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Construction Programs & Results Inc

We Like to See The Good Guys Win!

Sticking to the Budget

by Michael Stone

Potential clients always have a budget for their job. They have at least a rough idea of what they can afford or expect to spend on a project. Unfortunately, it's not unusual for them to make changes to the job and expect you to keep the price the same so they can stay within that budgetBudgeting.

If you've read our book Profitable Sales, A Contractor's Guide, you know that establishing the budget for a project is an absolute necessity. Once you know the budget, you can design the project to meet that budget.

The budget isn't a single figure, it's a range. If your client needs help, give them ranges based on the work they want done. We discuss how to do this in detail in Chapter 7 of Profitable Sales. When asked correctly, a serious client will almost always let you know their price range. If they won't, either they don't trust you yet, or they aren't serious about the project.

Let's say you design the project to meet their budget and they sign a contract. The job starts and on the afternoon of the third day, she comes up to you and says, "George, while you're here . . . " or, "We stopped by the cabinet showroom yesterday afternoon and saw a different cabinet style that we like a lot better than the ones we originally picked out."

They want to change the job, and that means the numbers must change.

Many of these changes can be prevented if you do a good job during the sales process. If you ask enough questions before you estimate the project and write the contract, you can reduce the number of changes significantly. Your questions will force the client to think through what they want, covering every aspect of the job. When you've asked enough questions, your client will know exactly what the project will be and what they will need to invest to get that project built.

Make sure they understand that when the job changes, the price changes. Explain to them how changes will be handled once the job starts and include a description of the change order process in the contract. Don't assume anything; tell them and then put it in writing.

When you've explained this to them, they should know you won't add something for free. They know you'll write a change order and charge them for the additional work.

Stay focused and stay tough. If you're wishy-washy, you'll be expected to throw in changes for free. They need to know that there are no free lunches. They don't work for free, and you don't work for free.

The best way to stay focused is to remember the last time you were burned. Remember what it cost you, both in dollars and in irritation. Think about what you should have said to prevent it from happening. Then when the next client starts talking about freebies, say what you should have said back then. Get paid for everything you do. That's why you're in business.

Michael's Comments

We have one month left in 2016. Many of you have called and asked for help this year and we were there for you. Others have called, asked if we could help, and we never heard back. Let us help you figure out what it is in your business that isn't working. We want to help you down the path to a profitable future.

Do it for your family. If your business doesn't allow you to take a paycheck on a regular basis, large enough to cover all your family's needs, then it is time to get some help. You owe your family that.

Let's make this the best Christmas ever for your family.

 

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