How You Avoid Being a Commodity Contractor.

This is a follow up to last weeks, commodity contractor blog post.

I had the pleasure of having coffee with a very wealthy client that turned into a very expensive lunch and great conversation. Luckily, he paid.

Somehow our conversation between two men took a drastic turn when the topic of Nordstroms started. We have a local Nordstrom in Tampa that his wife was shopping at while we had coffee.

The only thing I knew about Nordstrom is they sold higher end clothing/shoes and to keep my wife away.

I asked, "Why does your wife like Nordstroms"
His answer was priceless, "My wife can spend hours in that store, they have a personal stylists that assists her every step of the way. She likes the layout of the store, very open and welcoming. She earns points on her Nordstrom Card toward future purchases. She goes to the other stores Neiman Marcus, and Saks but, really goes back to Nordstrom for the personal touch. Lastly, the stylist will call or email when they have new arrivals that fits her style."

I would typically space out while another man talked about a department store. I found myself asking more questions. I was curios to see buying habits of higher end customers. Customers that could choose to shop wherever they wanted but, found themselves spending thousands of dollars in one store.

My findings and how they pertain to Contractors:

Nordstroms has 5 competitors in the market place. They have carved a great niche with high end and personal services. The wide open store layout invites customers to freely walk through the store and take in everything Nordstroms has to offer. Lastly, the return policy is 100% Guarantee.

Enough about Nordstroms.

Ways not be a commodity and more like Nordstroms:

1. Position yourself as the expert. If you are the best at what you do, you dont need to talk about being the best. Show your expertise with articles, and answering questions on community dashboards. Highlight your projects through social media and be open to answer questions and let prospects freely look around.
2. When customers arent asking for your bid or price, but when they can get on your schedule. Welcome to the Nordstroms experience. You are the contractor they want and will wait until your avialable.
3. Your 100% satisfaction Guarantee. Offer that longer warranty, your business uses better materials and trades. Extend the guarantee and warranty.
4. BONUS. Stay in touch with your customer. Thank you card or pictures taken during their project with personal note from you. Bottle of wine with your label. Anything that keeps you top of mind.

Creating a higher end niche keeps you out of price wars. Spending more time on higher end will garnish higher profits and better referrals. How do you want to spend your time price wars or profits?

Want to know more about selling to higher end? Call me or send an email.

Justin 727-644-0160 or Justin@ContractorsNetworking.com

Are You A Commodity Contractor?

Are you a commodity contractor?

I was recently asked my niche in the local market. I explained what I do better than anybody else. Then I proceeded to explain why I do it better than anybody else.

The prospect I was talking with called 8-9 companies and told me they all sound the same. The ones that did call back, I cannot differentiate between any of them.

I simply told the prospect, I cannot help them. You will waste your time and everybody else searching through these commodity contractors.

I had an AHA moment just then.

DO you have that awkward moment where the prospect asks "What company are you with again"?

Sometimes I want to hang up the phone and other times I say my name and company.

If you cant create a distinct difference between you and other contractors, you are a commodity contractor.
How do I know if I am? Here are some examples:

1. If you constantly lose jobs to price. COMMODITY
2. If your marketing is exactly the same as competitors. COMMODITY
3. If you strive to be the lowest, and brag about all your jobs. COMMODITY
4. If your telling your team to wait and cash their checks...DRUM ROLL....COMMODITY

If your stuck and cant figure out how to get out of the rat race, I can help call me.

If your ready to increase leads and profits, email me.

If this sounds like your business. Call me or email: Justin 727-644-0160 or heavenly.foundations@gmail.com

Is Price Per SQFT Coming Back?

I drove by this sign last week while riding from Pinellas to Hillsborough. The big debate was going through my head.."Do I call this company and tell them to up their prices..or...Do I call them and remind them price per sqft ended in the 80's"

I figured I would just write to everyone and get some opinions.

For those of you who don't know price per square foot, I will give you a little back story.

During the good old Reagan years when interest rates were 18+% builders had several different home models, these models came with limited choices and could be figured out by the sqft price instead of calculating in all the different trades and selections. This was great for buyers that would pick A,B, or C.

In today's world with all the different choices, price per sqft doesn't work. Prospects will still try to ask about the sqft price and good contractors quickly explain.."It doesn't quite work that way..."

My local market, Tampa Bay Area you cant build for $90/sqft and make a living. Not possible, if I had to figure out per sqft on my last couple of deals, the median would be around $144.

Please tell me what I should do in this situation? I dont want these guy bringing this back to my market..

Are You Selling What People Want?

In my everyday business I run across a lot of people who think they know what they want. In truth, they have no idea.

I recently polled all my current jobs and the past thirty jobs completed. I had two customers that knew what they wanted. Two out of Forty, Approximately 5% knew what they wanted.

My question to you, how do you know your selling what people want, if only 5% know what they want?

Do you sell your products? Do you sell what you think they need?

My formula to make sure your selling what people want:

1. Sell based on results. (This is my secret sauce.) 
• Listen to what people want. 
• Reiterate to them what they want. 
• Add your professional opinion and thoughts. 
• The customer will get what there asking for and you add value by giving a professional opinion to re affirm the customers choice.

Can You Estimate This Small Project For Me?

"Hey Justin, were loving the new kitchen and bathroom and wanted to know if you can help with an exterior door and some trim?"

I got this call yesterday from a great client. In 2012 I did a very large remodel to their house and now they have an exterior door and some finish work they want done. The scope is no more than $1200 and doesn't fall in line with my everyday work.

I know others have been in this dilemma..Do I install or refer out?

I figured I had some options:

A. Suck it up. Its my client, install the door and quite crying about not making money.
B. Call my Finish Carpenters and hand them over scope and client referral.
C. Man, Mrs. Smith great hearing from you but, I cant help right now...Maybe in 45 days I can get to it.

Do you have other options?

Selling With Heart Still Requires Profit

I recently sat down at a coffee shop to have a serious conversation with a residential contractor. This contractor was struggling financially. He had plenty of work going and his sales funnel was packed. After a little bit of conversation I realized that his sales formula was incorrect. He enjoyed the art of selling but never took into account markup is different than profit. 

He would take his cost to handle the job and add 10%. The 10% he figured was for him. After taking some time over coffee and explaining to him you  must include your money in the job, along with your profit, then mark everything up.

The light bulb that went off that day was priceless.

Further, he was not job costing. Didn't have a handle on receivables. A hot mess he was.

I asked him if he ever read the book by Michael stone, Mark Up and  Profit? Michael did a great job in the book explaining profit and markup.  I gave him some quick pointers on how to get out of the situation and start estimating accurately:

1. Don't accept another job without at profit at a minimum. Customers will give you work all day long and     not care one bit if you're making money.

2. You will raise your prices. Don't sell yourself short.

3. You will have to start tracking your jobs to make sure your marking up appropriately. Simple formula        for contractors:

           Sales-(Overhead + Profit) = Job Cost

           Sales/Job Costs=Markup

Before he sold anything after that point I got a couple calls to make sure for estimating accuracy. 

Do you have similar situation where you hadn't a clue you were estimating incorrectly? The jobs were there but, no money once done?

Give me your comments below. 

Selling Results To Increase Profits

I recently had the pleasure of meeting with a customer to about remodeling their pool. I typically don't tackle pool remodeling but, decided because of the referral to look at the project.

I met with the customer who explained they wanted the above picture in their backyard.

My first response, "This isn't your typical pool remodel" Here is what I can help you with on this project:

1. Establish the plan of action that will be needed to get you the pool and spa of your dreams.
2. Coordinate the designer and pool remodeler.
3. Maintain contact with trades.
4. Coordinate with the building department.
5. Weekly meetings with you to discuss changes and projected dates of completion.

I sat in their kitchen and discussed how the process works from start to finish and I would be subcontracting everything out.

The owners response was priceless. "Justin, your transparency and being able to recognize what you can handle and cant is the reason your in business today. The reason we also want to move forward with having you handle our remodel for your FEE."

I have never had that response from a prospect. But, I realized after seeing the project and they had no clue how to get started. The value I offered was helping them get focused and started.

Think about this for a second.

• No testimonials for pool renovations
• No pictures of completed pools
• No pretty pamphlets on pool remodeling. 
• Nothing. 

Take Away: By focusing on the results the customer was looking for and not over extending my capabilities the customer recognized the value. 

I gave my professional opinion and outlined what they will need to do and how I can help. Concentrating on what you can do to get the customer results far out weighs what you cant do.

Give me your experience on this below in comments please?
Justin