Tag Archives: sales income

Sales Is A Numbers Game!

What business activity makes the most $$$ for your company? I bet you didn’t say: ‘Sales!’ To most contractors, their total sales effort is no more than picking up a set of plans from a customer, estimating the job, turning in a bid, and then waiting for the results. They rely heavily on price to sell most jobs. As the economy has gotten worse, and work is harder and harder to get, many company owners have thought about how to increase their sales. Some have even decided to hire a salesperson to increase their revenue. But then what? These frustrated owners don’t know how to manage a salesperson to get the results they need or want.

Sales is easy!

It’s a numbers game. When competent salespeople make regular sales calls on good prospects who need what you offer, your company will get their share of the business. When you don’t make the calls, you won’t get the business. It’s like professional hockey. The team that takes the most shots, usually wins the game. The more sales calls, the more business. Simple and easy.

Most business owners don’t like to make sales calls. So they try to encourage their estimator to make them. Most estimators are not built to sell. They are built to analyze at a set of plans, use their calculators and computers, and put a price on a specified amount of work. Like business owners, estimators also they don’t like to get out of their comfort zone, go out and make sales calls, and spend a majority of their time selling. So, in tight markets, small business owners often want to hire salespeople to solve their lack of revenue problem.

Why do companies struggle?

A major reason small to medium size companies struggle is caused by a lack of a systemized and focused on sales and marketing plan. They mainly rely on their reputation to earn the right to be awarded enough work to make a reasonable profit. This works in good times, but not during a slower economy. Successful companies must have written sales systems and marketing plans that pro-actively and aggressively look for and attack new customers, targets, and contracts.

As I observe the successful subcontractors who our general contracting company use, there is a common thread. They have a plan to find and attract new customers and follow it diligently. Every week the come by our office as a part of their sales route to meet with our project managers, and build relationships with our people. They are always in the selling mode and ready when we have an opportunity for them. The majority of subcontractors wait until we call them, the successful contractors are already there waiting for an opportunity to attack.

A pro-active sales plan starts with a business owner or general sales manager who will hold their salespeople to a required standard of performance excellence. These required standards can include the number of calls per day, number of customer lunches per week, number of face to face meetings per week, number of proposals, and total proposal volume per month. To know how you’re doing, you’ve got to keep score.

Keeping score with salespeople is often difficult, as they tend to not want to be tied down to a set number of calls required. They like to let their instincts take them through the day. They don’t like to be held accountable or to a minimum standard, and don’t like to track numbers. They also don’t like to write, don’t like discipline, and don’t want to follow a written plan. They generally feel their gift of gab will get them through and reap enough results. But without numbers to hit, most salespeople will fail and not meet your expectations.

Sales numbers to track:
– The type of customers you want
– The markets you want to attack
– The project locations you like
– The project sizes you want
– The minimum fee per job
– Sales calls per day
– Leads from calls
– Face to face meetings per week
– Proposals from leads
– Proposal follow-up tracking
– Proposals or bids hit
– Referrals from customers
– Average job size
– Average profit margin
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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. Continue reading