No matter if you plan on becoming a general contractor or a window cleaner, in the early days of your business you’ll be going toe-to-toe with big, established companies and maybe even some national chains or franchises.  You might be inclined to think that this gives you a disadvantage, and in some ways this is true (they can outspend you in advertising, for one).  However, it also gives you some distinct advantages over the big boys.  Here are some ideas for how to give the behemoths a run for their money.

1. Play up your “hands-on” role as an owner-operator.  People will be impressed that you, the business owner, took the time to provide a detailed, in-person estimate.  They’ll be doubly impressed that you make a point of being on site for all jobs.  This will go miles in assuring homeowners that the job will be done correctly and with quality in mind.  Compare this with a franchise that sends barely-qualified salespeople and laborers out to do the dirty work and you can see how this is a major advantage for you.  Don’t forget to make this distinction clear when you meet with the customer that first time.  In my company’s early days we beat out larger, franchise operators time and time again with this technique.  Oh yeah, and make sure to send out that signed thank you letter after job completion (you’d be surprised by how many of the bigger companies don’t bother to do this).
2. If your business is “family owned and operated”, say so.  It gives potential customers the impression that the business is generational and that you’re true, skilled craftsmen.  It also lends a sense of accountability because people know that while a new hire off the streets might be more inclined to cut corners or act stupid when the boss isn’t around, a relative of the owner is less likely to do so.  There’s more pride when the family name is on the line, and people know this.
3. Many people would rather give their money to a local, scrappy company than to a faceless corporation that doesn’t give a damn about the community.  It makes homeowners feel good that by hiring you they are, in effect, keeping the wealth “in town”.  You can really leverage this advantage by doing all you can to support local events that allow for marketing opportunites.  Sponsor a little league team, do free work for charitable causes, or offer discounts to homeowners within a certain radius of your home or office.  I’ve had customers tell me that my business’ proximity to their home was the single biggest motivating factor in awarding me the job.
4. People root for underdogs.  You’ll find that a lot folks will respect your desire to build a business from scratch, and it makes them feel good to help make your dream a reality, especially in it’s early stages.  It’s important to note that you shouldn’t make a point of telling customers how new or small your company is, but don’t lie about it, either.  If they know or come to find out that you are a newer business most people will still give you a shot if you look and act professional.  Lack of experience need not be a roadblock if you can demonstrate superior knowledge, organization, and hunger for success to the potential customer.  If given the choice between a friendly, eager business owner who’s been around one year and an apathetic, established company that’s set on “cruise control”, I think most consumers would choose the former.
5. Your small business can schedule and perform work more quickly.  Many of your customers will put off home improvement and maintenance jobs until the last minute, and so your ability to work them into the schedule quickly will often prove advantageous.  Often times the big companies are booked out for a month or more, and this gives your newer, less overloaded company a great opportunity to snag a job from under their feet by being able to get to it sooner.  Don’t be embarrassed that you’re only booked out for a week or two – look at it as one more way to gain ground on your bloated competitor.

So there you have it.  Five ways to take your larger competitors to the mat.  Can you think of other ideas?  If so please comment below.

Mistakes I’ve made.  Mistakes I’ve seen others make.  Mistakes you’ll probably make at some point along the way.  Find a way to avoid 90% of these and you’re doing pretty good.  Find a way to avoid all 21 and you’re probably a liar.  It’s inevitable that from time to time you’re going to inadvertently anger or frustrate a homeowner.  Sometimes it’s just a conflict of personalities, sometimes the customer is just an odd bird who gets their feathers ruffled over petty issues, and to an extent a small percentage of your customer base will not get along with you very well no matter how nice, competent, and professional you are.  But you can effectively minimize these episodes by taking some common sense approaches to your business.  If growing your business doesn’t matter to you and you enjoy conflict, then by all means, do the following:

1. Stick a sign in the homeowner’s front yard without asking.  I see this done all the time but it’s always struck me as a little rude and presumptuous.  Of course I use yard signs as a part of our marketing strategy but I always ask first and people are almost always okay with it.  Don’t ask for permission and you can bet that more than half those signs are yanked out of the yard as soon as your truck turns the corner.
2. Take more than two hours to call back or 12 hours to answer an email.  We live in an age of instant messaging, texting, fast food, and 15 minute oil changes, yet you’re going to wait 24 hours to return a phone call?  What are you, nuts?  People want answers NOW, and the longer you wait the better the chance they’ll move on to your competitor.
3. Show up late with no call.  Nothing enrages people more than disrespecting their time, so if you’re gonna be late (which is bad enough), at least give someone the courtesy of calling them to let them know.  Most people will forgive your tardiness if you make an attempt to let them know.  Anything more than 10 minutes past an agreed upon time probably merits a call.
4. Don’t clean up.  This is something I use to struggle with a bit, but I’ve come to understand that many homeowners are downright looney when it comes to dust and debris in their home.  Some people will absolutely lose their mind if you leave even the slightest trace of dust on the floor or counters after the end of each work day, even when it’s a multi-day job.  I recommend taking every precaution possible to minimize dust and to clean up every day until the work area darn near sparkles.  Ignore this one at your own risk.
5. Blindside the homeowner with surprise costs.  There’s no quicker way to spoil an otherwise good relationship with a customer than to nail them with a $100 surcharge near the end of a $30,000 job.  This is particularly irritating to people when it involves something that you should have anticipated from the beginning.  Didn’t realize that you’d need to buy a new tool to finish the job?  Tough.  It’s on you, not the customer.  Don’t trash your chance for future free construction leads just so you can nickel and dime a good customer.
6. Take forever to complete a job.  It should go without saying that a four-week long kitchen remodel that was supposed to take 10 days will probably light the fuse of even the most patient homeowner.  Review plans carefully and map out daily activites before you begin so that your estimate of a completion date is accurate to within a day or two.  This is one of those areas where you’ll want to under-promise and over-deliver.  Better to finish early than late.  I’ve learned this one the hard way on a few occasions.
7. Do crap work.  If you’re a glutten for punishment and really enjoy getting nightly phone calls from infuriated customers, then go ahead and speed through your jobs with no regard for quality.  If not, then take those extra few minutes or hours to make sure your work is outstanding and you’ll avoid untold numbers of massive headaches.  You don’t really want to drive 30 minutes back out to a home just because you missed one small spot of paint, now do you?
8. Lack organization. If your company is lacking in systems and standard procedures then it will be tough to turn a profit, let alone grow the company.  If when a potential customer calls you have to put them on hold for two or three minutes while you search through stacks of papers on the floor for a copy of their estimate, this one definitely applies to you.  Again this is related to wasting peoples’ time.  Good organization will go miles in giving you the image of professionalism and experience; bad organization will cause homeowners to sometimes lose their cool and often times run to your competitors.  If you have your heart set on learning how to become a general contractor, just know that organization will be especially important for you because you’ll have to manage not only your own people but also the subcontractors.
9. Come to the job unprepared. Nothing says competence like showing up that first day for a major tile job but forgetting to bring mortar.  Or telling the homeowner halfway through painting a room that you ran out of paint and need to go buy more.  These sorts of dumb mistakes not only tick off customers, they cost you valuable hours during the day.  Result: the customer gives you a negative review on Angie’s List, and you just finished a project where you averaged $5 per hour because you had your head up your ass.  Congratulations.
10. Be inflexible.  As I’ve said before, you’ve got to stand firm when it comes to pricing your work or performing free services, but that doesn’t mean that you should absolutely refuse to work with the customer when it comes to small requests and adjustments.  If they ask you up front to split what should be a one-day job into two days to accommodate a major event at their home, try to make it work.  Just build the added inconvenience into the estimate and use those two half-days off to catch up on paperwork, give other estimates, or start other jobs.
11. Don’t listen.  It’s a common human characteristic that we want our concerns to be heard, and we don’t want to have to repeat them.  So your job as the contractor, particularly during the estimate/first meeting is to listen as much as it is to sell.  Don’t just bull-rush them with a boilerplate sales pitch; be receptive to their unique questions, fears, and expectations and then provide clear, specific answers.  People will appreciate your willingness to honestly and thoroughly address their particular situation, and the ultimate result will be a higher closing ratio for your business.  If you insist on talking over them or if they have to ask you the same question two or three times before getting an answer you are on the fast-track to a failing business.
12. Give unrealistic expectations.  This one can get a little tricky because while your marketing and advertising should play up your accomplishments and show potential customers what is possible, you also need to give them realistic expectations before things get underway.  Don’t promise them a Homearama-grade kitchen with vintage kitchen cabinets if they only have a $5000 budget and live in a 1000 square foot home.  By delicately lowering expectations up front you’ll end up with much happier customers at the end of the job.
13. Be rude or dismissive.  This is a no-brainer but I’m always amazed by how many businesses I come across that treat their customers like chumps.  Whether it’s rooted in a lack of basic manners or just a hatred of humanity in general I can never tell, but I can tell you that eventually these people will be out of business.  It might not be tomorrow, it might not be next year, but eventually karma has a way of chopping down the jerks.  And if karma doesn’t do the trick then the fact that I and 100 other disgruntled customers are going out of our way to badmouth your company probably will.  Word of rotten customer service spreads faster than wildfire.
14. Lack job skills.  Suffice it to say that if you’re bringing “how-to” books to a customer’s home while doing a remodel, they probably won’t be a happy camper.  Not only that, but if you’re taking on work for which you’re not qualified you’ll be so slow that earning a respectable amount per hour will be virtually impossible.  In fact, you might even lose money.  Don’t be afraid to tell somebody that you have neither the experience nor the tools to take on projects outside of your skill-set.  They’ll respect your honesty and it’ll give you an opportunity to send some business to another local contractor who can handle the job.  Odds are he’ll send you some leads for your specialty down the road.  Reciprocity can be a powerful business-booster.
15. Wear your emotions on your sleeve.  Sometimes customers are jerks, but if you’re smart you’ll keep your cool as much as possible.  This is one of those professions where you’ll need to develop a thick skin and lots of patience.  People will tick you off, they will disrespect you, they will ask millions of stupid questions, but you need to understand that by rolling your eyes or showing your irritation you’ll be magnifying the situation by a factor of ten.  Act perturbed by a homeowner’s concerns and there’s a good chance that they’ll go from being slightly distressed to being Bob Knight.  The more you can tolerate crazy customers the better off your business will be in the long run.  Bite your lip, swallow your pride, and watch your wallet get fat.
16. Give less attention to low-dollar jobs.  You’d be wise to focus your ad dollars on areas of town where people have gobs of money, but if somebody calls you from a shady part of town with a smaller job request, do them the courtesy of listening to their needs and offering your services.  This goes back to basic decency and respect for people (regardless of their net worth), and though they may not be able to afford your services you can at least call them back to offer other solutions or advice.  In some cases it’s as simple as explaining to them how to fix a problem on their own.  Or find a way to schedule the job so that it coincides with other similar jobs in the same area.  You never know when that small-dollar job could result in a referral down the road that drops a monster project in your lap.
17. Put people on hold to take another phone call.  Recently I called a local company to ask about having a windshield replaced, and in the middle of the conversation the guy put me on hold to take a call from another prospective customer.  About half a second later I ended the call and later that day gave my business to someone else.  Loss to me: nothing.  Loss to said dipwad: about $300.
18. Lack of communication within your company.  Less common in a smaller business, but once your company starts to grow you’ll want to keep a close eye on this one.  It’s always frustrating to me when I make a specific request to the salesman or estimator that never actually makes its way to the people performing the work.  Bottom line: the customer sees your company as one entity, one body, one cohesive unit.  If the left hand isn’t talking to the right you should expect to encounter some fire-breathing homeowners.
19. Be condescending.  If you have a habit of boosting your self-esteem by trying to make others feel stupid then prepare for the wrath of the normally calm soccer mom.  She may not know as much about installing cabinets as you do, but give her the impression that you think she’s dense and she’ll make your life a living hell until job completion.
20. Talk about politics or religion.  I can’t tell you how many times I’ve been (foolishly) talking politics or some other garbage with my brother at someone’s home with the assumption that they were out of earshot only to look up and see them standing there like Houdini.  You’ve got a 50% chance that they agree with your views and will laugh it off, but if they’re in that other 50% you could be in some deep doo-doo.  Americans get pretty fired up about their politics and their religion so you’d be wise to keep your opinions on these topics to yourself until after work hours.
21. Forget to send a thank you letter to the customer.  How would you feel if you spent $40,000 on a remodel and never received a thank you in the mail?

I recently wrote a post about how to handle deadbeat customers, and I thought it might be useful for some of you to have a sample demand for payment letter.  Okay, it's not exactly a "demanding" letter because it is friendly and respectful in tone, but just the fact that you've sent it to the offending customer will really get their attention and in most cases you'll get paid immediately.  In the rare case that they still don't pay, you'll need to make a phone call and ask them what the deal is. 

Just download this document and open it with Word to customize it for your company and situation:

Download customer_hasnt_paid.doc

My last post was about how you’ve got to expand your business in order to achieve wealth, but I also need to make the important point that replication in your business is made much, much easier when the service you provide can be easily performed by unskilled laborers.

Many services require special training, education, and certifications.  For example, I have a good friend who is a personal trainer in Cleveland, and he is highly skilled at what he does.  He earns a good living, but if he ever desired to expand his business by moving into a managerial role and bringing in other trainers to work for him he could find it more difficult than it would be for, say, a lawn-mowing business owner.

Why?  Personal trainers are certified and have devoted long hours to get where they’re at, which means that they are somewhat of a scarcity and expect to earn a good living.  In other words, they expect to be paid well and are difficult to replace.  One or two trainers quit and it could really effect the business in an immediate and negative way.  Lawn mowing techs, on the other hand, are pretty much a dime a dozen.  They don’t need any previous training or skills and so they are in greater supply.  Therefore they can be hired for relatively low pay and if one quits they are easily and quickly replaced.  This scenario sets you, the business owner, up for higher profit margins, less chance of a breakdown in the system, and therefore a quicker rate of company expansion.

As evidence of this phenomenon just take a look at McDonald’s or Subway, which have thousands upon thousands of franchises.  Do you think they achieved that kind of growth by hiring highly skilled hamburger flippers and sandwich makers who expect to make a lot of money?  Of course not.  They’ll hire just about anybody with a pulse because the work is easy to learn and perform, and the pay is therefore pretty low.  That means more money in the franchise owner’s pocket, and more money in the corporation’s pocket.