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One common mistake that new business owners make is to price their service too low – also known as “lowballing” in the construction and home services industry.  Your motive in doing so might be to generate enough business to keep the business afloat in its early stages, but it’s a flawed strategy that will almost certainly lead to your company’s demise.  Learning how to become a contractor also means dedicating yourself to understanding business fundamentals, and a big part of this is learning to price appropriately.

For one thing, you’ll find that most quality-minded, upper-class homeowners (whom you’d be wise to target most aggressively) view low bids as a warning sign that your company must be cutting corners somewhere in order to stay in business.  In their mind a super-low bid equals crap work and even crappier service.  I must admit that I, too, nearly fell into the lowballing trap in the early days of my business.  I was scrapping for business any way I could get it, and to assure a constant stream of cash my bids started to drift lower and lower.  The middle-class customers hired me consistently at the lower prices, but I was working harder and harder for less and less money per job.

But soon arrived one particularly puzzling day when I gave a low bid for a large job at a huge home, and instead of getting the usual gleeful response of “when can you start?!”, I got a marathon of questions about why my price was so low compared to the competition’s, if I was going to do quality work, and what kinds of references I had to prove my abilities.  It threw me for a loop, and though my newly honed salesman skills eventually won me the job anyway, it opened my eyes to to the fact that I could actually be losing business because my prices were so low!  And I was losing it in the demographic that I most needed: wealthy, time-challenged, highly-networked homeowners.

It is true that many middle-class customers are more concerned with price than anything else, so you have to price competitively to them, but they do not represent the segment of the population that will give you your most profitable jobs.  Focus on targeting higher-end homes, charge what you’re worth, and you’ll wonder why you ever used to be one of the dreaded “lowballers” that works more but makes less.

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UPDATE:  Obviously I had not expected it, but in looking at my site stat logs it seems that this post is coming up in some internet search results for those researching suicide.  If you are feeling hopeless or suicidal, please call the National Suicide Prevention Lifeline at 1-800-273-TALK or visit their site at www.Save.org.  Please call them now.  Help is available.

Welcome to 2008!  The beginning of a new year is the perfect time to take a brutally honest look at your life or your business so that you can correct mistakes, refocus on what’s important, and rekindle the passion that may have been lost along the way.  If you feel like your energy for life is worn out, but you aren’t sure why, please take a minute to read this list.  It could make all the difference!  So, without further ado, I give you the Top 10 Ways To Kill Your Spirit:

  1. Finally let go of those juvenile notions to have an occupation that you enjoy.  You’ve got to stay at that job that you hate and suppress your desire for a career change because, well, that’s what everybody else does.  After all, you’ve got several more lives after this one to do that thing that you’ve always wanted to do.  No need to have a sense of urgency.
  2. Stay committed to that significant other that doesn’t believe in your dreams.  So what that they ridicule you for wanting to become a contractor, or that they call your hobbies a selfish waste of time.  They know you better than anyone else, and therefore know what’s in your best interest.  And who knows, maybe with time those feelings of resentment and bitterness that you harbor will just fade into a mind-numbing, soul-sucking disconnectedness that you so admired about your now-divorced parents’ relationship.
  3. Don’t show too much enthusiasm or emotion.  People might think you’re weak.  Worse yet, they might gain a glimpse of the real you, and the real you might make them wish that they were leading more authentic lives.
  4. Ignore and suppress the talents you were born with.  Never mind that you were put on this planet with the express purpose of writing that Pulitzer Prize-winning book that would help sway public opinion in such a profound way that it resulted in the election of a President who’s revolutionary ideas would end world hunger and the AIDS epidemic.  You’ve got more important things to do, like spend 40 hours a week, 50 weeks a year, for the next 30 years writing cheese-ball, one-liner greeting cards that will end up in the garbage anyway.
  5. Don’t stand up for yourself.  Self-respect is overrated, and your boss is probably right: you are a worthless idiot.
  6. Don’t rock the boat.  The way things have always been done is the way things should always be done, period.  Malcontents like George Washington, Thomas Edison, the Wright brothers, and Rosa Parks just made the world more complicated.  Who needs air travel, anyway?
  7. Refuse to apologize for mistakes you’ve made.  After all, it was a long time ago and they probably don’t remember, just like you don’t remember that time 39 years ago when your best friend in high school borrowed your car and then wrecked it before skipping town.
  8. Refuse to accept apologies because, well, you’ve never made a mistake in your entire life, and holding onto that anger is doing wonders for your blood pressure.
  9. Don’t take risks.  Whatever is out there beyond the horizon might hurt or frighten you or, God forbid, allow you to learn something new.  Besides, everybody knows that the greatest, most influential figures in history preferred to play it safe and take the easy bets.
  10. Read something like this and tell yourself that idealism is for the young, the naive, and the stupid.                


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When my brother and I made it through the process of learning how to become a contractor and then finally started our niche business, most of the people in our lives supported what we were doing (thank goodness), but there were plenty of critics, too, as there always are.  It’s hard enough to convince these types that business ownership is a worthwhile endeavor to begin with.  So when they hear that your business is ultra-specialized it’s just that much more ammunition for them.  The naysayers could be friends, family, former co-workers, you name it.  Listen quietly to their speech and say little, but allow it to fuel the entrepreneurial fire within you.  If you’ve done your research and know that a market exists for your service (especially an emerging one), you must learn to ignore those buzzing flies in your ear.

These days our business is on fire, and suffice it to say that most of the criticism has been silenced.  The key is specific, targeted advertising.  Google Adwords, for example, has been huge for our business.  Internet advertising is still a confusing concept for many contractors and small business owners, but I can almost guarantee that if you give it a chance, you’ll be astounded by the results.  By the way, if you don’t have a website for your business yet, what are you waiting for?  More and more consumers are opting for Google and Yahoo and throwing away their phone books, so it’s high time you developed an internet presence – you won’t regret it!  By leveraging the internet you can score huge numbers of free construction leads.  We also send postcards to upscale homes that are obviously in need of our services, and this has proven to be effective as well.   Be aggressive in targeting those that have a need for your service, even if the concept is a relatively obscure one.

The exciting thing to me is that we’re staking a local claim to an emerging type of service, and the pool of potential clients only grows larger with each passing year!  The critics will never get it, but that’s just fine.  The more numerous the cynics, the fewer the number of potential competitors you’re likely to encounter.  The end result is that you could be positioning your company to be the dominant local player in a niche service that is about to explode.

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Now many of you no doubt have big plans to build a full-service remodeling company, and perhaps you’re already knee-deep in the process of learning how to become a general contractor, but I’d ask you to put on the brakes for one second and hear me out on this one.  I would contend that for many people, a simpler, more streamlined service business might be the better way to go.  Let me explain.

I’m always impressed by the speed and efficiency that characterize the most successful local carpet cleaning companies.  They’ll arrive in a basic, lettered van, zip through a few rooms of carpet like it’s nobody’s business, and less than 30 minutes later be out the door with $100 in hand.  Those that repeat the process an average of eight times a day have quite a cash machine working for them.  Furthermore, those that can accumulate 5-10 vans and workers, each visiting eight homes per day, can start counting the days to early retirement and seven-figure wealth.  They’ve figured out how to perfect a system that fulfills a very specific consumer need, and then expanded the business without straying from their specialty.

There are several factors that contribute to the success of this kind of service business:

  • By specializing in one service, systems and procedures become easier to replicate and perform.  You can hire less-skilled laborers (who therefore don’t expect to make a lot of money) because they don’t have to juggle varied tasks or responsibilities.  Simply spend a few days training them on their main task (in this case carpet cleaning), and then with every carpet they clean thereafter they’ll become faster and more skilled, to the point that they hopefully need little or no oversight.  By contrast, a more complex business that requires the laborer to have or accumulate a multitude of different skills will almost always struggle to find qualified personnel that will stick around for any period of time, and the ones that do are more likely to command a premium wage.
  • Material and equipment costs are lower and more predictable with a niche business.  Businesses that try to do too much or provide too many services are often burdened with all sorts of equipment that may or may not be utilized on a consistent basis.  That’s extra equipment that needs to be purchased, maintained, repaired, and stored.  And all that upkeep means extra manpower, less productivity, and more money out of your pocket.  Keeping your service and equipment setup as predictable and simple as possible will serve you well as you look to expand.
  • A one-service company can more easily claim to be an “authority” in their local market.  Most quality-minded homeowners today want to know that they are hiring an “expert” in a specific trade or field, not a jack-of-all-trades or handyman type of service.
  • Speed, and therefore profit, is more easily achieved with a single-service business because it often avoids the pitfalls of a more complicated, custom-design type of business.  Ask any full-service remodeler what his pet peeves are, and one of them is sure to be customer indecision when it comes to design and color schemes.  Enormous amounts of time are lost when a customer changes their mind on what type of cabinets should be installed, what color the walls should be, whether the tile should be in a subway or diagonal pattern, etc.  Lost time equals lost profits.  Pursuing a niche, non-custom service business like carpet cleaning or gutter-guard installation allows you to bypass these kinds of problems and focus more of your energies on perfecting your system and achieving speed and productivity.

Of course there are exceptions to every rule, and the multitudes of successful and wealthy full-service remodeling business owners in every American city would surely take offense to many of this post’s precepts.  Just be aware that the more varied and complex your services, the more focused and organized you (and your employees) must be; the greater the number of moving parts, the higher the chance of a system breakdown.  Full-service remodelers and builders also must be keenly aware of margins and cost projections, lest one bad job send your whole quarter down the tubes.  The nice thing about something like carpet cleaning is that if you have one pain-in-the-butt job that you lose money on, it’s over in less than an hour and you can move on to the next one.  Not so with a more complex service.

My personal preference is for a specialized company that is more able to focus on systems, speed, and productivity.   A few add-on services could be justified from time to time, but only if they won’t interfere with your core business and its mechanisms.  A good example would be the carpet cleaner that adds upholstery cleaning to his list of services because it often utilizes the same equipment and materials and only adds a small amount of time to the job.  Just remember that simplicity is conducive to quickness which is conducive to profits.

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You’ve heard that first impressions are everything.  Well, in the world of contracting it’s often the ONLY THING.  When you go to a potential customer’s home to give a bid, quite often they’ll be watching you from the moment you pull in the driveway.  Believe it or not, that 20 seconds or so that elapses between getting out of your truck and shaking their hand at the front door will very often determine whether you get the job or not.  It’s got everything to do with how you look, walk, and talk.  The packaging and presentation of a product is often perceived as more important than the product itself, and if you think this doesn’t apply to home improvement services then you’re delusional.  You ARE the product in this scenario, and the sooner you come to grips with that reality the better.  Part of learning how to become a contractor involves paying more attention to your image and creating a sort of persona for the customer.

For starters, drive to the estimate in a nice truck.  Pull up in a Ford Escort and you can kiss the job goodbye (what are you, a contractor or a 16 year-old scooting over to your job at McDonald’s?).  Whip into the drive with that old beat-up piece-of-crap truck and you’re just wasting your time (homeowner will think that if you drive junk, then you’ll do junk work).  I’m not saying you need to go out and buy a $40,000 behemoth F-250 with tinted windows and a helicopter landing pad in the bed, but at least find yourself a truck that is a newer model and looks clean and well-maintained.  I recently bought a nice, used F-150 from a dealer for under 10 grand.  No, it doesn’t have a “pimped out” stereo system or even power locks for that matter, but it looks clean and new, and that’s what really matters for your image.

Now, as you step out of your truck, the real scrutiny of you as a person begins.  Homeowners want to see the following traits, in no particular order:

    • A relatively in-shape person.  It’s a sad but true fact that lean people tend to get hired more often than their overweight counterparts.  Subconsciously, people think that if you don’t have enough discipline to master your own body, how will you ever find the motivation to complete a home remodeling job that may involve difficult and often frustrating phases of work.

 

    • Clean, professional, wrinkle-free attire.  Ideally you’d be wearing long khaki pants (no cargo pants) and a tucked-in polo shirt with your company’s logo emblazoned on the front.  Absolutely no gym shoes.  Any tattoos should be covered up if possible.  Skip the ball-cap, or if you’re going to wear it at least make sure it’s clean and subtle.

 

    • Short, well-groomed hair and beard, if applicable.  A lot of contractors have a problem with this one, but it is what it is.  People see long hair and the first word that comes to mind is “punk”.  It’s obviously a totally bogus and unwarranted assumption, but it’s reality.  For the love of pete, if you’re going to keep the hair at least tie it back out of your face.

 

    • A confident walk.  No slouching or moping on your walk up to the door.  You should look like you want to be there and that you’re excited to meet this person.  Who would you rather hire: a guy that looks genuinely excited about his work and business or somebody that looks like they’d rather be at the dentist?

 

    • A person that looks old enough to be experienced.  If you’re 32 but look 18, you need to take measures to make yourself look older.  Wear glasses, switch the Casio watch out for the Movado, comb your hair in a different way – whatever you have to do to age yourself.  I once posted a photo of myself on our company website so that potential customers could see how clean-cut I look, but it backfired because it made me look like a teenager, even though I’m in my 30’s.  The phone calls suddenly stopped.  I removed the photo and it started ringing again.  Crazy but true.

 

    • A wide, clean, odor-free smile.  Self-explanatory.

 

    • A confident, firm handshake.  When that front door opens you absolutely MUST give a friendly “hello” (no matter how bad your day has been), introduce yourself, shake their hand like you mean it, and look them in the eye.

 

If you can meet all or most of these standards then there’s a good chance that the homeowner has already made up their mind that they like you and that they want to work with you, or at the very least that you’re on their short list.  This assumes, of course, that you know your business and don’t completely blow it during the rest of the meeting, but getting off to a good start will put the customer at ease and make the sale that much easier.  Those first 20 seconds are paramount to the success of your business.  Fail to prepare for and master them, and your company will struggle to survive.  These tips may seem shallow or mean-spirited, but it’s reflective of our society, like it or not.  If you want to succeed you have to learn the rules and play by them.  If you’re the stubborn kind that refuses to change for anyone or anything, I applaud you.  Just don’t expect to ever become a rich contractor.

 

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