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.
Slow and steady wins!
Generating slow and steady business is an answer to improving your company’s future. Especially in light of the current economy. Slow and steady business is not dependent on new construction to generate work for your crews and keep your doors open. In Steve’s case, his customers can’t afford to shut down during a power outage and will pay for the service his company provides. What type of slow and steady service business can you start or acquire to generate ongoing steady work and revenue for your company? Consider one of these following service business models to add and compliment your revenue sources:
– Plant piping and repairs
– Industrial electrical service and maintenance
– Exterior building cleaning and sealing
– Full service plumbing, electrical, and mechanical
– Roof maintenance and repairs
– Site cleanup, road service, and river bed maintenance
– Landscaping, tree trimming, lawn service, weeding
– Snow plowing, Christmas lights installation, and light bulb service
Jim goes slow and steady!
Jim’s business is typical for small to medium general contractors. He specializes in new construction of commercial buildings, remodels, renovations, and interior improvements. His job sizes run from $50,000 to $700,000 and does $5,000,000 in annual revenue in this type of work. But his competition is growing and his customers are asking for lower prices. He is at a point where he couldn’t make enough profit to make it worthwhile.
Jim called me and asked what should he do? I asked who his customers were. He had built local several stores for national retail chains. I asked what he did for these companies on an ongoing basis. He hadn’t pursued service work as it took too much time and his company had stayed fairly busy building new construction projects. I suggested he go see these companies and offer a complete full service package to them.
Jim listened and implemented. Within a few weeks, he set up a separate company with a different name. He put a manager in charge, added an in-house customer service coordinator, a marketing manager, and a full time salesperson. Fast forward three years later. His company now has four to five service crews busy seven days a week and often working nights to accommodate these retail businesses. His service company provides anything retail store customers need: emergency glass repair, overnight painting, quick repairs, clean-up, installation of new fixtures, electrical, plumbing work, flooring, doors, heating or cooling maintenance, trash removal, or remodeling. After only three years, Jim’s service company generates over $2,500,000 in annual revenue and significantly more to his gross profit than his new construction company does.