Business was lousy for many in the building industry in 2010
David Lupberger Contruction Industry Marketing Expert
I was to talking with one of my clients the other day and he mentioned how glad he was to see 2010 come to an end. It was a lousy year and his contracting company didn’t do very well. He’s hoping for better results in 2011.
If you’re like most people in the building industry you understand his frustrations. Business has been down for quite a while now and as a result there are fewer projects available and those that are doing building or remodeling projects are being more cautious than ever.
If you’ve been able to hang on during these tough times you already understand that the marketplace as we used to know it is gone. Progressive contractors have learned new ways to adapt and run their business. They’re not afraid to look for new ways to find and keep clients by adapting to this new marketplace with creative and aggressive ideas .
In this article I’d to address some common misconceptions that I regularly hear from contractors in this new marketplace:
There are many misconceptions about the construction industry
We’re waiting for the market to come back
If you’re independently wealthy you may have the luxury to sit around and keep waiting for the market to recover. Everyone else needs to understand that the market has changed and it may never come back to the levels we used to know. It could be years before companies start to accumulate a backlog of business like they used to.
Project “confusion” due to inconsistent cash flow
Project confusion means taking projects that are not your specialty, and doing the project just for cash flow. While this may seem like a short-term fix, it can ultimately cost your company a lot of money. Staying occupied with busy work especially if you’re doing it below your normal markup can be deadly to your bottom line.
Stopping or reducing your marketing spending
When time are tough the tough get marketing! Cutting back on marketing spending is the worst thing you can do now. If money is a problem then it’s important to find low-cost alternatives to keep getting the word out about your company. (Ever heard of a phone? Call past customers to say Hi). Now is the time to increase your marketing budget. Let consumers know you’re still there to help them.
Cutting back on education to cut expenses
Continued education on any topic is important no matter what the economy is doing. If you can’t afford to spend more on marketing, then take a class on advertising. Want to meet some potential customers, take a class on basket weaving. The point it you must define your educational goals and take action on them. The act of staying educated will help build your confidence and who knows, maybe you’ll meet your next client in the basket weaving class.
Common myths about business that are holding contractors back
Contractors are powerless to get new business in this market
The way you get new clients has changed for many contractors. What hasn’t changed is the fact that if you do nothing to attract new business that’s exactly what you’ll get – nothing. Ask yourself where is the opportunity now? What do consumers need? If you’re unsure, call 5 of your best past customers, and ask them where they need help with their homes? What service would they like to see? The only thing keeping yourself powerless is lack of action. Get busy!
Service providers are subject to the whims of the marketplace
Homeowners still own their homes and need to maintain them. Their homes need work and in many cases they aren’t able to do the work themselves. Find out where consumers need help. Create more services that you can sell. Expand your offerings, maintain proper margins and help your clients manage their biggest asset (their home!).
I can’t compete with all of the cut throat hacks out there
I sure hope not. The horror stories I continue to hear about low price hacks and the consumers who think they’ll get a great deal are astounding. Don’t get suckered in. If you need to walk away from a deal, then walk. If you want to increase your chances of staying out of a price war, start learning how to build meaningful and long-lasting relationships with your clients. You’re a professional, start acting like one.
Relying on the same old business model will be OK
Albert Einstein once said “Insanity is doing the same thing over and over again and expecting different results.” Is this happening to you? If you’re struggling it may be time for some innovation. Waiting for people to call is part of the old business model. It’s time for contractors to take a proactive stance. You need to find reasons to stay in touch with your past clients. Reasons to call them on a regular basis. Good customer service is still the best way to market and sell your services.
I’m not sure what to do – It’s hard to stay motivated
Persistence is the key to success in any business. It’s easy to get discouraged when the phone is not ringing, but don’t give up. There is light at the end of the tunnel and there is a great deal of pent-up demand waiting for you. Good follow-up with past and present customers will provide you with the additional projects you need to keep working.
Here’s an idea that you can use to proactively market your services
I did a webinar with Dan awhile back. You can watch it for free here. In this webinar I discuss a system I’ve developed called the “Home Asset Management Plan”. Apply some of the ideas in the presentation to your business. Those that have adopted this concept have found it to be an exciting way to stay in touch with their clients and it has resulted in more work for them. It also sets the stage for guaranteed future work. Imagine having work lined up years in advance. It’s possible if you take action now.
Thankfully it’s a new year filled with promise and opportunity. Make sure you take the action needed to capitalise on all of the opportunities that are out there.
David Lupberger
www.TurnkeyProgram.com
303-442-3702
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Diane,
Thanks for your note. I got the opportunity to speak with a contractor already implementing the program, and he is reaching out to his insurance agent, his friendly mortgage broker, home inspector, interior designer, and landscaper to help him promote the Home Asset Management Plan. All see the benefit in promoting this idea to their client base. It benefits everyone.
Your point is well-taken. Many homeowners would be interested in this concept (you have to let them know you provide this service), and a very interested group would be working women, and and women (like yourself) that work with working women. There are ample business opportunities present, but we have to find and develop them. It’s up to us.
As for your last point, knowing the numbers is the basis of any successful business. You can’t make good decisions without knowing your numbers (and your true cost of doing business). Your accounting tips are the foundation to any successful business.
Hi Dave,
I sat in on your webinar, and it was really eye-opening… As a homeowner and accountant (not a contractor) whose time is focused on running my own business, I was thinking:
“Wow, I wish that I knew someone who offers the services Dave’s talking about! I’d love to find someone who is:
– Really competent
– THAT I COULD TRUST and who is
– Going to be around for the long haul
to advise me on a periodic basis re: the upkeep of my home. E.g., what’s needed now, what’s coming up, and how to best get those projects most effectively and economically accomplished.” What a great concept!
So, as a consumer, I’m encouraging remodelers and contractors to watch your video (just referred one of my contractor clients to the video last night…).
Re: the other points you make in your article, I totally agree – and would like to add a few more thoughts. Tough times are requiring ALL of us to become more creative, more knowledgeable and more diligent business owners. Of course, as a construction-industry management accountant, I know that it’s critical for contractors to get on top of their numbers so they can job cost, and monitor exactly what’s going on with each their jobs on a day-to-day basis.
Company owners who invest their time to learn how to use their accounting system to:
1. Create basic financial controls (e.g., detailed estimates, purchase orders, job costing reports, etc.)…
2. Closely monitor results and job costs as jobs progress…
3. Help them analyze financial results and learn what’s working and what’s not working…
are almost guaranteed to avoid the “project confusion” syndrome that you discussed. I.e., when you know your numbers, you won’t “sell every job at a loss and make it up in volume” (a bit of accounting humor [smile] ).
Adversity breeds creativity. So, the businesses who view tough times as an opportunity to get smarter (marketing, education, numbers, business management, etc.) are “upping the game” across the marketplace. They will not only survive, but will create new ways of doing business, bring innovative value to consumers, become more profitable, and stand out in marketplace. (And the businesses who don’t take a pro-active approach? Competition will sort them out…)
So “Bravo” to your contribution Dave – and to all of you business owners who are discovering new and unique (as well as tried and true) ways of rising to these current challenges. You’ve decided to create an even better future for your customers, your employees and yourselves!