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Are you the best company in your area? Do you make that claim frequently and proudly? How do you know for sure?
I, like all of you, work for the absolute best company in my area, perhaps in the entire free-world. But, alas, I do not have any way to put facts or numbers to that claim. It seems to me that in order to really know for sure, there must be some way to benchmark our company. By bench marking, I mean that there must be some way to measure the various characteristics of the company, and then be able to compare them with other companies.
Have any of you researched this, or done this for yourself? If so, I would really appreciate your thoughts and feedback.
Thanks
Replies
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That's an interesting concept, Ken. Some of the trade magazines already have "top 500" type lists. What do you see as different about your benchmarking process and the ones the magazines use?
*Ken, there are several categories of which one can "benchmark" his/her company.If however, you are talking just generally, I have four for you to use.1. Able to command higher prices than the competition - all of the competition.2. Obtain 100% of annual sales from referrals and repeat clients.3. At least several months of contracts lined up on a continual basis year round.4. At least double the net profit margins of the industry average. The above four "benchmarks' will say one hell of a lot about your company: It's salesmanship, client service, perpetual client relationships, production organization, workmanship, quality, sub relationships, employee attitudes - the entire gamut.Ken W., I'm suspect of those top "500" lists. Often, they are contained of those who just take the time to fill out the form, and at best, unless legitimately audited, offer unverified stats.
*I have questions like:Is the level of our craftsmanship as good as my competitor?Are our products or methods of construction up to par or better than our competitors?What services are our competitors offering that are different than ours?Are our sales techniques as good as our competitors?Are our prices...You get the picture. Any questions that would help us to understand just how we stack up against our competition.Ken
*Exactly, Sonny, which is why I brought it up. I have the feeling that consumers look at benchmark comparisons in advertising the same way we view those top 500 reports.
*What about benchmarks for*The quality of life and the work experience of the work force *The companies contribution to community and society in general*Quality. (period)
*Ken B., a benchmark is a standard by which to measure. The problem is that the industry has far and few too little standards, and that the ones that do exist are way too low. Just look at NAHB's Performance Guidelines. Sonny and I have been discussing (again) the concept of a national organization that would set a standard, and a high one at that, for the performance and ethic of it's contractor members. Acceptance in this organization isn't merely based upon the clearing of your dues check (as with some other organizations). There may also be some financial reviews, interviews with past clients, subs, and employees. Guidelines for performance would be written in several areas, and members would have to prove their compliance with these criteria on an annual basis. There would also be support material to take your company to the standards we would be promoting, and marketing to the general public in what it meant to them to deal with companies of such a calibur. How would you feel about such an organization? Would you be interested in assisting us in its set-up?
*Ken, the organization Peter mentioned is one whereas the "bar" being raised would be self-imposed by it's members, as would be the compliance guide lines. Without such, it would be just another organization/association as Peter mentioned, where only a check validates membership.To have marketing clout and verifiable realistic benefits to the public, it should be no less. By being so, it would in effect, finally set new higher standards for those to view themselves, and aspire to be, the best in the industry, and as such, in demand by the public.I think it's way past due.
*Sonny what you're talking about kinda reminds me of ASE for auto mechanics. Am I right, that this'll be an 'ASE' for contractors? Regardless, I'd love to see this type of organization formed. I'd like my contractors to have that type of a certification/endorsement from an indepent organization. I'd also like to help youse in any way possible, except to say that I'm a DIY, so probably not 'qualified' to help. Except I have one idea - Independent Review Boards. In the pharmacuetical industry, all clinical experiments are reviewed by a panel of say 5 people - 4 doctors who are familiar with the medical issues involved, and 1 lay person who is there mostly to keep the docs honest. The theory being that some medical experiments might be carried out in such a way to seem ethical to those doctors, but someone not so familiar with medicine/etc. would say, "hey, this ain't right" to protect the clinical subjects. Kind of a big picture type of role. The IRBs came about as a result of the Tuskeegee untreated syphilis scandal. Perhaps something similar could be established for contractors, maybe as part of their review process?
*The Architectural Woodworking Inst. (AWI) has a certification program. It includes visits to your plant, and a pretty comprehensive review of your dealings with clients and other industry partners; it's no rubber stamp by a long shot. They have got it to the point that on a job (and these are usually pretty high dollar millwork jobs, but the concept is applicable), the design authority can state that only certified companies (I think it's QC; Quality Certified) are eligible to bid. The other side of the coin is that the jobs are inspected by AWI to assure the cutomer that the work is up to standards. Not every job out there is being run like that, not by a long shot, but it is being done.
*Fellas, about 18 - 24 months ago I started discussing this concept on the Remodeling Online site. Only because I got tired of referring to it as "this organization", I gave it a temporary name of Team of American Contractors (TAC). Peter Bush, Jerry Hayes and the others from the RO site are familiar with the TAC idea.TAC was to include the cream of the crop of all of the various member cateories, eg., GCs, remodelers, specialty contractors (subs), etc.As Peter and I discussed, our purpose and principles would mean that TAC's members would, as I mentioned, self emposed operating procedures, systems or philosophies, but going beyond "average" to a substantially raised "bar" of very high ethical standards, exceptional integrity, financially well run, above average standards of workmanship, realistic guarantees, standardized customer relationship management policies - virtually every aspect of running a business would be raised to the level so as to set new standards for our industry and it's specific specialty categories.In other words we would provide what each client wants, and what each of us want when making purchases, and are willing to pay a premium for - "peace of mind."We would market our "philosophy" to the upper middle class and affluent market. These are the people that desire, even demand, exceptional services, and are able and willing to pay for them. Therefore, members margins would increase, as they do for Ford when someone buys a Town Car as opposed to an Escort, and GM when someone buys a Cadillic as opposed to a Chevy. Most of us would rather do, for example, 20% net profit on $300,000 in sales, then 10%, or less, on $600,000 in sales. The same amount of net profit, but using less time, less grief, less sales calls, and less paperwork. Eventually, TAC would have it's own web site. The advantages of this are tremendous, but I wouldn't get into that now.At the time, I discussed the TAC concept with two lenders here. Both said they would financially sponsor such an org. Ditto from one lumber yard here and another in a different state. My point to both was that, to the lender, no more headaches about contractors going under on a new or remodel project that they mortagaged. No more hassles with less than ethical contractors. The lumberyard said they would sponsor for the same reasons I just mentioned.A few months ago a client called me to ask if a TAC member existed near his Northern city in New York. He needed a remodeler. Two months ago, a client called me with a major plumbing problem and asked the same question for here in Naples. Both clients were aware of the discussion I had on the RO site about TAC and just assumed it was up and already in existence. They were obvioulsy enthused about it, and knowing it would entail premium pricing. I had to tell them both it was still in the conceptual stage. The buying public is eager and willing to pay premium prices for premium services, and in fact already do so in virtually every other industry that serves them in one way or another. Our industry has nothing to offer these people, and is why I and Peter brought this TAC concept up in this forum. It's a win/win for all involved.Can you imagine clients calling you or checking our web site to obtain a cabinet maker, plumber, window replacement contractor, builder or remodeler, who is a TAC member. WOW!! Presold - knowing they will pay a premium price for his/her services, but then again, what services they would get!Anyway, the above is just a brief of the original concept. Sorry, couldn't make it a shorter post, yet get the concept across.
*Sonny claims: "We would market our "philosophy" to the upper middle class and affluent market. These are the people that desire, even demand, exceptional services, and are able and willing to pay for them." Sonny and I have differed on this issue before. Basically, I agree that we might have to target this customer type at first, but it is my contention that that is not our long term goal. I feel that our current baseline of services is undervalued. This may be due to the large flux of novice construction companies that go in and out of business. They are unsure of what professional services entail and they are not charging enough to provide them. If they last for more than several years, they usually find themselves providing a higher degree of service and charging a respectable fee. For every one that succeeds however, nine might fail. Our goal is not to be snobish in working for only the affluent. Our goal is to educate both contractors and consumers as to what defines professional service and what fee is appropriate. Once a new base line of value is established, consumers of all means will again be our prospects.
*bonny, I have been reading your posts for a while and I am always impressed with what you have to say. I guess It helps that you are always right!Anyway, I would love to see an organization such as AC started. I would like to offer to you or anyone else assistance in getting this set up. Please em-ail me At: [email protected]
*Mr. Novick, thanks for the compliment but if I were that smart, I'd be the most successful remodeler in the country - and rich to boot! But alas, I'm on a first name basis with my short comings.
*Over the years there have been several attempts at developing an Industry Rating System that could be used to market construction. All have failed for a couple very good reasons.First, building, except for the huge tract builders, is a low entry cost industry. This was pointed out in a previous thread that talked about how everyone got their start. Since the ultimate purpose of the Industry system is to raise prices and profits a few low priced new entrants do in the whole system. Or, another way; anyone with a few tools and some moxie can start competing with the established, and higher priced companies. Guess who wins in the short run, and maybe even in the long run?Next, is the credibility problem. The general public has been conditioned to be suspicious of industry paid for rating systems. So, unless there is some type of independent review it is unlikely the rating plaque over the door would mean much. The ASE mechanic thing has been used as an example. Well when almost every garage boasts ASE mechanics, even when it is a dirty hole in the wall that fails to matter any more.Another problem is just how to get contractors to sign up for the program. Building is essentially a local, service industry. What matters is what happens in the builder's area, not what happens far away. So, I suspect most builders would consider this an unneccesary expense.Great idea, but it has been tried before and has been dashed on the rocks of reality.What you can do though is find your niche, market the devil out of it, give the customer top notch service for the dollar and retire young.
*Fred, I tend to agree with you that the ASE rating thing loses it's appeal when the dirty hole in the wall is rated!If you have seen the ads( or know someone) tied in with improvenet.com, they do checks on the contractors who apply to include credit, legal and business history. All the contractors they refer are true professionals. Improvenet.com does not "rate" the contractors to the general public, but I know there has been internal talk to somehow do so. Could this be some sort of start?
*Fred, I don't buy that. The buying public discerns what "value" means to them. That's why we have Ford Escorts and Ford Explorers. The entry to a cafe is cheap compared to the entry ($$$) for a fine restaurant, yet these fine restaurants are doing a booming business, as are the McDonalds. There is a market for both.The credibility problem is "exactly" why a TAC membership needs to differenciate themselves from the industry at large. How, but marketing them selves as "service providers" first, and in the construction industry second. Ther are painters and artists. There are trimmers and framers and there are true craftsmen. There are Designers who command $50 per hour and those so are sought after at $500 per hour.Merry Maids is a local service industry, yet this franchise is thriving. Ditto for Subways. Ditto for every retail or service business an any city or town, even if it has a "home office' elsewhere. The products are sold and the services are rendered locally.The reason a TAC concept will not become a reality is not because of "outward" environments, but because of the attitude of it's potential members. It's really a simple as that. No house would ever get built if all that was heard at the site was: "It's too cold." "It's raining." "It's too hot." "We don't have enough lumber." And on and on. Our biggest problem is that unlike small companies in same industries who create viable "alliances", we will not. Here's a copy of an email I got fro Ken Watkins. It's a similar analogy, a small one, but still similar:From Kitchen and Bath Design News Sept 2000Licensing Agreement May Point Way to Future for Small Businesses in IndustryA recently announced license agreement may be a harbinger of the future forsmall and medium-sized businesses in the kitchen and bath industry."Solure Solid Shapes" is an manufacturing/marketing effort involving GruberSystems, Alcoa, and eight regional solid surface manufacturers. All haveagreed to produce the same shapes and sizes in 31 colors, using the samematerials. The result is a consistent product that has more marketing musclethan any of the single entities has by itself.This is an intriguing development, and points the way to similar alliances -such as between retailers, or regional custom cabinet manufacturers. Thesecompanies by themselves don't have the resources to launch an expensive andwidespread marketing campaign that a big chain store or large nationalmanufacturer can bring. But together, they can create a potent force.To make the alliance work, each entity will have to agree to do business ina similar way. Members have to have similar products and services, andconsistent operating policies. The idea is to submerge individual identitiesinto a larger entity with one identity. For cabinet manufacturers, this maymean offering the same door styles, stain colors, sizes and a coher entconsistent nomenclature under an agreed-upon brand name. For retailers, itmay mean developing a brand, a logo, standardized paperwork and operatingpractices, and even a standardized showroom "look."It's an idea that's worth considering - even in an industry where businessesowners often pride themselves on their individuality and independence.
*Sonny:I understand that what you want to do is make more money for the contractor. There is nothing wrong with that. To help in the discussion let me tell you what I see in the examples you gave.First, the Explorer vs Escort. I don't see that as a value choice by the customer at all. I see the choice as a combination of price and taste with a lot of bandwagon effect thrown in. People who might want the Explorer but who can't afford it might settle for the Escort or similiar. Some people buy Explorers not because of any perception that it is a better car but because that is the style. Witness Explorer 4X4s in LosAngeles. Then there is the status effect.As for Franchises; they sell a consistent product across the continent. The value to the Franchisee is a ready made market from experience elsewhere(McDonalds), training and supplies, and the biggee, marketing. For this the Franchisee pays a whopping royalty. Being a franchisee doesn't guarantee success either. Just think back at all the national franchises that have gone broke over the last 20 or 30 years. Then there is the large number of local franchisees who haven't been able to make it.As for whether national chains are in fact local service businesses. Look at the reaction to the Box stores in this forum. I doubt very many consider them to be a local business.Lastly, is the matter of enforcement. To work an association or franchise must have enforcement ability. That means each contractor must put his ability to stay in business at the judgement of the Association or Franchise. If the business isn't at risk then the group has no real enforcement power and rapidly becomes just another marketing tool to the unwary.And of course while all this is going on the new kid on the block who doesn't have the association expense and overhead and does a good job is eating everyone's lunch.
*Mr Baker:I don't want to hijack your thread so I thought is best not to ignore your question. Frankly, I don't know what to use as a benchmark. The term "best" has been used so much in business that it is almost meaningless. I doubt that if every business in the area said they were the "best" that anyone could accuse them for lying.
*Financial Benchmarking has proven to be a huge benefit for Remodeling Contractors.Ever since we established our Financial MasterMind Group the Members have seen huge breakthroughs. Tom Capizzi, a highly successful remodeler, with 11 other contractors in the group), leads the MasterMind group. Each remodeler submits his/her financial statement. All 12 that in a sense form a Board of Directors review the statement. Suggestions for improvement are shared.The outcome is amazing. Contractors thinking they are doing great find out that they aren't doing as well as they thought. They find this by focusing on their number getting ready for the MasterMind (something many contractors fail to do) and by direct comparison to other contractor's numbers.New goals and new plans are set at that meeting. It is amazing to see the transformation that can happen in 6 months between meetings.Many times contractors learn that they are doing really well in comparison, but they discover minor "profit leaks" during the meeting that they can close.To learn more drop me a line, or check out http://www.contractors.netRichard KallerCertified Contractors NetWorkE-mail [email protected] http://www.contractors.net
*Fred and Sonny, I think you both have some good and false logic in your post. Please compare apples to apples.I agree with Fred the Explorer vs. Escort is a bad example. A better example would be a Kia Sportage vs. Ford Explorer, or Hyundai sedan vs. Ford sedan, etc.The franchise thing is also flawed. A better example would be McDonald's/Wendy's/Arby's vs. Benigan's/Friday's/Ruby Tuesday, both categories are fast food, national chains, but one is more upscale/higher quality than the other. And people are willing to pay for it. As for the non franchise, compare a local bistro vs. a 4 star restaurant. If you want to compare franchise to non, compare Domino's to your local pizzeria, or your local deli to Subway.National chains are not local service businesses, but I would argue franchises are. The local Home Depot's profits become Atlanta's (HQ) and from there the investors. A local franchiser's profits become a local business owner's - that franchising fee is part of overhead.On to enforcement - I don't think an organization with the ability to put a contractor out of business is what Sonny had in mind. Rather, I think (correct me if I'm wrong) the 'punishment' for bad work, bad ethics, etc. would be something like maybe fines/suspension/probation leading up to revokation of the membership. With this type of enforcement the consumer might be able to contact national HQ and inquire/report/whatever individual contractors. Similar to the BBB but with more teeth?Oh, and if that NKOTB was a member, what with the higher rates they'd command I'd expect the membership to pay for itself. But at the same time, not every contractor will want to join, nor should there be a requirement. You still stay in business when others underbid you, right?
*Mr. Kaller: You are doing a good job of using this thread to market your product. Good on you! Never miss an opportunity to get your name out there. But, I don't think this is quite what we are talking about. Essentially you offer a financial review and consulting service. That is useful and is also pretty commonly available from a variety of places.It wasn't the specific franchises I was having trouble with. It was trying to figure out how the concept of franchising would be worth the cost for a small, local construction business.
*Actually, the idea is not to be able to call yourself the best, but to compare yourself with the best and see where you need to improve. One idea that was proposed that I rather like begins by listing quite a few practices that you think are key to good business, assigning each a one - ten rating scale, and asssigning your company the middle value. You would then give out the survey to all of your vendors, subcontractors, designers, and architects, asking them to indicate how they would score the majority of other companies in relation to you.The idea is to see how you stack up, and to see where you can improve. Ken
*Good idea Ken. I'll suggest one step back even more basic - comparing ourselves not as remodelers, cabinet makers, etc., but as business people. The basics of "interacting" with the public, and in a manner we would like to be treated by other businesses when we are in a consumer role. Those points of contact that have an incredible impression as representing our overall attitude, and what "they" will use as a basis for expected future treatment.1. Prompt returning of calls, even if you say nothing more than,"I don't yet have the information you requested", but return the call the same day.2. How do you or others in you company answer calls? With a "Hello.", a "Smith Company", or an upbeat, "Good afternoon, this is Sonny Lykos", or Sonny with Construction Solutons", and certainly not as though they are interrupting a football game with 4th and it's goal to goal in the last 10 seconds of the game.3. What do we look like when we show up for the initial call? Do we park the ego, shoulder chip at the door, sexist attitude on the driveway?4. Do we take off our shoes or put on a pair of booties?5. Are we enthusiastic, or is this just another pain in the ass.6. Is our Proposal professional or hand written and ambiguous to boot?7. Do we call even if we think we might be only 5 minutes late?How to you want to be treated when you call someone or ask of info. And how to you expect a person to act when invited into your home as a quest? Sure, it's a bitch to always be and act as a professional when you're puting out a fire or having a bad day or week, but those who don't create those good habits reflect, in the clients "perception", just another run of the mill business owner who doesn't give a damn. First master all of your basic interactions with the public in general. Only then, should you go on to compare yourself with your industry peers.
*Gentlemen...what do we do? make things well, to deserve the name, of say, carpenter? or just stress out piling up useless green stuff? Might as well sell bad dope... Money...ain't no poetry in it. Lotta poetry in a perfect trim job, an exquisite curve to a cobbled walk, a freakin' paint job that, up there where no one will ever see it, is cut perfectly.Ridiculous? Yeah, and it sure ain't the way to get rich, but! "God is in the details"...not the stomach-wrenching contractual shite; the art of the work, itself. Losing money? if you're honest, pleasant, and a killer carpenter, painter, mason, whatever, you'll never go hungry; every person you work for would never choose to hire anyone else.Joel K.Former ship's carpenter, sometime furniture maker, genial contractor; the proverbial church mice drive nicer trucks than I do...but I've got better tools.
*What about the old story of sitting at the rear and being asked to move up is better than sitting in the front and being asked to give up your chair for someone more important. Translated to who else besides you says your good. The preferred style of TV ads in my area is to have clients on TV saying how happy they are with their contractor or having employees that switched from one company to this one because they were cheaper,better, cleaner etc. How many referal letters do you have? Who else says your good? Ken, are you trying to impress / sell your peers or your future customers on how good you are? There is a difference in how the best is judged by both groups.
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Are you the best company in your area? Do you make that claim frequently and proudly? How do you know for sure?
I, like all of you, work for the absolute best company in my area, perhaps in the entire free-world. But, alas, I do not have any way to put facts or numbers to that claim. It seems to me that in order to really know for sure, there must be some way to benchmark our company. By bench marking, I mean that there must be some way to measure the various characteristics of the company, and then be able to compare them with other companies.
Have any of you researched this, or done this for yourself? If so, I would really appreciate your thoughts and feedback.
Thanks