Owning and operating a construction business isn’t for the faint at heart. Among other things, it requires having a strong will and being self-directed. Those qualities get you up and going in the morning and keep you focused on what needs to be done.
Those qualities can also lead you to stubbornly hold on to beliefs that can limit your profit.
My business is different
Too many underprice their work because they believe their business is different. They can’t use the markup their business requires. They have to quote a lower price than what they need to pay their job costs, cover their overhead including owner’s salary, and make a fair profit.
Guess what? The fundamentals of math apply to everyone. Unless you have vast stores of money to draw on to help pay your bills, you need to calculate and use your correct markup, or you’ll go out of business.
I work in a competitive market
I hear this regularly. The truth is that everyone works in a competitive market. If you’re in construction, chances are good that you have all kinds of people around you who do what you do. Most of them can build the same job you can build. That’s reality.
When you say that you work in a competitive market, your focus is on price. That’s what you’re really saying. You have to reduce your price because there are other people doing the same work, and the only way you’ll make the sale is if your price is lower than theirs.
That’s a game you can’t win. The truth is that if you’re marketing to the right people, they won’t focus on getting the lowest price unless you make it their focus.
The successful salesperson doesn’t worry about being competitive. They zero in on providing a quality, value, and service to their clients. They don’t compromise by bidding on jobs or by trying to be competitive. They know they need to make a profit on each and every job they do.
It’s important to separate yourself from others by doing things right: return your phone calls, arrive at appointments on time, keep your jobs clean, and do what you say you’re going to do.
Doing things right doesn’t make you different, it makes you normal. You’re doing what you’re supposed to do. You’re a business owner. It’s what’s expected. The flakes are the ones who are different. You don’t want to be different. You want to be normal.
When you’re on a sales call, focus on the positive things you provide. Don’t talk about the other guys. Remember that everyone’s radio station is tuned to WIIFM – What’s In It For Me. They care what you can do for them. Focus on that.
Knowing how to sell isn’t easy, but it’s a skill that can be developed with practice. The sooner you start practicing, the sooner you’ll become successful at it. Our book Profitable Sales, A Contractor’s Guide, will take you through the steps you need to take to become success in sales. It’s specifically written for those selling construction services in the residential market.
Other contractors are out hustling business just like you. Some are focused on price and fall into the trap of trying to be competitive. When you visit a potential client who just spent two hours with another contractor hearing how low their prices are, you have an excellent opportunity to turn the client’s focus back to what really counts, and that’s the value and service you provide.
When you focus on price, you need to be the lowest price. When you focus on quality, value, and service, you stop worrying about being competitive. That’s when you start making more sales and becoming more profitable.
The knowledge and experience Michael Stone gained in his 60+ years in construction has helped thousands of contractors improve their businesses and their lives. He is the author of the books Markup & Profit Revisited, Profitable Sales, and Estimating Construction Profitably, and is available for one-on-one consultations as needed.
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