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Should you add another trade? Well, that’s the second question you should be asking yourself. The first question you need to ask (and answer) is, “Are we paying attention to changing market conditions and monitoring how well our company is functioning with the trade or trades we already do?”
One of my clients was debating the value of whether to add weatherization products and services to the work he already did. His company was in an enviable situation because the work we did together had it already doing a great job of selling and conducting home energy audits and heating and cooling work.
However, the company’s home energy audits were so great it also demonstrated a great need to improve its customers’ homes with better weatherization products such as home insulation and more.
My client had been subbing out this work, which is OK. However, it was always a problem when the subs were too busy to respond, or did the work the way they wanted to and not how my client wanted it done. Yes, the subs were OK, but they came with a cost. This caused my client to wonder whether there was a potential for making more money and having more control of the outcome if he brought the weatherization trade in-house.
Focus your Mind
Before making any decision, I recommended he do the Daily Business Meditation I had taught him to do when we started our work together. This meditation method is where you ask yourself the following set of questions and spend time thinking about each one:
1. What business am I really in?
2. What business should I be exiting?
3. What business should I be going into?
Once those things are clear in your mind, it’s time to ask yourself the next three questions and answer them as honestly as you can, making sure to remove your ego from the equation.
4. Will we make more or less money by continuing to sub the work out?
5. Does subbing the work out keep us from being distracted from the work we should focus on?
6. Would we do a better job if we did the work ourselves, and could we charge for the value of doing this ourselves?
Next, it’s time to answer the following two bigger questions:
7. Are we already on top of how to deliver on sales and install work done in the trades we already do today?
8. Are we the company people think about when they want top-notch work in the trade(s) we do?
If you said yes to these last two questions, consider expanding into another sector or growing your service area.
If you said no to one or both, it’s best to focus on the trade you are already engaged in and make this a reality first. Then re-examine how this next piece you want to add would fit into a profitable model.
My family would ask ourselves these same questions related to our own company before we branched out from only selling and servicing fuel oil heating. We decided that we could bring a value proposition to our customers by adding plumbing, gas heating, cooling and electrical trades.
We knew we wanted to “own the basement” and keep out our competitors who were beginning to steal away our customers. Plus, we learned the secret to successfully adding new trades: creating documented policies and procedures in writing called operating manuals, a working hands-on training center and a trade course curriculum. We knew we could commit to buy all the tools and equipment and provide the best training in-house to do this new trade the right way.
All of this is a must!
Fortunately, our company also knew what trades we didn’t want to do, such as home security. That’s why we found a good home security company we could be allies with; we worked out a stand-still agreement that benefited us both. A stand-still agreement is one where both parties agree not to enter each other’s business or take one another’s clients. Know that this type of agreement can vary.
Once you are philosophically onboard about adding this new trade to your company, you must make a brutally honest financial projection. The numbers must be there. If they aren’t, don’t pursue it!
If you do decide to add a trade, you can proceed a couple of ways: either by acquiring another company or growing it organically through marketing. Either way, you must create a way to train your existing and future staff on that trade. There are four basic steps to this:
Step 1: Write a trade manual for the new trade containing 80 percent of what they need to know (not the 20 percent weird).
Step 2: Break the trade manual into chunks to create a training curriculum and set up the training classes.
Step 3: Add a module covering the new trade to your hands-on training center. (Reach out to your manufacturer and see if they’ll provide it at low or no cost.)
Step 4: Begin the process of cross-training your existing staff.
Cross-training is critical. You must make it clear that this new trade is part of what the company does. Otherwise, it will create division, i.e., “We’d make money if we didn’t have to drag you along.” Also, what if the new people get sick, die or quit? Suddenly, you’re out of that trade you took on.
Careful consideration and reflection, honest financial projections, manuals and training will allow your company to add a new trade — successfully.