The economy has taken its toll on almost every contractor you talk to. Contractors who relied almost exclusively on their reputation and being low bidder to win contracts are hurting the most. These contractors are now really scrambling because they never needed or had a solid business development plan or program in place during the boom times. They generally started their companies as good field technicians versus experienced solid businesspeople focused on sales as a business growth tool. They offered quality workmanship and lower prices than their larger competitors. They kept busy winning enough work against a few other bidders, but they weren’t doing any real marketing or offering any differentiating factors in their sales efforts.
Now what?
Would you think about opening a donut shop without $200,000 to $300,000 in the bank? No. And would you open a donut shop without an advertising and marketing plan to attract new customers? No. So why would you think you can run your contracting business without money for marketing or a systemized approach to your sales effort? Especially now with less work and more competition.
Be different to grow!
I coach and work with many contractors trying to improve their companies. When I first meet or talk to them, I do a detailed ‘Business Effectiveness Evaluation’ of their practices, management systems, people, financials, marketing program, projects and field operations. After we fix their obvious and urgent problems, we get down to what really matters today: generating more and new profitable sales revenue via differentiation. What do you do that’s different than your competitors? Just doing a really good job isn’t enough anymore. Most competitors do a really good job, or good enough to get awarded the next job if their price is low enough. So you’ve got to give your customers real reasons to hire your company. Not the same old answers: quality, service, schedule and technical skills. These are the same answers your competitors give, and they don’t set them apart either! If you can’t give them five or six really good reasons, that aren’t the exact same thing your competitors are going to say, you’ve lost and your only differentiating factor is price.
Get uncomfortable!
Contractors need to get out of their comfort zone and offer MORE. You have to take on more trades and more risk. If you’re a metal building contractor,you must also offer to do the demolition,earthwork, complete site-work, full-service construction, guarantee the completion date, provide annual maintenance and property management, and provide financing. You’ve got to offer more turnkey and ongoing value-added services to make your company more attractive to customers and prospects. Before the construction slowdown, you could make it by specializing in a small scope of services and products. Now you have triple the number of competitors bidding against you on every opportunity, some from 1,000 miles away or more. Your old marketing system to wait for the phone to ring, pick up plans and turn in bids with lots of exclusions won’t work. If you try to compete like you did in the past, you’re going to be one of two things: busy & broke OR not busy & out of business.
Other ways to set your company apart and offer more is to find service accounts at large national corporations or manufacturing companies who need ongoing service. Go to the headquarters of a big chain, like Starbucks, and talk about servicing all their stores. Or joint venture with a minority or disabled veteran and get on government set-aside programs with the Small Business Administration, or the military base nearby, or the department of transportation in your area. These types of work have difficult barriers to entry and therefore less competition. Contractors never had to do that before. Unless you’re willing to step up and do more, you’re going to go backwards. You’ve got to change your business strategy.
What used to work doesn’t work today, unless you want to go out of business.
Make marketing mandatory
Traditionally, contractors would wait for a developer or general contractor to call and say: “Come on in to pick up a set of plans and give us a bid.” That was their marketing program. After they’d submitted the bid, their one sales effort was to call and ask: “How does my bid look?” That was it. No continuous sales or marketing effort was needed to win contracts. That doesn’t work now. Most contractors don’t have a dedicated full-time professional accountable for generating profitable revenue and looking for new opportunities, customers, services and projects. Is your estimator accountable for revenue or just bidding what comes across from the traditional job sources, referrals or your Yellow Page ad.
When no one is in charge of generating and creating new and different revenue streams and customers, all you get is the same old easy jobs to bid with too many competitors. Hire a professional who will focus 24-7 on growing your business, or put yourself 100 percent in charge 100 percent of your time. Invest enough money (and time) to develop glossy sales brochures, printed postcards with photographs of past projects, videos of successful jobs and customer testimonials, a powerful interactive website that expresses your value-added services, a targeted list of potential customers and draft a working marketing business development plan.
Don’t continue to look for work to keep you busy until the economy turns around. All that dead strategy will do is keep you busy and broke. Get uncomfortable and stop doing what you’ve always done.
George Hedley owns Hedley Construction
& Development Inc. and Hardhat Presentations in Newport Beach, Calif. He is an entrepreneur, best-selling author, popular speaker and business coach. Visit
www.hardhatpresentations.com for more information.
