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Construction Programs & Results Inc

We Like to See The Good Guys Win!

Spare Topics

by Michael Stone

It's time to catch up on some spare topics I have lying around. These aren't earth shaking but they can and will impact your bottom line.Assorted Business Topics, Sales and Business Stability #MarkupAndProfit #ConstructionBusinessManagement

I've heard from a number of contractors talking about how they are booked up four, five, six months or more. They can't possibly take any more leads or start any jobs until some point in the distant future.

First, don't let yourself get that far behind on jobs. If your work is in that much demand, raise your prices until sales slow down. Your lead time should be four to six weeks (that varies depending on the type of work you do), not four to six months.

However, if you are booked out too far, don't tell a potential client that you're too busy to take their job. What they'll hear is, "We aren't important." They care about their project, not your problems. We talk about that in our book, Profitable Sales; A Contractors Guide (Chapter 7). Get the book out and read that section. There are ways to make the sale and keep to your schedule without alienating your client.

Next subject: How is your Operating Capital Reserve Account (OCRA) doing? Have you reached your goal yet? At some point in the near future, this economy is going to nose over and head south. It always does. When it happens, you'll need a financial cushion to carry you through. Don't count on a line of credit to carry you through. That's a very expensive way to keep your bills and unexpected surprises paid in full. A line of credit not only costs you money the minute you use it, it's also a business distraction until it's paid off. It doesn't keep you from debt, it puts you in debt.

An OCRA gives you the freedom to walk away from bad jobs and bad customers (yes, there are some of those still around). You'll have the freedom to transfer difficult or unproductive employees to the competition, make emergency purchases, and maybe even treat yourself and your spouse to a nice weekend away for some business-related thing or other.

If you're a specialty contractor, your goal should be to have five to seven months of overhead salted away. The goal for remodeling contractors should be seven to nine months of overhead set aside. Those building new homes should have somewhere between nine months and a year's overhead in reserve, depending on the size and length of the jobs you build.

If you haven't started your OCRA, you can read about it in Chapter 5 of Markup and Profit; A Contractor's Guide Revisited.

Finally, let's talk about one of my favorite topics, the use of the telephone. Last week I called fourteen contractors for various reasons; eleven of them answered the phone with "Hello." That's not how you inspire potential clients. It leaves a negative first impression, and those are difficult to change.

It also fits the stereotype of contractors as flakes instead of professionals. Gang, if you want to be treated as a professional, and paid as a professional, you have to act like a professional. Start by answering your phone correctly.

When you answer the phone, say something positive: "Good morning", or "Good afternoon." Then tell them who they're speaking with, both the company and the person: "Bob's Construction Company, Bob Smith speaking." Finish with the five words every potential client wants to hear: "How may I help you?" Give it a try and see if you don't get a more positive response.

That's it. Three quick topics. Two of them are sales related, the third is solely about your business stability. Now go sell something.

 

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