In my area a couple builders that I compete with own other businesses also. Businesses such as insulating, kitchen showrooms, or truss and panel shops to name a few. They run the other businesses under different names but most of the builders all know who’s behind the name.
My question is would you ever hire those companies knowing that you are putting money in your competitors pocket? What if they were the cheapest?
Or what about hiring a sub that competes with you? I’ve actually been aproached by another builder about doing framing for him because we have a good crew, but yet we bid jobs against each other. I thought that was odd, a compliment I suppose, but odd.
Replies
"My question is would you ever hire those companies knowing that you are putting money in your competitors pocket? What if they were the cheapest?"
Are those companies going to dry up and go away if you don't use them?
probably not ... so why not use them to your advantage.
Jeff
Buck Construction
Artistry in Carpentry
Pgh, PA
Why not? As long as you'll be using them to put money in your pocket. The less animosity the better I say.
Who Dares Wins.
I have a roofing business specializing in custom copper work. I have several competitors who will bid against me on a copper roof and then if they get the job, hire me to do the fabrication. I have a small shingle crew, but if I get more shingle work than I need, I have several competitors I sub the overflow to. I have one competitor who owns a boom lift. I sometimes rent it for cheap if he's got some down time on it. I've got one who owns a crane - he gets the call when I need a crane.
Years ago, I fell and injured myself pretty severely. I was short on help and what I had was full of potential, but short on experience. They couldn't do the job we were on without good supervision and I couldn't supervise. One of my competitors stepped up and ran my crew for me for a day until I recovered from surgery. A couple of years later, he called me and needed help drying in a roof. Some of his crew had quit during a tear off and a storm was on the way. I took my guys and got his roof dried in.
I built my reputation when I was working for a GC, running their roofing crew. We had established ourselves as some of the best around. Other GC's started asking us to bid on their jobs. Soon, I started getting into the situation where 3 bids were being submitted for a particular job and I had the roof portion of all three of them. No matter who got the job, I got the roof. This continues to happen several times a year.
My point in telling all of this is: If these other contractors and subs are ethical, fair and honest and you're the same, there is great potential in loose alliances. As long as you sub to each other job by job, you're not getting locked into a partnership if things start to go south. Good luck.
Scissors cut paper. Rock breaks scissors. Paper wraps rock.
Greencu,
good post
I am doing much the same---and for much the same reasoning.
Stephen
I'd rather have a bunch of friends than a bunch of enemies ( which as far as I know, I've only made two in 20+ years and they've been into it with each other ). I always look at the situation and if it looks as if both parties can benefit, I'm willing to give it a try. My dad once told me it's only truly a good deal if both sides benefit. I may be naive, but I'm not interested in screwing anyone anymore than I'm interested in getting srewed.
The sales aspect of contracting is my least favorite part, so it suits me to let someone else do the selling. One of my competitors bought yellow page advertising this year. He keeps getting calls for stuff he's not set up to do, so he subs me for his fabrication. I hire subs for my installations anyway, so basically I'm getting free yelow page advertising. He has no qualms about being honest about who made the stuff when he's asked, either. All of the GC's I work for advertise quite a bit, and my work is on their websites ( reminds me - I gotta get mine set up ) and magazine ads. Doesn't cost me a penny and I seldom have to meet with clientsScissors cut paper. Rock breaks scissors. Paper wraps rock.
greencu,
I have 2 different " competitors" that I sub stuff out to.
there are some things they can do well----like supply a large number of experienced workers, get things done FAST, fair price etc.
They can do about 90-95% of a job well---but their are some detail issues they don't do so well with, they don't talk well with homeowners, they can't handle any carpentry other than replacing decking, they don't sell well, there are a lot of business issues they have problems with---------
on my side of the deal----I don't relate to employees well------but I sell well, I add a lot of value to the customer by being able to talk to the homeowner, handle any of the relevant carpentry, handle any of the flashing work. I will do slate repairs( and I stock some slate)---that these 2 competitors don't handle. I almost always insist we use the more expensive materials-------
so the competitors get a good deal of work out of me
I no longer need employees
the customer gets a better faster product than any of us could produce individually
the competitors consult with me on , insurance,advertising, equipment purchases, carpentry. they have asked for help with pricing certain jobs they were bidding directly to homeowners ( we don't really" fish in the same pond")
when I injured my knee last summer( not roofing related)----they really helped me out in the middle of the job I was doing
all in all---it's a good arrangement for all parties
Stephen
I once hired another builder to frame an addition for a project of mine because I was busy, and he was cheap, and I knew his crew did good work. Once it was done he asked for more $, but I told him there was no cushion, sorry, a bid is a bid.
edited to add: we stayed on good terms, and I later went to work for him for awhile, running some of his commercial projects. He did get mad when I quit, 'tho.
Edited 2/4/2005 3:55 pm ET by Huck
Maybe you are in an environment or think you are, where you think the goal is one dog eats all the meat and fights off all the other dogs.
But co-operation and referals and goal sharing are in a different world from all that. Maybe it is the competitive attitude...dunno
I loan or rent tools and equipment to other contractors heere. One of them just loaned me his concrete chutes, and another rented my curing blankets.... on and on...
So if you wanna be it all and do it all, you need to build or buy a truss palnt or an insualtion company, or a batch plant, opr all the above.
Welcome to the
Taunton University of Knowledge FHB Campus at Breaktime.
where ...
Excellence is its own reward!
We are all in this together. Just don't give away any future leads or personal secrets. Some of my good friends are competitors. We often recommend each other if we can't take on more work. Who understands the process better than other builders. There is usually plenty of work to go around.
Beat it to fit / Paint it to match
2 Different perspectives.
A guy I know owned a paint shop, nice custom place loaded with good tools, advice, top quality expensive paint. Fun place to go. Paid a premium but figured the free coffee and advice was worth it.
Happened to see the owner leaving a house where I was asked to come do an estimate. Put 2 and 2 together and asked if the paint shop owner offered to bid or was consulting on colors or paint quaility. Was told he offered to bid the project.
I decided I could buy my paint from someone else.
A few other guys and I team up on projects regularly.
In other words I cooperate with fellow contractors supplying carpentry etc.. I won't support a materials supplier offering installation.
Maybe not relvant to the topic but it is my 2 cents.
Edited 2/5/2005 10:00 am ET by TMO
I agree with TMO.
Don't get me wrong I get along with and like about 99% of my competitors. Lending some equipment back and forth once in a while is perfectly fine. But I am not going to be putting money directly into their pockets.
Another example in my area is between two large commercial contractors. Company A bought a redi-mix company that company B used for most of their concrete. Company B promptly started there own redi-mix plant. Must be nice.
When you bid a job you decide how much you need to do the job and make profit. No profit... you don't do the job. Someone else decides to do it for less-you can make profit by subbing and get the same quality through supervision-bravo-is just makes sense.
I always have reccomended others when that works for me. If it was a yellow page ad I started out with a list of the worst-and cheapest contractors I knew. Usually the subs that did sub standard work and that had tried to mow my lawn when I hired them to put in posts and they tried to steal the clients. You know-the real cut throat guys, that were beligerant about it, charged too little to stay in business for long and usually did sub division work.
The first thing I would say to a client who obviously found me from a yellow page ad and asked if they could get a free estimate. "Is Price your Prime Concern Maam?", if they said yes I would reply, "Do you have a pen...then I'd give them one of the 3 names-advising her that these guys were the cheapest in town. We aren't cheaper than anyone, we warranty our work for 5 years and we do the best work-good luck with your job".
You know, 80% of the time the potential client would get the point and ask why are you brushing me off? Most of the time we sold the job... with a healthy profit.
Nowadays my time is spent generating work for 7 different contractors locally, and a couple in the southwest. I couldn't do it all-everywhere-for everyone. I even share my trade secrets and sales tools with these guys-and they use my logos on their marketing. The key is that they all make more than they would without the program, and what they kick me back is a small fraction of profit.
Benevolance is bliss. When you build a team of the best in the business-noone can compete with you.
Sub-contractors never care as much about the job as the guy with their name on it. It's a frustrating lesson and we are all trying to build a reputation. My suggestion is that if you want to work with subs (hire your competition), cut them in on the profit and put their name on the photos with a "Built By" credit. Share the wealth and the reputation-and help them take pride in the job.
When I say share the profit, what I mean is say- 10 % of Net profit-which may only be a couple hundred dollars. I bet the sub shows up on time and the job is made a priority for him-equal to his own work. Small price.
L
One of our competitors (We have both been in business for over twenty years.) has your attitude. He does absolutely as much work in house as he possibly can, seeing subs as draining away his profit. He started a small lumberyard/hardware store in an effort to capture those profits as well. He views the available work in our area as potentially his and any work preformed by others as a loss to his business.
I don't know how this has worked out for him financially except that it has not made him rich and that he would have a hard time selling any of these businesses. A few years ago he wanted to retire but the bank insisted that he stay on if they were going to continue holding his loan. It seems like an awfully heavy burden to me.
We buy 40-50k materials from his yard per year and are happy to do it. It is convenient and competitive enough for our smaller buys. We also recommend his outfit (as well as others) for work that we do not have time for. They will do an adequate job. We have hired a couple of his ex-employees and been happy with them.
Life does not have to be a cutthroat, winner-take-all, competition. I can go play pickup basketball on Sunday nights if my competitive juices are up. There seems to be plenty of good work available for everyone who can do it. I like to concentrate on that. I have no desire to beat this guy into the ground. If he gets a little of my money, good for him. God knows that he is working hard enough for it.
Life does not have to be a cutthroat, winner-take-all, competition. I can go play pickup basketball on Sunday nights if my competitive juices are up. There seems to be plenty of good work available for everyone who can do it. I like to concentrate on that. I have no desire to beat this guy into the ground. If he gets a little of my money, good for him. God knows that he is working hard enough for it.
Nice attitude!! Live long and prosper!
EricI Love A Hand That Meets My Own,
With A Hold That Causes Some Sensation.