The beginning of a new year is a great time to review your business practices. Are your habits helping your company grow, or are they holding you back? Our Ten Cardinal Rules are business habits guaranteed to make you a better businessperson, and I’m going to rephrase them here:
Cardinal Rule #1: Return all phone calls the same day (or by 9 am the next day)
Not returning phone calls is a bad habit. Over and over I’ve heard, “I don’t have the time to return my calls, I’m too busy.” You aren’t too busy. It only takes a few minutes to return each call, and you never know who or why they’re calling until you make that return call.
A customer’s first contact with you will often be by phone. You want to treat them with courtesy, answer their questions and meet their needs when they call. In 2021, make it a top priority that you and everyone in your company will return all phone calls the same day or by 9 am the next day.
Cardinal Rule #2: Keep all appointments, and on time
When you set an appointment time, you’ve made a promise. When you’re late or don’t show at all, you’ve broken that promise. If, on the way to the appointment, you realize you’re going to be late, even if it’s only a minute or two late, get the phone out and call them. Let them know you’re on the way and when you’ll arrive.
Cardinal Rule #3: Be professional
If you want to be paid like a professional, then dress and behave like a professional. There are more than enough flaky contractors in the world, and frankly, that’s what many homeowners expect to deal with. Surprise them; be different. That includes your speech; foul language isn’t professional, it’s foul.
Cardinal Rule #4: Keep your ego in your pocket
Find out what your client wants, then help them get it. You don’t need to impress them with your incredible knowledge; you need to show them you’re listening. They care about their job, not about you.
Cardinal Rule #5: Make sure they’re qualified to buy from you
You don’t want every client you meet. Some of them have unrealistic expectations, won’t answer your questions, or are looking for the cheapest price. Follow the guidelines in Profitable Sales; A Contractor’s Guide to ferret out the problem clients and sell to those who are qualified.
Cardinal Rule #6: When estimating, get written quotes for any items over $300
Don’t guess at what a sub or specialty contractor will charge; get a written quote. Run your labor estimates past the person who will build the job to make sure the time is reasonable. Accurate estimating is critical to your profitability, and after all the effort you’ll put into selling and building the project, you want it to be profitable. For more, read “Estimating: How to Improve Your Profit Margin.”
Cardinal Rule #7: Calculate your correct markup and use it, every time
The correct sales price for every job is the price that allows you to pay all job costs, it’s share of your overhead expenses, and provide a reasonable profit. You’ll find the correct sales price if you calculate your markup that is based on your overhead and profit needs, then apply that markup to an estimated cost that is as accurate as possible. More on how to calculate your markup here: “Calculating Your Markup.”
If you don’t calculate your markup and use it, you’re guessing at the sales price. The wrong guesses can take you out of business.
Cardinal Rule #8: Stay on budget
During your planning for 2021, you set an overhead budget for your business. The next step is to follow it. Don’t buy toys or tools unless it’s in the budget; if an emergency occurs, follow the procedure in Chapter 5 of Markup & Profit Revisited and adjust accordingly.
Every increase in your budget will require either more sales than originally projected or a higher markup on all future sales. The alternative is a lower profit.
Cardinal Rule #9: Continue your education on a daily basis
Spend an hour every day to learn more about business. Even thirty minutes will help. Watch our videos. Read or listen to books. You’ll learn new things, and everyone needs continual reminders of what they already know but easily forget.
Cardinal Rule #10: Take a fixed salary from your business every month
Your salary needs to be included in overhead when you calculate your markup. When you sell your jobs at the right price, using that markup, you’ll have the funds available to pay yourself a fixed salary every month and enable you to take care of your family. If you’re not sure how much to pay yourself, read “What’s the Right Salary for a Construction Company Owner.”
Following these cardinal rules make it easier to pay that salary. You’ll be different than the rest of the pack. You’ll look so good to potential clients that they’ll be more than willing to pay a fair price for your work, the price that pays for all job costs, covers your overhead (which includes your salary), and allows you to set aside a reasonable profit.
Running a successful construction business happens when you do the little things, consistently. Good habits deliver great results.
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