Owning and operating a construction business requires a strong will and self-direction, but those qualities can also lead you to hold on to beliefs that limit your profit.
There are lots of opinions on how to pay a salesperson. Your salespeople have to be able to make a good living and provide for their family.
If you employ a salesperson to help you sell something, you need to pay them for their services. I am a firm believer in paying sales people by commission
I’ve long been an advocate for paying salespeople on straight commission. Not everyone agrees, not even all the experts, but in my experience straight commission is the best way to go.
All price proposals need a deadline because you never know when material and labor costs will increase rapidly.
Construction sales take time and your time is valuable. Avoid these common time-wasters when selling construction services.
The purpose of a design agreement is to get a commitment from your client to design the project so you don’t have to do the design for free. How do you keep the design within the budget?
It’s not unusual to find a contractor who sells by deliberately underpricing or underbidding jobs and making up the difference with change work orders.
A business owner in the UK asked a question that illustrates that remodeling sales challenges are the same regardless of your location.
Getting a commitment from potential clients is critical if you want to save yourself a ton of time and work putting together an estimate that won’t go anywhere. You have better things to do with your time.
Budget doesn’t need to be a major worry during the design and build of a project if you handle it properly during the sales call.
Sales is about communicating and interacting positively with others. Those skills make life easier in any delicate conversation.
I want to share a recent phone conversation with a contractor concerning a problem they were having with a client.
From a contractor: “I am definitely going to do a better job in pre-selecting my clients after this one.”
A contractor sent us an online article written by a real estate investor with the purpose of educating you on “how to develop a fair relationship with your contractor.”
A guest article: How do you avoid going out on sales calls to look at jobs for folks who obviously do not qualify to purchase from your company?
Is there anything you can do about the sales you miss?
“The #1 reason I lose jobs is ‘your price is too high.’ What am I doing wrong?”
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.
Give clients options when you quote the work they want done.
What do you do when your partner is listening to someone who knows nothing about construction, but still thinks they knows what’s best?
We’re aware that homeowners also visit our website. This letter is from a first-time homeowner who’s ready to buy, but his builder isn’t cooperating.
The last thing I want to do is cause a family problem, but apparently I did with one family.
Flaky contractors make us all look bad. But not all advice given to homeowners to protect themselves from fraud is good advice.
Avoid losing money by recognizing some of the games that building owners play to avoid paying.
When something seems amiss, don’t stop asking questions. A contractor shares his experience on a recent sales call.
Clients are changing, and if you want to stay in the game and make something more than a living, you’ll need to change with them.
You should stop providing free estimates. It’s called free consulting, and you won’t be successful giving away your time. (Guest Article from David Lupberger, Remodel Force)
We discussed design agreements last week; today we’re going to look at them from another angle. The first step is setting the budget with the client.
A contractor we’ve known and worked with for many years sent us a note about his experience working with a new architect. Ideally, the architect would have been working with the contractor from the beginning so he could have educated the client as well.
A good guy we know was recently working with a potential client when he ran into some concerns.
It’s smart to specialize on the work that makes you the most money. It’s even better if you know contractors who can pick up the leads outside your specialty.
If they called you, doesn’t that mean they need or want the work done?
The topic is uncomfortable but if you’re involved in residential sales, you’ll see family disagreements. It helps to know what to do.
Many contractors who write us are having a problem with their business, and in many cases, it’s because the contractor has lost focus on what’s important.
Should you let a client work on the job they’ve hired you and your company to build?
Since the end goal for both the architect and the contractor is a satisfied client, how about working together from the beginning?
It’s amazing the things a potential client can think of to get you to lower your price.
The one question too many salespeople stumble over is the budget for the job. They are worried that it looks bad to ask.
Is transparency the way to go when selling? Be careful who you listen to.
We recommend setting goals every year, beginning the process about now. If making a profit is one of your goals, Michael outlines practices that will help.
We were recently asked about an online service designed to make it easier to handle sales calls.
A survey outlines the challenges homeowners say they’re facing when they remodel or renovate their home. It’s valuable info, because it tells you what they need help with. It’s your job to show them you can provide that help.
A recent Houzz survey confirmed what you need to know if you’re in sales; it’s not all about price.
What do you do when a potential client waits until the proposal is together to request itemization on the project?
An objections book is a history of your sales calls. It includes everything you said and did, right or wrong. I have only met two or three others in my thirty-plus years of direct selling who took the time to compile a book, but each one became outstanding in their profession.
A building owner challenges our statement that contractors shouldn’t itemize their estimates.
In our book, Profitable Sales, A Contractor’s Guide, we discuss the need to set the client’s budget for a project. One of our clients sent a note recently that explains why setting the budget up front is important.
I’ve been around the construction industry long enough to know that it isn’t always rosy. When a recession hits, construction is one of the early victims.
If you’re doing service work, make sure your client knows what to expect before you start.
I’ve been reading advice in a few construction magazines on how to sell to millennials, and I don’t understand the fuss.
Some business relationships turn out badly; with experience, you can identify and avoid them.
Generally speaking, when potential clients don’t want to make a commitment but want to keep your paperwork, they intend to shop it around.
Too many homeowners believe they need three bids for their project. The intent, of course, is to compare proposals so they can make the best decision.
Some clients want the lowest bid for their project, and nothing else matters. It’s your job to try to educate them.
Does subcontracting raise the price of the project?
One-legged sales calls. Frankly, this is much to do over a problem with a fairly simple solution.
Are you bidding on jobs, or are you selling them? There’s a difference.
What you do has value. Respect your time and your knowledge.
Sometimes a potential client expects you to work for free. That’s not a smart route to take unless you have a lot of money in the bank and time on your hands.
On a sales call, if you’re speaking and your potential client is thinking “so what?”, you’ve lost them.
When your client wants a lower price, something has to change. It shouldn’t be just your price.
Given how valuable leads are, once you get one, you need a sales procedure to help make the sale.
It’s cheaper to ask questions than pay for mistakes. A coaching client is trying to fix the problem created by an former salesperson’s expensive omission.
Can you be too professional? A contractor shares the story of a sale that he was told he lost because he was dressed too professionally and responded to questions too confidently.
When I think about major influences on my sales training, I think of Tom Hopkins. He was an outstanding salesman who become a gifted sales trainer, and I still receive and read his newsletters.
A design agreement is nothing more than an agreement to work with the client to design their project. That’s not the final goal of a remodeling contractor; your business is about building projects.
A referral fee is what you pay to the person who provides you a lead. A sales commission is what you pay a salesperson to close a sale.
A potential client wanted to get a bid on some work at her home. Our coaching client was pretty sure the lead was dead, and wanted to know if she should have done anything differently to have made the sale.
If salespeople know the business owner will back them up and pay them fairly, they’re motivated to produce profitable sales. If they aren’t motivated to make sales, the business is in trouble.
Real or fake outrage can be a client’s attempt to elicit an emotional response from you to get what they want. It often puts you in the position of questioning yourself and your company, not dealing with the subject at hand.
Every once in a while, your phone will ring and the potential client on the other end will tell you they want a bid today. What should you do?
Never let your final payment exceed 2% of the sales price. And your contract should include a finance charge clause for payments not made on time.
Sometimes they request you use employees instead of subs, or work on a T&M basis. Clients don’t understand how the construction world works. It’s your job to educate them.
A major mistake contractors make is to tell a client they can’t start the job for 3-4-5 months. “We are backlogged, can’t possibly start your job before then.”
What if you agreed on a price, now customer wants all receipts for material? Without a clearly written fixed price contract, it's a problem waiting to happen.
Cutting your price to get a job is a money losing approach. Over time, you won’t be making a profit and you’re only working yourself into debt.
My clients are constantly chiseling me down, everyone makes money on the jobs except me.
Many of our website visitors aren’t contractors, they’re clients looking for help with a Cost Plus project gone wrong, or wondering if their contractor is overcharging.
If you're a remodeling or new home contractor, how can you get clients to make their selections before you write the contract? Make it easy for your client.
What’s the average cost per square foot for a remodel? Average contractor markup? Average contractor fee? There is no average anything in construction, and here’s why.
Address their fears so they feel safe purchasing from you.
From time to time, you will go out to see a potential client about doing work for them and they’ll ask if they can choose their own subs for their job.
Ten Cardinal Rules for residential construction sales.
You don’t have to be competitive. You have to be profitable. If you aren’t profitable, your business won’t last.
Don’t worry about what “the other guy” is charging.
“Your price is too high” means you haven’t done your job as a salesperson.
Cancellations happen, even with the best of salespeople. Clients have all kinds of reasons to cancel an agreement, and you need to be prepared.
I read an article where the author talked about passing savings on to clients. This sounds well and good, but place it low on your priorities when putting a job together.
Construction (with the exception of new homes) is a service business. Your focus can't be on putting pieces together to build a job, it has to be on your clients.
I wrote a Blog post for another company recently stating that I didn't think it very smart to negotiate the price of your work. A reader agreed with me and said:
This potential client had a house built using the “lowest bid” contractor. The builder cut corners, leaving out little details like collar ties on the roof rafters.
Someone asked me recently if I thought a salesperson for a construction-related company should help provide leads, and how many. Yes, they should help provide leads.
Most contractors I talk to believe their neck of the woods is different. They believe their clients are more difficult to sell to than anywhere else in the country.
She got a call from a guy about cleaning 300 feet of his driveway. When she told him her minimum trip charge ($300), she heard the famous, "Your rates are too high!"
I was reminded again recently of the need for in-house training on what it takes to pay the bills in a construction related company.
One of our goals is to improve the image …
The contractor presented a design agreement with a $3,000 fee to design the job, 1/2 of the fee would be credited back when a contract was signed for the final job.
I read an article telling general and specialty contractors to give itemized estimates. Oh joy. It talks about goodwill, trust, comparing estimates, and other tripe.
If you are in business, you are in sales. No rationalizing, you are in sales. If you don’t sell something at a profit, you are going to go away.
If you’ve been in construction sales very long, you’ve met potential customers who ask for an estimate, but after a lot of work you learn they were just shopping.
A coaching client was working with a potential customer who wanted a remodeling job on a cost plus basis instead of a fixed fee contract.
If your employees consistently take longer than you estimated, you need to change your method of estimating. The human body can only work so fast.
Respect your time – get paid for the work you do.
Design agreements, letters of intent – get paid for written quotes.
Just a quick reminder. Be sure to put a limit on the length of time your proposals are valid. That time should be a maximum of 3 working days, no more.
As a relatively new contractor, how do I win over prospects that are “looking for quotes” – homeowners who are “getting three bids” for their construction project