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I thought it would be wise to make a list of important issues that are common and affect the results contractors get from their businesses. Choose your preference from the options that follow.
Choose your preferred customers
I believe there are two types of consumers — value buyers and price buyers. Which is your choice?
Consumers who are problematic because: a) they question your business protocols; b) they are only willing to pay prices that do not allow you to earn a profit above your cost to service their requests, or, at the least to recover that cost in totality; and/or c) they possibly, and anonymously, criticize your business practices on the internet with false allegations.
A clientele base which appreciates the services you perform for them while allowing you to recover the cost you incur in serving their requests so you can have an opportunity to earn a profit above your cost.
If you prefer to attain a good clientele base you must first intend to deliver excellence to consumers. This is achieved through integrity and intelligence blended with top-quality workmanship and material. Since great technicians and top-quality material cost more, your prices will have to reflect those expenses appropriately.
The next step is to give consumers the options and prices of services you can perform before starting any task. And, you should explain the benefits and caveats of each option. This will allow the consumer the opportunity to wisely choose which option best fits their situation. It also places the onus of their choice on them rather than you or your business.
Then, you must come to the realization that since you are a contractor, and contracts require a meeting of the minds of the participants regarding the agreement, you have the right to decide whether you want to enter into a contract with any consumer.
I realize you would like to please everyone by providing your services so you can earn the profit you deserve from every chance you get to serve consumer requests. But, troublesome consumers often do not allow you to even recover your true cost let alone earn a profit above that cost. And, those who have the propensity to anonymously state online falsehoods about your business are to be avoided. They could lessen the number of opportunities you could have to serve others who mistakenly fall under the negative spell consumers cast upon your internet business image.
I believe you really want to deal with value buyers who will appreciate the excellence you deliver, the up-front information you offer, your honesty and the professional workmanship you deliver. However, you might want to try to educate price buyers, regarding the wisdom of purchasing value — which is less expensive than cheap prices in the long run — to become value buyers. Then, you can build the clientele base you really want.
But, beware! If your protocols and prices are built on the premise of being the cheapest contractor around, you will attract many of the problematic consumers described in preference No.1 who will not give you the time to cultivate the clientele base of preference No.2.
Choose your preferred technicians
I am sure you are aware technicians can range from great to the worst in the world. I think most contractors who say they can’t find good help do not know how to discern the difference between great, mediocre or the worst techs in the world. You must choose intelligently and carefully.
Which of these do you prefer?
Technicians who are: 1) mediocre; 2) don’t care about the quality of their workmanship; 3) have no integrity; 4) have the loyalty of Benedict Arnold; and/or 5) try to make deals with your customers for moonlighting work after hours.
Honest and loyal technicians who: 1) appreciate their employment; 2) look after your business like it’s theirs; 3) address consumer requests in a professional and caring manner; 4) are reliable; 5) deliver excellence to your clientele; and 6) build consumer confidence in your business, through their mechanical aptitude and professional demeanor.
Since your techs deal with, and, are face to face with, your clientele more often than you, they must reflect your attitude in dealing with your clientele. If you want good clientele, you need great techs, which I call “Star Techs.” That means you must know what to look for before hiring technicians as well as how to equitably evaluate their performance once you do hire them. You must also compensate them well and let them know they are part of your winning team.
If you hire mediocrity you will get mediocre results. If you hire greatness you give yourself the opportunity to succeed.
Choose your preferred pricing protocol
Arguments about pricing with consumers are more often than not caused by implementing the wrong pricing method rather than the price itself. Ask yourself which of these two methods you would prefer if you were the consumer.
Time and material pricing which is based on the “going broke rate” charged by other contractors in your area. This method: 1) doesn’t give the consumer the final total until after the work is done; 2) leads to potential arguments about the amount after the consumer receives the final shocking bill; 3) doesn’t take into consideration your true cost of operation; and 4) leads you to build your business based on the problematic consumers of the aforementioned consumer preference No.1.
Contract pricing which is based on: 1) your average true cost to perform a specific service; 2) your desired profit margin; 3) prices agreed to by consumers before they authorize you to perform the service; and 4) a legal and binding contract between your business and the consumer.
I refer to it as the “going broke rate” of the first choice listed because it is more often than not based on an amount which is less than your true cost. That combined with the potential for arguments and a customer base of consumers you really do not want to enter into contracts with is the reason this choice is not good.
However, with contract pricing both you and the consumer come to a meeting of the minds to which you both agreed before tasks start. The potential for a legitimate argument about your price does not exist if you fulfilled your obligations under the contract.
Choose your preferred prices
With this issue, I see these choices: 1) sell your services at your true cost; 2) sell your services below your true cost; and 3) sell your services above your true cost.
If you sell at your true cost you defeat the purpose for which you entered the business arena because you cannot earn a reward (profit) above your true cost. And, profit is the only reason “for profit” businesses exist.
Selling below your true cost means you are your business’ worst enemy and should have yourself treated for yet another propensity to harm yourself and your business.
To sell your services above your true cost, you must know your true cost as well as have the courage to charge prices that will give you the opportunity to recover your true cost and earn a profit above that cost.
Choose your preferred management style
Management style determines the difference between the enjoyment of success and the misery of failure.
Which is yours, and, which would you prefer yours to be? 1) manage your business in an environment of stress and frustration; 2) manage your businessbusiness in an environment conducive to good business.
To manage in a good business environment you must crunch your numbers correctly. Don’t fool yourself into thinking you can perform a service faster than anyone else because this will cause you to sell your services below your true cost. Also, give your clientele a reason to trust in your service above others by delivering excellence.
Your preferences are solely yours to make. Your choices will determine whether you succeed or fail. Choose wisely.
The fix to business problems is just a phone call away. So, why not call?
Richard P. DiToma has been involved in the PHC industry since 1970. He is a contracting business coach/consultant and an active PHC contractor. For information about the CONTRACTOR PROFIT ADVANTAGE or to contact Richard: call 845-639-5050; e-mail firstname.lastname@example.org; mail to R & G Profit-Ability, Inc. P.O. Box 282, West Nyack, N.Y. 10994.