A national construction-industry magazine posted a note that said about half of their subscribers were in the path of Hurricane Sandy these past few days. Which leads me to a question: How many of those contractors are taking advantage of the potential new business?
Let me share some thoughts. Storm damage may or may not be the kind of work you like to do, but it is work. I’ve said many times that the smart contractors, the ones who make good money, focus on their most profitable work, whether or not it’s the work they like to do. Doing what you like is a hobby. Doing what makes money is a business.
If you were in the path of Sandy, this is a great opportunity to reconnect with all your previous clients, as well as potential new clients, friends, neighbors and just about anyone else you have the ability to reach. Let them know you’re there to help them recover. We received some email newsletters from contractors just before the storm hit that listed all the emergency information their clients might need during and after the storm. What a great idea! Those companies got after it.
Warn clients about the hazards they might face if they get involved with a storm chaser company. Those are the companies that move into an area right after a storm to pick up insurance work, and move out when the work is done. Some are legitimate and do good work, but your clients need to be warned that there are bad ones as well. The focus should be on dealing with people you know. Warn them about high-pressure tactics, requests for large down payments, one or two page contracts, etc. My suggestion is to give your potential clients the same information and warnings that you’d give your mom if she was dealing with damage to her home. Tell them what they need to know about the repair process and how to make sure they’ll be treated right.
In repair work like this, you’ll probably be involved with insurance claims. That means you’re going to run into issues you don’t normally bump into with remodeling or new home construction. Points to consider:
Be nice to the adjusters. They have a tough job getting all these claims settled. But remember, nobody and I mean nobody, can do work for 10% overhead and 10% profit as they want you to believe. Price your jobs the same or as needed to cover the higher cost of doing this type of work, and stick to it.
Get all depreciated and deductible amounts paid upfront by the client or don’t start the job. If you don’t collect upfront, you stand a big chance of not getting paid on either or both of these at all. And watch out here, because the adjusters often don’t want contractors talking about these two items because it “upsets” the customers. The problem is that you’re the one who has to collect them, and you’ll be even more upset if you can’t collect them when the job is complete.
Last but not least, be sure you know who the payment will come from. If payment will come from your client, schedule your down payment and progress payments like normal on your contract. If you’re going to be paid by the insurance company, make sure that the check goes directly to you and is made out directly to you. If the check is made out to you, your client and the mortgage holder, it can take a long time to get that check signed. Guess who waits for their money while the wheels grind?
There are other issues to consider – I could write a book on the subject. Instead, pages 250-256 in the book Markup & Profit Revisited discuss insurance work. And Craftsman Book Company wrote a book on the subject – “Insurance Restoration Contracting” (the eBook version is here). I recommend them both.
Get after it my friends; help your clients get their homes and buildings put back together. And make a reasonable profit on that work. That’s why you’re in business.