contractors can’t and shouldn’t assume every prospect will buy from them.   By using the right content at your contractor web site visitors can actually prequalify themselves.   If they like what they see and read, and they determine that what you offer and how you do business makes sense for them, they will likely contact you.  On the other hand they may decide yours is not the right company for them and move on to find a different contractor.   This too saves the contractor a lot of valuable time because the contractor will be spending less time qualifying and more time helping qualified prospects who are much more likely to buy.


Content marketing methods you can use

Content marketing can be done in a variety of ways including blogs, white papers, infographics, photos and many other mediums.   The infographic below offers a matrix of content marketing types.  PRWeb says they created this matrix to show how different types of content can appeal to different consumers and offers facts or suggestions about each. The top shows the different types of content, while the bottom explains how those pieces of content can be used.

Not all of them will be practical for all businesses, but it’s good to know what your options are and what other businesses may be using to do their content marketing.   Also, as your business grows you may want to eventually take advantage of additional content marketing methods to improve and or increase your marketing results.

 

small business content marketing infographic wr

 

Looking for help with content marketing?

If you’re interested in using content marketing at your web site but are not sure how to get started with it, let me know if I can help.   By working together I can help you better understand how and why to use it, and help you create a plan you can then present to your web site designer for getting it done.  I can even help you get the content written if you can’t or don’t want to do it yourself.

 

Topics: Sales, Marketing, Marketing Ideas, Prequalifying

How A Contractor’s Web Site Marketing Can Speed Up The Sales Cycle

Posted by Shawn McCadden on Tue, Jun 17,2014 @ 06:00 AM

How A Contractor’s Web Site Marketing Can Speed Up The Sales Cycle

Web site help for remodelers

 

With the right marketing strategy and tools a contractor can turn his or her web site into a lead generation machine as well as a selling tool.  That's right.  Think of your web site as not just a place for consumers to find your business, but also a place where you can help them buy.

 

 

Make it a place where they can educate themselves

Educate them about your business as well as the many things they will need to consider about their project and about choosing the right contractor to partner with for their project.  By helping them do this at your web site two different outcomes are possible. 

  1. Attracting remodeling customersOne might be that they realize your business is not right for them.   This can save you and them a lot of time because you won’t need to get together in person to figure this out.  
  2. On the other hand, because of your content, the right prospects for your business will be much closer to making a confident buying decision by the time they ask you to come out and meet with them.

 

Every consumer has their own buying process

Research shows that consumers spend anywhere between 38-114 days doing their research and due diligence before they make the decision to go forward on a significant investment.   If you think of their buying process as their buying cycle, broken down into definable stages, you can strategically align the content of the marketing on your web site with what your target customers need to help them as they move through these stages and their research. 

Here are the typical stages of a remodeling consumer’s buying process:

  1. Awareness stage: remodeling buying cycle
  2. Research stage
  3. Comparison stage
  4. Purchasing stage
  5. Repurchase stage

In this follow-up article I explain how to strategically market to these consumers during each stage.

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Keep in mind that due diligence will be personal to every consumer. 

selling remodeling to womenNever assume what they should do or tell them what to do.   A key to this strategy is to offer options within your marketing and clearly explain the differences between them so prospects can confidently make their own decisions.   Remember, it’s all about them, not about you.   Helping them along and being a resource, rather than telling them what to do, will make you stand out as a trusted advisor.  Often times, because they are typically the main decision makers when it comes to purchasing remodeling, this strategy works particularly well with women.  Think about it.  How did it go the last time you told a woman what to do!  It’s about options and helping them compare them.


Summary

To help speed up the sales cycle with your prospects your goal should be to help them buy, not sell them something.  Put yourself in your prospects shoes.   Would you want to be sold?



Topics: Sales Considerations, Differentiating your Business, Marketing, Web Site Related, Prequalifying