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The holiday season that began with Thanksgiving, traversed Christmas, Chanukah and Kwanzaa's celebrations, and welcomed the New Year is behind us. I offer you my belated holiday best wishes and hopes for a healthy and wealthy new year.
The word “holiday” is derived from two words — “holy day.” Thanksgiving Day is a day for us to be thankful for all the blessings we have received. I thank God for my life, family, friends and readers.
The holiday season is filled with gifts of thought, spirit and mundanity. My gift to you is the business knowledge I possess. I sincerely hope it helps you in your business endeavors.
When the New Year comes, resolutions are made. I urge you to make for yourself, your family, your employees, your clientele and your creditors a resolution to embrace the intent to excel.
I resolve to strive harder to get the information contractors need to succeed in their businesses to those who intend to excel.
I’m sure when you entered the business arena, you intended to succeed. But things happen, both good and bad. When bad things occur, you probably wonder what you did wrong. That’s only natural. Those bad results arise because of a lack of knowledge, improper decision-making, fear of rejection or any combination thereof.
The occurrence of good things puts a smile on your face. But have you ever wondered if things could be better?
I believe in predestination. My earliest encounter with destiny was height; God gave me the gene to be 6 feet, 4 inches. I’ve never met a member of my extended family as tall as I.
I know some readers believe I am someone with lofty ideas who never ran a PHC contracting business and knows nothing about the trials and tribulations contractors incur. But that’s not true.
Like you, although we may differ regarding our styles and the urgency to excel, my destiny was to become a plumbing and heating technician, as well as a master of the PHC trade and business coach to contractors.
As a child, whenever Sal the plumber would come to our home to tend to some plumbing problem, I would rummage through his toolbox. Sal and the other grownups would laugh and say, “He’s going to be a plumber.” However, my academic education led me down the path of mathematics and accounting. I’m a numbers guy.
My father passed away when I was 18. The shock sent me spiraling downward as I entered the real world with no experience in the working arena.
As I searched for my calling, I wandered from one job to another, never working with my hands. I was employed in positions requiring managerial and sales skills. I even worked for a large banking institution. But none of this seemed to interest me as the way to spend my life.
A little more than three years after my father’s death, while I was still wandering, predestination led me to the bar me and my friends considered our hangout. One night in the fall of 1969, as the place was packed, three beautiful young ladies I had never seen in the bar before ran behind me.
I quickly turned around and started to talk to them. To my left was Ginny; on my right was Annette. They started telling me they had a rule that whenever a fight broke out in a bar, they would find the biggest guy in the bar not in the fight and stand behind him. It seemed a fight had broken out on the dance floor; with my height, I met their requirement. But the predestination doesn’t end there.
Remember I told you there were three young ladies? The third young lady was a bit shorter than the other two and was standing behind them. When our eyes met, I saw the most beautiful sight I had ever seen or will ever see. Her name was Judy.
As soon as I saw her, everyone else in that packed bar disappeared from my sight. Predestination struck again. We spoke, and I asked her on a date. By the third date, we started to become each other’s counterpart and fall deeply in love with each other.
Unfortunately, I had no future since I was a wandering fool. Enter destiny and Judy’s older sister, Geri, whose boyfriend, Joe, was a successful excavating contractor. Geri had Joe ask me what I wanted to do. Remembering Sal, I said plumbing. Funny thing about predestination; it keeps popping up. Joe spoke to his brother-in-law, a PHC contractor, and my journey in the PHC industry began.
Within a year of meeting, Judy and I were married.
Numbers and plumbing
On the first day as the newbie on a condominium jobsite, I gathered with the other workers in the trailer to get our assignments. The foreman told the journeymen which section they were working on that day and what tasks they were to perform. Then he turned to the helpers and divided them into two groups. One group was to grab Sawzalls while the other group was to grab hole hogs.
The problem was that I, being a never-worked-with-my-hands newbie, didn’t know what either of those tools was, let alone how to use one. So, I waited to see what the other guys in my group picked up and followed suit. Now, all I had to do was figure out how to use this tool. So, I once again looked at another guy using that same tool and did what he did.
I had to go through a five-year apprenticeship program. Fortunately, I made it through the program as the No. 1 apprentice in my class.
Upon completing my apprenticeship, I sat for my master PHC license test and passed in 1976. Judy and I opened our PHC contracting business, which consisted of me on the truck serving consumers and Judy taking on administrative duties. Our husband/wife team probably sounds familiar to many contractors. Thinking that the predestination was complete, we put our noses to the grindstone and did our jobs, just like many of you.
Judy had worked in a beauty salon and had never done the type of work she had to do as an administrator. But her beauty was surpassed by her intelligence; soon, she spoke to customers as if she had been in the PHC industry for years. And she kept the books like a pro.
As for me, my first mistake was to follow the example set by contractors who didn’t know how to price their services — I arrived at my prices by finding out what other contractors charge. Unlike my emulation of the other helpers on my first day of work in the trades, following the lead of people in business who are not businesspeople is unwise.
I found out they all charged by the hour; at the time, the highest per hour rate was $18. Some charged $17 while others charged $16.
I wondered If $16 would go to $15 and $15 to $14 until some contractors paid consumers an hourly rate for the privilege of working in their homes and businesses. But it didn’t. Their rates just stagnated in a limbo of blissful ignorance that would keep them from attaining their true business goals.
Judy was uneasy about charging by the hour. But making my second mistake, I assured her it was the way business in the industry was conducted.
I pondered my goals of delivering excellence to consumers via quality and expediency while earning the reward I deserved for the delivery. Realizing that excellence would cost more to produce than mediocrity, I decided to charge $20 an hour for my services.
Within a month or two, I realized that $20/hour was not enough to cover the true cost of delivering excellence. So I raised the rate. Due to our set goals, my tenacity and Judy’s love, devotion and work ethic, our business grew enough to add employees.
The contract price
After six months of time-and-material pricing and interactions with consumers, I realized Judy was right about charging by the hour. So, I developed the limited contract pricing method, which gave consumers a maximum number of hours and a certain amount of material at a price that would not change unless more time and material were expended. In which case, the consumer would be charged extra for overage costs incurred.
This plan showed I wouldn’t let go of T&M pricing entirely, and it worked as long — as there were no overages. If there were extra charges, questions would arise from the consumer about the bill.
With numbers in a constant state of flux and so many contractors selling at ridiculously low, below-true-cost rates, I had to devise a pricing method that would separate our business from our competition and enhance the excellence we delivered to consumers. It had to be perceived as more upfront than a pricing method that gives them sticker shock when the bill is presented after the job is finished.
The limited contract price had to be changed to the contract price. Tasks were described and a price was quoted. Each task’s price would be calculated on the average time it would take an average tech to perform it, the average material needed to complete the task and the total average cost of the task, blended with our chosen profit margin.
This method required the consumers’ authorization to perform the agreed task at the agreed contract price. Since the task's price didn’t change, any questions about the bill after the job was done would be without legal or ethical basis.
With contract pricing, we were able to attain our goals, and our clientele was very satisfied with our service. I was named Plumbing Contractor of the Year by the Plumbing-Heating-Cooling Contractors – National Association. I received an Award of Excellence from the Office of the County Executive in the county where I lived and ran our business. And our company received the first Quality Award, in a five-county area, from the Palisades Institute for improving the quality consumers received.
When I grew tired of competing with contractors who improperly priced their services below their true cost, I decided they needed help. I opened my consulting and coaching business to show contractors the right way to calculate their true cost, sell at properly profitable prices and attain their goals.
Follow your own destiny; don’t follow the lead of contractors who are not good businesspeople. Show consumers they can trust you because you believe you can give them value through your excellent workmanship and peace of mind by standing behind it.
I implore you to resolve to excel in your business, deliver excellence and earn the reward you deserve for your expertise. In 2017, I retired from the contracting business, but I still conduct my consulting and coaching business because I know the challenges you face and how to solve business problems. If you need help, give me a call. Embrace your destiny with excellence.