Here’s a small sampler of our Fast-Track, Super Profit-Building Strategies
CONGRATULATIONS! The fact that you stopped to think about building your business, instead of just ‘building something for someone else’ … is a great starting point. So we’d like to give you a ‘taste’ of 11 of our profit building strategies … for free. (Just click the arrows in the orange panels below)
Don’t be fooled by the apparent simplicity of some of these ‘strategies’. And whatever you do, don’t find yourself saying “That’s just common sense”. As the saying goes, ‘Common sense is the most UN-common commodity’. This represents over 60 years of combined knowledge in the building industry and marketing.
Just one idea from these points could be the very catapult you’re looking for to grow your business and boost profit.
One more thing … The strategies we’ve shared with you here are just a tiny sample of the vast resource library of practical tools, strategies and systems you can access in our industry-specific business programs. And we’d welcome sending you more information on those too.
But in the meantime, browse (and apply) these eleven ‘sampler’ strategies.
Talking about the power of common sense ... this first one is a hidden powerhouse of potential. But most builders fail at it every working day.
It’s about dealing with those enquiries you get, perhaps while you’re on the job.
You get enquiries right? Voice messages on your phone. Enquiries via your website. Maybe you answer a call, say you can’t talk right then, and that you’ll get back to the caller.
Here’s a secret. Studies show that the company or individual that gets back to the enquirer fast, has a way better chance of winning the business.
That study even looked at that likelihood to win the job when the company responded within an hour, within a working day, within two days, etc. And the results were amazing.
Those companies That got back within minutes were seven times more likely to get the sale than those who took a day, and multiples more compared to a company that took two days.
Now your common sense will probably tell you why. Responding fast not only ensures that the enquirer will still be in the right ‘headspace’ they were in when making the enquiry (and not now thinking of picking the kids up from school, or rushing to an appointment) ...
Responding fast also gives the prospect an impression that you’re really ‘on the ball’. That you care enough to call back promptly.
Which means you’ve got all the advantages of having your unique sales message heard first, and to setting an appointment time long before your competitors (finally) call the prospect, (or if they call in too many cases).
So Strategy #1 is simple ... call back fast. You never know when a random enquiry may turn out to be your year’s most profitable project!
There’s a great temptation in the building industry to ‘save time’ by just making an appointment to go out on site to see the prospect, without an intensive discussion on the phone first.
It’s quick, it’s in the diary, and you can get back to the job at hand.
But unless you qualify the lead, how do you know if it’s going to be a productive visit to the site?
You risk running all over town like the proverbial headless chicken, fighting traffic, giving up hours of your time, and when you get there, realising you’ve wasted huge amounts of your life on a lead that just wasn’t right for you.
- The job was too small for you
- Too big
- The prospect just isn’t ready to do anything, and was making a casual enquiry
- When you get there, you see they’ve already got a handful of quotes, and are trying to get the barebones lowest price, where there’s just no margin left
We could go on! We’re sure you could add another six examples yourself!
The point is, failure to qualify effectively is one of the biggest drains on the energy, motivation, productive work week and profits for countless thousands of hard working, well meaning individuals in the building industry.
So how do you qualify leads effectively? It comes down to knowing how to ask questions in the enquiry phone call.
Now, some individuals think that asking questions is being ‘pushy’ or aggressive. But the opposite is true. When you ask the right questions, and explain why you’re asking them, you become the expert.
Think about when a doctor first interacts with a patient. They ask lots of questions. And by doing so, they not only probe the real needs of the patient, they give confidence to the patient that this doctor knows what he or she is doing.
Likewise, when you explain on the phone that you’ll be asking questions so that you can best determine the needs of your enquirer, and that it’ll help you advise them if you’re the right person for them, you position yourself as that expert.
Chances are the prospect is going to be thinking, “Wow! No one else I’ve called has asked these questions. This person is different”.
And you know what? That is what is going to go on in their mind. And better yet, it’s going to take the focus of the conversation right off price, and onto the great solution you can deliver for them.
Make sense? It sure does. And it’s one of the most powerful strategies to develop in your business. It’s so important, it’s one of the key strategies we teach in great depth in our business systems.
We warned you this would be all commonsense! And this strategy may appear too simple to be of any importance. But it is hugely important.
What do we mean by ‘looking the part’? Very simply, when you arrive at the prospect’s home or site, turn up looking professional.
If you’ve been in work clothes with concrete spills or mud on your boots, change into a clean uniform. And turn up in a clean vehicle. Have a professional folder with you.
And turn up on time. If you can’t, call in advance to say how many minutes behind you’ll be.
Indeed, if you really want to stand head and shoulders above your ‘average’ competitors, phone when you’re going to be on time! You’ve no idea how much that blows people away.
People typically expect tradespeople and building contractors to be late. When you’re not only punctual, but actually phone from the vehicle to say so, you are a rarity.
You’ve made a huge positive impression even before you walk up the drive! Simple as it may sound, but that huge impression is a big part of winning the business, and winning it at your price.
What? Is that a profit building strategy? You better believe it! But it’s when and how you use those tools that makes the difference.
This is most especially important when you’re talking to a prospective client about a major project .. a deck, a pool and surrounds, a landscaped garden area.
You see, with a pencil and eraser, you can start to ‘paint the picture of their dream project’ and get them to see it unfolding before their very eyes.
Neville Cox can testify to this.
Sure, he’s somewhat gifted at drawing a rough conceptual in front of a client, but as he’d tell you, (and he demonstrates in our High Value Selling training video), the prospects lean in, get really involved, and excited at how their project is going to turn out.
That humble pencil and eraser (the eraser is used to change ideas as you work with the prospects on their dream) ... enabled Neville to sell $180,000 pool projects when his competitors were quoting on an $80,000 pool.
And of course, the message in that is ... never assume what the client really wants or can afford. Just because they nominate an initial budget, doesn’t mean that is what they’re really prepared to spend to realise their dream.
Again, in our business systems, Neville goes into a lot more depth on how to harness that pencil and eraser as powerful sales tools, but suffice it to say here, if you can draw even a rudimentary conceptual of the prospects ‘dream project’ in front of them, you’ll have them excited about working with you.
In our business programs, we tell the story of a painter named Jim, who had a small painting business in a tiny country Victorian town.
His challenge was that there were 17 other house painters in town, all competing on price to win the available jobs.
Jim confessed he was burning himself out, doing endless quotes, cutting his margins, and struggling.
But things changed when he came to one of Chris’ business workshops.
He realised not only that he should be proud of his prices, but that if he could educate his prospects to why his prices were what they were, ‘good’ clients would value that and he’d win the work.
From that point on, when his phone would ring, instead of going into quote mode, he would start the conversation by saying, “Thanks for calling. Before we start, I just want to let you know that I’m the most expensive painter in town”.
You can imagine what happened. most callers would say, thanks and hang up at that point. But some stayed on the line, intrigued as to why he was ‘the most expensive’.
This gave Jim a wonderful opportunity to explain that he used only premium paints, that he only employed qualified tradesmen ... he’d explain the extra care and time he’d go to in the preparation phase, prior to painting, and why that meant a longer lasting, quality paint job. And so on.
To cut a long story short, Jim’s life changed dramatically.
His qualifying process on the phone, and his pride in his price, meant he worked far less hours, won the best, more profitable jobs, and got the highest rate of referred business in town. Is this practical in a ‘cut-throat’ building industry environment?
For a start, the industry is not as ‘cut-throat’ as many people think. Yes, there are the ‘price shoppers from hell’ out there when you’re dealing direct with prospective clients.
But really, do you want to cut your margins to get that sort of business? Wouldn’t it be better to leave it to your competitors to fight over those scraps?
There’s a great piece of wisdom that says: “More often than not, the seller has more problem with price than the buyer ever will.” In other words, buyer decisions are not driven by the lowest price.
Sure, ‘price shoppers from hell’ aside, people will fish for a discount sometimes. Why wouldn’t they? They’ve been trained to do so by discount-obsessed tradespeople!
But get this ... a discount is not really what they want, (even if they ask for it at some point in the negotiation). Most people want the best value solution, not the absolute cheapest price.
Let’s say you’re looking at a project to add a deck to the prospects’ home, or a pool, or a landscaping project.
Think about it. The home is possibly worth a half a million dollars to well over two million today. To those homeowners, it’s a valuable asset.
So would those owners risk a ‘cheap’ job? That is, if they knew it may well massively devalue the home?
Bottom line, when you learn how to qualify the sort of clients you want to work with, and you learn how to educate them to the value you deliver, and the importance of getting a quality outcome, you will win more projects at healthier profit margins.
That is a fact.
In our building industry-specific business programs, we share some startling facts about the impact of discounting. Most tellingly, we provide a chart that reveals the massive negative impact on the profit line of seemingly minor discounts.
Suffice it to say here that each time you discount, it’s pulling money out of your profits. And at the extreme, it can mean that you’re doing a whole lot of work for very little return.
As an indication of that, if (say) you were working on a gross profit of 30%, and you discounted your price by 10%, you’d have to do 50% more jobs at that discounted price to get back to your original profit.
Again, seemingly harmless discounts can cut into profits, in this case above meaning you’d need to do half the number of jobs again, to earn the same profit as without a discount.
Interestingly, those who learn how to be proud of their price and avoid discounting ... and learn how to educate the client so they can actually charge more ... will enjoy a dramatic increase in profit.
And here’s another twist on this. Working on that gross profit of 30%, say you put your prices up by 10%, you could take one week off a month and only work 75% as hard as before, and you’d still be making the same profit you did before the price rise.
No one is suggesting you should only work three weeks out of four, (or indeed, 9 months out of 12 each year) ... but it’s interesting to see the power of a small price increase on your profit earning potential, don’t you think?
If you love numbers, you’ll see the impact immediately. If numbers aren’t your thing, then bear with us ...
The actual numbers aren’t the point. It’s the dynamic we need to focus on here.
For the exercise ... Let’s say you’re just starting out in your own entrepreneurial trades business and you’re turning over $150,000 a year. And let’s also say that your outgoings - materials, fixed and variable costs are $105,000.
In these early days, the business is virtually ‘just you’, so you get to keep the rest as wages and ‘profit’.
Let’s say you take out a wage of $30,000. (It’s not profit until you do!)
Which means: $150,000 turnover
Less $105,000 in costs
Less $30,000 for your wage
= $15,000 net profit.
Your net profit is $15,000.
But the real indicator is your Net Profit Margin. This Net Profit Margin figure as a percentage of your turnover (and multiplied by 100 so it’s expressed as a percentage).
In our example here ... $15,000 ÷ $150,000 = 0.1 X 100 = 10%.
Your Net Profit Margin of your fledgling business = 10%.
Now let’s say in a year or so, your turnover has grown to $300,000.
As the business grows, so do the costs, don’t they? You find you have to take on more people, buy or lease more vehicles, rent premises, increase your insurance cover, and so on.
In short, your overheads go up as you expand. Sound familiar?
Let’s say with all of this additional overhead – added wages, rent, insurance, vehicles, etc –your new materials, fixed and variable costs are $250,000 (up from $105,000).
What’s left at the end of the year now? Lots of exhaustion and stress, that’s for sure! But in dollar terms, you’re now left with:
$300,000 - $250,000 = $50,000 after all the bills are paid.
But don’t forget your wage! You’d probably agree that given all that extra risk and stress, you should be able to take out a much bigger wage for yourself.
But with just $50,000 left in the till, that really doesn’t leave much to play with. So until things improve (you hope), you again decide to take just $30,000 as a wage.
Which leaves you with $20,000 in profit.
Sure, $20,000 is a bigger profit than the $15,000 the year before.
Yes, the business is achieving a higher turnover, and a slightly higher net profit, but ...
The Net Profit Margin – the indicator of its effectiveness in making profits – has crashed and burned.
The Net Profit Margin - $20,000 ÷ $300,000 x 100 – is now down ... from 10% to 6.7%.
If this were your results, you’d have to ask yourself, “What’s the point?”, wouldn’t you?
After working longer hours, taking a much greater risk, with lots more stress ... in terms of ‘profit effectiveness’, you’re going backwards.
This scenario is happening every day in businesses around the country. Many many trade businesses are spiralling into this trap.
Yes, they’re achieving higher turnover, but suffering a lower Net Profit Margin.
And they don’t even know it.
They may feel a gut level sense of frustration that they’re working harder and not getting anywhere, but without the numbers, it’s impossible to see what’s actually happening.
And think about it ... if your Net Profit Margin is getting skinnier and skinnier as turnover grows, it wouldn’t take much at all – the slightest hiccup – to bring the whole business crashing down.
Net Profit Margin may sound complicated. But it’s really not.
It’s a key performance indicator that you must get a handle on if you’re going to build a super profitable business. (No doubt your accountant can help you calculate this figure if you haven’t got the numbers to hand.)
Some years back, one of Chris’ clients came to a seminar and stood up to tell an amazing story of how the strategies he’d learned had earned him an absolute goldmine of new business.
One of the strategies he learned was to add more ‘touch points’ into the interactions he had with clients. Instead of just sending out a quote after visiting the client’s site, he put a whole lot of new contacts into his ‘system’.
After someone had called and he’d qualified them, he’d send out a brief letter to them(this was before emails!), confirming the discussion, outlining what he would be going through with them when he arrived on site, and included a ‘Company Commitment Statement’ that spelt out all the things he and his team do to go the extra mile for their clients.
As well, he always diarised to call the client in advance to re-confirm the meeting time, and then to call when he was on the way to their site.
After the site visit, another brief letter would go out immediately thanking them for their time, and saying how much he looked forward to working with them.
Might seem like a lot of extra work, but even in those days of stamps and envelopes, his business grew substantially quarter on quarter.
And there was another interesting twist to his story too! Because he was now growing and becoming more profitable, he purchased a competitor’s business to expand his geographical reach.
And with the business came books of old quotes that were unsuccessful. (Or so the previous business owner thought!)
In keeping with his new strategy of creating ‘touch points’ with clients, the new owner had one of his team start ringing these ‘lost’ quotes to introduce the new company.
And to his amazement and financial delight, a substantial proportion of them said they hadn’t gone ahead because, (wait for it), ‘no one followed up’! ... and ... that the job was still there for the taking.
He ‘converted’ 32% of the ‘dead’ leads on the first follow up, and a further 10% on subsequent approaches.
He estimated that this one initiative generated around $80,000 for him, which more than funded the purchase of the business he’d taken over!
Bottom line, his ‘Touch Point’ Strategy not only grew his existing business, but uncovered an absolute goldmine of un-serviced business in someone else’s‘ dead leads’. There’s a real lesson or two in there!
You may already do this. Strangely, most businesses don’t. It’s the ’10-each-side-and-20-across-the-road’ strategy.
In short, when you are commissioned to start a project (of any size really), you have a courtesy note or card printed up to advise neighbours that you’re going to be working at such and such an address, (or if privacy is a concern), that you’ll be working at a nearby house, and that you and your team will do everything you can to be considerate of the neighbours as much as possible when it comes to noise and disruption.
Of course, your card also invites the neighbour to call your mobile if they’d like you to drop around while you’re in the area, to chat about a project they have in mind!
We know of one contractor who used to drop a second note in the immediate neighbours letterboxes to say that if they had any small items they wanted to get rid of, they’d be welcome to put them in the mini-skip on the last day. It created lots of goodwill.
Whether that idea is workable or not for you, dropping those courtesy cards ’10-each-side-and-20-across-the-road’ is an inexpensive, quick and easy way to generate future projects.
It fascinates us how many building industry individuals don't do this.
Countless business people have gone broke while their sales are booming. It seems counter-intuitive, but it’s a fact. And one of the biggest causes of business failure, if not the biggest cause, is a lack of working capital.
And overwhelmingly, that lack of cash flow comes from not being paid what you’re owed.
Being instead, you’re an ‘honorary bank’, where you’re servicing someone else’s debt!
The harsh facts are:- The older the debt, the harder to get.
- Until your client pays, YOU are funding their bank balance and their lifestyle.
- Chasing money time and time again saps your energy, your motivation and eats away at your profit. Let the debt go on too long and eventually, you’ve done that project for nothing.
- The fact that being owed tens of thousands of dollars is ‘par for the course’ in the industry doesn’t make it right or in any way acceptable. It’s bad business (you’re effectively running a gift shop!), and it’s just unnecessary.
- And the most valuable advice we can give to you ...- Set things up correctly up front, and you’ll get paid on time, almost every time.
Unquestionably, the big one (that’ll truly revolutionise your cash flow if you do it right) is having a process to set the expectation of payment on time with the client up front, that is agreed to and ‘signed off’ by both parties.
Note, just having your ‘payment policy’ on your invoice is not enough. It’s a good practice, but it’s not enough.
We’re talking instead about getting a personal commitment in advance from your client that aligns with your expectation.
When builders, contractors and suppliers first embrace our business systems and programs, it often takes them time to accept that they actually can tell a client up front that they expect to be paid on time.
And to believe that clients actually will sign off on that. But positioned properly, clients will happily comply.
There’s a whole lot more to this than we can cover here, but as a quick strategy takeaway, be alert that if you’re owed money, and especially if those outstanding funds that should be in your pocket are getting more an more overdue, it’s not the client’s fault in most cases.
It’s because you don’t have the right policies and mindset to take control of being paid promptly.
All businesses benefit from Word of Mouth and Referrals. It is the most profitable, most qualified and easiest to deal with source of business.
Yet almost no businesses have a system for acquiring Word of Mouth and Referrals.
So, how do you get more referral work coming your way? Well, the deceptively simple answer is, ASK for referrals.
Let’s be clear. We’re not talking about projects you might pick up doing subcontractor work.
Instead, what we’re talking about is getting additional project work because of the reputation you’ve developed, where past clients and other suppliers actively refer to you ...
Again, referred clients are typically already largely ‘sold’ on working with you. They’re typically less price focused. And having been referred to you, they’ll know what to expect when you meet them.
Referral business takes a whole lot of the pain out of finding and getting the go-ahead on new projects.
But it’s also a fact that some businesses get a truckload of referrals ... while others don’t. Why is that, do you think?
Very simply, the ones who get the referrals are the ones who focus on ensuring every interaction with other companies they work with, and every interaction with their existing clients – and indeed, with their subbies and workmates ... is a great experience every time.
A positive and memorable experience.
Or in other words, they are the star performers when it comes to creating ‘memorable positive moments’. That’s a powerful concept that is central to whether you’re going to get a huge flow of referrals ... or a trickle.
So how do you make each and every one of those moments memorable?
- Do you smile when you answer the phone – every time?
- Do you give positive strokes to make the caller feel you care?
- Do you ask relevant questions that help problem solve for the client?
- Do you make the best recommendations for the prospect, even if that means referring the job to someone else occasionally?
- Do you turn up on time? Is your vehicle clean? Are you neat and groomed, with a clean shirt on?
- Do you listen carefully to what they’re saying, taking notes so they can see you are paying attention?
- Do you get your proposal to them at the time you promised, and always in person?
These are just small examples of interactions you might have in any busy day. But that’s actually the whole point.
Being a true star performer whose business stands out, over and above the rest, means creating these special things you do, that get people talking about you. And referring work your way.
It begins with having the right mindset. And once you decide that this is the only way to run your business, you’ll find it comes naturally.
And there ’s an extra benefit in this too. When you demonstrate this level of commitment, those team members who work with you on site and inside your business, they too will start to lift their standards.
We’ve only just scratched the surface of how to build a systemic, effective approach to generating quality Word of Mouth and Referrals.
But we know if you do nothing more than make it a practice to always ASK for referrals, and you demonstrate through the quality that you deliver that you deserve to be referred, your business will receive more and more of this ‘pure gold’ business.
Again, the strategies we’ve shared with you here are just a tiny sample of the strategies and systems you can access in our higher-level building industry-specific business programs.
If you’re serious about taking an entrepreneurial ‘growth strategy’ approach to building a super profitable business, you owe it to yourself to explore further what solutions might be right for you. We will be more than happy to help …