5 ‘Must Do’ New Year Resolutions!

It is almost 1 month into 2012 and things are already moving too fast. Hopefully you took a few moments and wrote out your goals for the next 12 months. Written targets and goals will insure you get what you want by keeping you focused. Less than 20% of all business owners actually write out their goals. And guess what? These top 20% are in the top 20% of the most successful business owners in their marketplace. A simple way to start is to write out these 5 goals:

1. Don’t be an island! 
Get involved with a group of like-minded business owners to seek advice, share challenges, get invigorated, and get accountable with on a regular basis. Personally, I made a decision to join a structured weekly group of men who discuss their personal and professional lives facilitated by a top business/life coach in our area. Consider looking into joining one of our BIZ-GROUPS or a local group in your area. Bottom-line – do it!

2. Take time to plan your plays!
Bill gates said that the best thing he did while building Microsoft was to take his management team away on a regular basis to plan for the future. At these regular retreats they discussed their strategy, options, new opportunities, what’s working, what’s not, and what they need to do to achieve their goals. When you don’t plan your future, you get what the market gives you instead of paving your own path.

3. Innovate or die!
Your business won’t work doing what you did when the economy was growing. In a flat economy, you have to change your business and evolve into a new kind of profit making machine. What new customers, markets, systems, technology, people, production methods, contract type, services, and products should you add or delete from your business to grow fast. Sit down and rate every part of your business as: keep doing, stop doing, start doing, or change how we do it.

4. Revamp your calendar!
Your calendar says it all. If you want to save money, your calendar is full of job meetings, ordering materials, scheduling crews, and doing take-offs. If you are focused on making money, it’s full of time with loyal customers, new customer targets, networking, mingling with potential customers, and building relationships. At least 33% of your time needs to be with customers having fun and enjoying each other. Make it your goal to revamp your calendar and pro-actively grow your business.

5. Put yourself first!
When I coach business owners, we always look at the income statements to see how they are doing. I almost always notice that business owner pay themselves way too little for the time, risk, and work they perform. In addition, their investments are often slim or none. When you put other people, employees, and customers ahead of yourself, you can’t do the best you are capable of. Customers want to do business with successful people, not poor struggling people. Make a commitment to pay yourself what you are worth and start an investment program starting now. Then spend the rest on overhead and expenses.

Do-Over #2: Diversify, Market & Serve Customers Sooner Than Later!

When business is steady with lots of bidding opportunities coming your way, it’s easy to keep busy working for a limited number of customers doing the same type of projects. This business model works during a good economy. Once you establish a few repeat customers, they continue to feed you work to bid on. You don’t have to go out and find new customers. You don’t have to market or sell. You don’t need an updated brochure or impressive website. And you don’t have to have a customer service or follow-up program. Work is easy to get: wait for the phone to ring, pick up a set of plans, and go bid the job. If you bid enough, you’ll get your share.

The second most popular “Do-Over” I hear from seasoned business owners is they wish they would have built up a broader base of customers, worked on many different type of projects, and developed a solid marketing and referral program that delivered diversified types of profitable work. Today I hear sad stories of underground contractors who kept very busy only doing private housing tracts for a few homebuilders. I also hear similar stories from contractors who didn’t want to mess with government jobs because of all the added paperwork. And I hear stories from companies who didn’t add any extra services like green technology, design-build, post construction services, or maintenance to attract and keep customers. These companies are now left without any customers.

The Business Do Over!

In sports, the coach gets to start over every season. Winning coaches look at their past records and make positive decisions of what they need to drastically change and achieve better results. If they continue to play the game the same as they did last several seasons, they won’t continue to build and win. They have to look at how they play the game, players, coaches, methods, offense and defense, training, strategy, and tactics.

Now imagine it’s your turn to start a new season. You are the coach of your business and want to keep your job and make a lot of money for the owners. What should you do differently to win the game of business? What tough decisions should you make? What new plays will you call? What players should you replace? Where should you play the game and how? Will you keep doing what you’ve always done or decide to do whatever it takes to grow your business and make a profit? Below is the list of the top “Do-Overs” I hear from the many business owners I have surveyed.

Do-Over # 1: Invest Sooner Than Later!
When your business was busy, you didn’t have enough time to stop and look for investments. And you were growing, so most all of your cash-flow went to fund your company’s growth. The snowball effect was keeping you excited as your business got bigger and bigger. It was like a shot of adrenaline as you did more and more work. The more you grew, the bigger you wanted to get. Volume is addictive, so you bid work too cheap and never missed an opportunity to grow or gain a customer. Everyone thought this gravy train would never end.

If You Could Start Over, What Would You Do Different?

Think of all the decisions you made over the last five to ten years that affected your future and where you are today. Now think of all those decisions you didn’t make you wish you had. Remember when you were busy signing new contracts, getting plenty of business, trying to juggle all your commitments, scheduling crews, putting out fires, and doing everything you could to keep everyone happy? During this time it was hard to do everything you wanted to do.

What Is Your Bidding Strategy?

After you have established reasons why customers should hire your company, now it’s time to find jobs to bid where you can be successful. Your overall estimating and bidding strategy is to get enough signed contracts at your price to cover your job costs, overhead, and then make a profit. This requires several winning plans. The first strategy is to have a strategy! Many contractors bid any job they are offered to bid. They don’t have a strategy that helps them decide which jobs to bid and when to say no. What’s your estimating and bidding strategy?

Before agreeing to bid a project, create a list of questions to determine if you will have an excellent chance to win the contract.

 1. Do you want to negotiate the project?
- How will you convince the customer to negotiate with you?

2. Do you want to be the select or only bidder?
- How will you implement this strategy?

3. Do you want to get the last look?
- How will you make this happen?

4. Do you know your bid-success ratio against your competitors?
- How do you keep track of your success versus competitors?

5. Do you have competitors you don’t want to compete against?
- How will you discover this information?

6. Do you have some competitors you will bid against?
- How will insure the bid list gives you a chance to be awarded a contract?

7. Do you have an ideal number of bidders you’ll bid against?
- How will you insure this happens?

8. Do you have a maximum number of bidders you’ll bid against?
 - How will you decide when not to bid a job?

Can customers really tell the difference between your company’s bid proposal and your competitors?

If all else is equal, the only differentiating factor between your company and your competitors is the lowest price. What do you do to stand out from the crowd? To set yourself apart and charge a higher price, you must be different than your competitor. Differentiation can include doing more than your competitor for the same price, being the expert or specialist in a particular type of work or project, adding more value than required, or having a deep loyal trusted customer relationship.

Give customers a reason to hire you!
The best way to win a contract is to have a relationship with your customer that goes beyond doing past projects for them. It is based on trust and friendship developed over time. It is built by spending lots of time together having fun fishing, golfing, or doing other activities together not related to work.

If you don’t have this kind of loyal customer relationship, you have no other choice but to differentiate your company from competitors. Low price is one way and creating and offering real differences is another. Before you bid the next project, ask yourself why the customer should hire your company for this project. Are you better or faster? Do you have more qualified trained people who know how to perform this type of work? Can you help your customer make more money?

As you create a list of reasons the customer should hire your company for the project, think about what you offer that no other competitor offers. Think about what else you can do for the customer that is not required by the scope of work. Think about how you can help your customer meet their goals, make more money, increase sales, grow their business, build a better project, reduce risk, or have more fun while working with your company. I know what you are thinking: ‘We don’t get paid for all those extra things!’ If you want to win jobs today, you must do more than the minimum.

After you create a list of three to five reasons why you are the best choice for your customer to award this contract, what will you do to prove your company is the best choice? In your proposal you can include a list of past projects where you beat the schedule and delivered results that made the customer excited about your company (this is more than the standard reference list). Include pictures of completed projects similar to the one you are bidding on. Include a draft schedule showing how you can help your customer complete the project ten to twenty percent faster than a normal contractor can. Schedule a field trip with your potential customer to other jobsites where you can show them how you solved difficult problems. Give them a list of added services your company will provide if awarded the job. Offer a guarantee such as completion date, punch-list completion, quality, or added warranty they will not get with another competitor.

Low Bid Gets the Job In Public Work

In public works construction, the low bidder usually gets the job and there is little or no room for sales strategy or tactics. The best way to be the low bidder and awarded a contract is to have the lowest possible costs and the most efficient construction management and field operation possible. To keep your costs lower than your competitors, your field crews must be lean, productive, and well trained. There must be no downtime, job problems, quality issues, coordination conflicts, or mistakes. Your subcontractors and suppliers must also be supervised and managed tight without gaps in scheduling, productivity, conflicts, or quality. This can only be accomplished with diligent leadership, accountable management, and ongoing training focused on productivity and efficiency.

Now you are in the sales business!
In private work, it takes a lot more than just bidding and negotiating to win contracts. You’ve got to give customers a differentiating reason to hire your company. It’s not just about the price, inclusions, and exclusions. Now there are too many competitors who can do the same job as your company and will cut their bid below their cost to get a job. To win more contracts at your price, you must face reality. You are not in the construction business. You now have to also be in the $ALES business!

Win More Contacts At Your Price!

Every construction company business owner wants to charge a higher price for their services and products. And especially today, I’m sure you are looking for the magic ingredient that will give you more jobs at your price. But why should customers award your company a contract? In this tough economy there are less jobs to bid and more competition. Many of your competitors are pricing jobs at prices lower than their costs. They are trying to keep their doors open and crews busy hoping something good happens soon. Ask yourself this question:

Why should customers award your company contracts at your price or higher than your competitors?

It is what it is!
Perhaps you are starting to realize that it’s not what it was. The new economic reality is here to stay for at least 3 to 5 years. If it hasn’t hit you yet, get ready. Just a few years ago you could do a pretty good job and get lots of work from your customers. But today, your old sales strategies won’t get you enough work to stay profitable. It takes more than doing a good job, producing quality work, and bidding projects per plans and specifications to win contracts. Now, you must do more and offer something different than your competitors to win contracts. You need to renovate, innovate, change, improve, and upgrade your estimating systems, bidding strategies, proposal format, presentation methods, customer contact approach, marketing plan, and sales tactics to be successful today.

I started my construction company in 1977. At that time there was not a lot of competition and getting work was relatively easy. Through my business contacts, I could find a nice job to bid, call the customer, meet them, get a set of plans to bid, do the take-off, estimate the job, and then turn in my proposal with a reasonable mark-up on it. A few days later I would call to see if I could meet with the customer to review our bid. At the meeting we would negotiate the terms, inclusions, exclusions, and agree on a final price. Simple. 

Do your customers want more?

Joseph owns a residential landscape company doing new installations for homeowners. He mainly works on referrals from custom home-builders, architects, and past customers. Sometimes his company is busy and other times he waits for the phone to ring. By chance he was asked to do some hauling for one of his contractor customers. In the past he didn’t pursue this type of business because is was a nuisance and disrupted his operations. But this got him thinking about how he could expand his revenue sources.

Joseph decided to set up a new division that focuses on service work. He moved his chief estimator into the role of division manager to build the customer base, added a service manager, and put a bookkeeper in charge of managing the accounts. He started by asking his customers what other type of services they needed on an ongoing basis. His homeowner customers trusted his company, liked their work, and actually wanted his company to provide more ongoing maintenance for them as well. They asked for weekly lawn and garden service, annual weed removal, yearly tree-trimming, winterization service, and annual irrigation repairs. Some of his customers owned pools and also wanted his company to do their pool service, maintenance, and repairs. Some customers had young children and wanted swing sets and playground equipment installed. Some wanted new barbeques installed, fencing added, stables for their horses built, cages for their pets, and patio covers added. Some customers asked him if he installed annual holiday lights as well. Some customers even wanted his company to offer debris and junk removal and hauling. WOW! All that business and Joseph hadn’t even thought about providing it for his customers.

Contracting is not just about construction!

How can construction companies increase their steady stream of ongoing reliable sales income regardless of the economy? What type of ongoing revenue can your company, employees, infrastructure, technical skills, reputation, equipment, knowledge, customer base, experience, or potential generate? Attendees of my two day Profit-Builder Circles come to learn how to get their business to work the way they want them to and then take them to the next level. As I look back over the hundreds of past attendees, the business owners who are the most successful are the ones who have two types of contracts, revenue sources, customers, and business models. They do both lump sum contracting work plus have a significant amount of their revenue come from steady ongoing service accounts.

These successful contractors don’t rely solely on bidding single jobs, one at a time, to generate most of their revenue. When you mainly rely on bidding or negotiating work to win contracts, your business becomes ‘fast and furious.’ Your business is either hot or cold, fast paced or dead, busy or slow, and you cant’ control your workload and your revenue isn’t steady or reliable.

‘Slow & steady’ business keeps your crews busy as the workload keeps on coming regularly over and over every month. You can count on a steady flow of work as annual service contracts provide ongoing revenue. With steady regular service accounts, you can plan your schedule, workload, and cash-flow.

Multiple types of income, contracts, and revenue sources compliment each other. This business model allows these type of companies who do both bid and service work, to become very efficient, generate steady workflow for their employees, and create wealth for the owners. But they require two different types of management, sales efforts, cost accounting, customer service, employee training, professional standards, and marketing efforts.

Steve is an electrical contractor who has two separate companies that work together. He has a new construction division that bids to general contractors and does commercial projects, large shopping centers, and office buildings. He has ten steady general contractor customers who typically give his company enough work to make a small profit during good times.

As an offshoot to his contracting company, Steve started an electrical service company several years ago that installs, services, and maintains back-up power generators for homeowners, commercial facilities, industrial plants, hospitals, government buildings, and offices. This company seeks annual contracts for all service work required to keep customer’s buildings electrified during power failures. This specialty service work includes design, engineering, preparing studies, permitting, new installation, repairs, maintenance, testing, fueling, implementing technology, and ongoing monitoring work to insure the generators will work when needed. This service business has grown as he has focused on acquiring new customers, providing excellent customer service, regular weekly employee training, and lots of sales and marketing to attract potential customers.