Just something that has been on my mind as of late,
I have a crew (4 of us) whom I am very proud of and have worked hard over the years through hiring/firing/training/outfitting to develop. Now that I am happy with the work we are turning out (as is everyone of my clients/customers) I still have a problem. I’m too expensive. I always come in high on my bids, spend a lot of time estimating jobs i don’t get and when i do get a job , we really don’t make a real profit. All I can say is that we are all paid decent enough. My crew consist of myself, a veteran carpenter with lots of skills , knowledge, tolls but he is slowing down and is an 8 – 4:30 guy , no responsibilities wanted, also i have a fairly experienced carpenter with a wide range of skills in other trades, is high energy, moves out, makes a few mistakes but all in all is good, then I have a helper who is everyones dream helper all you can ask for at a low cost. Should I add more low cost help and lower the average hourly payroll rate? look for a different market, split up more, or to my biggest fear, cut back on my need for perfection and go with good enough?
Replies
Yeah, that's the solution...cut back on perfection. Then you'll be a high-price low-quality contractor...just what all my clients want!
I don't have an answer, but I think that last idea was a bust.
Do it right, or do it twice.
Do your older carpenter and your high energy guy work well together? Would the older carp mind the younger guy becoming the lead on some of your projects? Would teaming them allow you and the helper to work on other jobs? Or are they going to resent having to do some of the things the helper is doing now?
Next question, when you say your'e not making a real profit. Is it because you take longer to do the jobs than you bid them for? Have you put your true expenses and operating costs into your overhead? Are you marking up materials enough?
What has worked so far for me is to try to keep 2 skilled carpenters working together. I am currently trying to hire one helper with enough experience to handle cutting and some installation to work with my lead carp or myself.
Make sure you are figuring in all of your overheads, things like your insurance and licensing are obvious. What about your mobile phone, vehicle, and wear and tear on your tools?
In the last 4 years I have not been the lowest bid on any projects. As some of the others here will tell you, don't sell a job on price, sell it on service, quality of workmanship, and customer satisfaction.
Read some of Sonny Lykos' posts in the business section. Lots of good advice there. Seems like Jeff Buck has brought up some good points on selling also.
Hope this helps. TCW Specialists in Custom Remodeling.
Hey Tim,
Thanks for the feedback, to answer some of your questions:
The old guy is slow and reliable but grumpy and no one likes to spend lots of time with him so I try to rotate us as much as possible. Also , I try to match the work with the skills and that often keeps the energetic guy and the old guy on different tasks or jobs.
My overhead is figured in to my billing but I guess what I'm looking to increase is my personal take , it's always the last thing to get supplemented (naturally) we manage to maintain our expenses well enough and still meet all the payroll but there is not a lot to use for growth and investment
I would like to someday move into an office with an office manager and get out of my house and truck while doing paperwork and scheduling, estimating etc.
anyway, thanks again
jay.. 4 is my favorite company size.. with 1 more in the office...
raise your prices... start marketing... you have a very valuable asset.. it's worth gold to the right customer
Mike Smith Rhode Island : Design / Build / Repair / Restore
hey Mike,
What do you think is my best approach for marketing? who do I target or do I mass market , I barely have time to meet and estimate jobs now, I don't want spend more time on unqualified leads, besides I hate saying no , I think I would get into trouble with too much work too fast. should I hire and market simultaneously on the pretense that I will increase work load?
who knows right?
the first thing , jay... ya gotta use the willy sutton approach.. 'member when they asked willy why he robbed banks ?
he said , cause that's where the money is.. ya gotta market to the people who have the money to pay for your quality...
they live in certain communities and sections of town.. they read certain periodicals..
buy a copy of "Guerilla Marketing"... it's a great little book to start you thinking outside the box..
here's one.. where do you buy your materials ?
at HD ? .. think you'll ever get a referral from HD .. or think they remember your name ?
find a good quality lumber yard and give them 95% of your business.. and shop there on a consistent basis....so every yard man .. every counterman.. and your outside salesman knows your name and your quality.. you'll be amazed at how many referrals they make.. then you have to qualify them..Mike Smith Rhode Island : Design / Build / Repair / Restore
I don't think being high priced is a bad thing - IF there's good reason for it. (High quality work, for instance)
If you're doing a lot of estimates, maybe you need to spend more time pre-qualifying your customers before sinking a lot of time into bidding.
If the music's too loud, you're too old.
Okay, here's another long rambling post from me, but those are big questions.
Should I abandon perfection and go for good enough? Depends upon the client and what they're willing to pay for…….and what you want to spend your time doing. You're not apt to sell a Jaguar to the average Joe. Average Joes can certainly appreciate the Jag, perhaps desire the Jag, but that doesn't mean they "need" one, can afford one or are willingly to spend the coin to own one. If you wanna sell them a car, you'll be better off pricing something for them that you know they can more likely afford……like a LeSabre.
Maybe you need to think about pricing and selling to your current market. That can easily change from one household to another. If there aren't enough or you haven't yet found enough high-end clients in your neck of the woods to keep you busy doing the best you have to offer, then you either have to move to another location or learn to judge where the satisfaction level is with the market where you are and play them a tune they like. Size up the home, neighborhood and clients and approach it accordingly. Hard as it may be to swallow after working hard to learn perfection, people don't always want or can't afford your very best.
I learned while making my way up thru the ranks of contractors here that it's best to mentally/visually size things up, but also to ask the client just what level of refinement they wanted and were willing to pay for; on a 1 to 5 scale, for instance. I didn't put it that bluntly to them, but asked in a friendlier, less judgmental way. This helped communications immensely by hopefully putting us all on the same page as fast as possible. While there's a lot of guys out there who can only do a 1, 2 or 3……… and if that level fits the client's ticket and you won't do less than a 4……..you might just as well find out right away. I wouldn't do less than a 4 for anybody and found that doing 4s never hurt my standing with the folks that wanted a 5 for themselves. I just showed the potential high-end clients a portfolio of my best so they knew we were qualified. Maybe you're already doing this.
I know it isn't at all fair, but some guys walk into a mine shaft and within a few strokes of the pick-axe are into a huge vein of gold, but I think the most of us find ourselves in mines that we chiseled away at for quite a while before we found the vein or found out that there wasn't one. And some mines require an array of tools to move the dirt and find the vein.
Maybe the big vein in your area is already sewn up by other contractors and so you're not hearing from or even getting a shot at the market you'd really like to work. Breaking into someone else's territory can be difficult or border on the impossible. I hope so cause it took me a while to stake out mine and I've no intention of letting someone else have a shot at wooing my clients.
I'm not advising that you think about becoming a bottom feeder or that you change the crew you're so satisfied with after a long sorting process there, but maybe a bit more flexibility would be an asset in your particular market. Impossible to say from here.
Might some of the cause of your problems also be connected to a surge of new competition aggressively advertising and willing to work for less just to gain a foothold or a bigger piece of the pie? Carpenter wars?
Do you have any close relationships with local architects who promote your name and workmanship above others? Impressing these folks and pressing the flesh with them can sometimes pay off in a big way.
As a homeowner, I don't think I've ever gone for the lowest bid. I look at Professionalism in the bidding process (shows the ability to organize and communicate), clear thinking and knowledge about the ins and outs of what I'd like done, pride in the work done and personality (the intangible). Having won some sort of "builder of the year" or some other craftsman type award is a plus as it shows your ability to produce quality work too.
You need to find a way to reach clients that desire and can pay for quality. You need to analyze your client base and find out the way to appeal to them.
Lisa
Lisa,
I do seem to have a positive relationship with my current client base and community, they all imply that there happy they do,t have to worry about the job having me on the job. I do find i have a bit of a shortcomming with communication with customers for upcoming jobs because i'm always so focussed on the current job and have little office time. but I am trying to dvelope a web site to aid in communication and advertising as well as I'm going to print with a brochure I've been working on with my sister for the past year. but my question for you , is as a homeowner how do I reach you if you are looking for my level and not just shopping price. how do I evaluate my market exactly?
Keep the quality high!
How long have you guys been at it? If your doing great work it will be noticed. I worked with 2 of the better firms in San Diego co.. Not too big about 3 4 man crews with a couple of aces. These guys are known by the best architects in th county and get the plum jobs because they have the same reputaion as you guys have.
If just breaaking even is paying all your bills and enjoying life; stick it out a little more and see if the rewards start coming through.
Sounds like if you had one more ace you could double your work with minimal expense. I'm guessing your a better than average carpenter yourself so your jobs are bid out for 3 top notch carpenters. Most jobs I worked had one lead, one or 2 competent carpenters and a laborer depending on the size of the job. If you got 3 guys all making top dollar on one job that may be the problem. I know it's hard to add more components to these equations and note you have been refining your work force.
But don't consider cheapening yourself.
HTH
N
Change your market. In the end, you will not do as many jobs, but the ones that you get, you will be proud to have worked on. And those clients who are willing to pay for quality, never call in a different contractor once they have found a good one. So you'll have work for life.
Clients in the higher price bracket are generally much nicer to work for also. But the best part about those clients.... they allow you to do your job right. In my experience, the best clients "join the team" so to speak and understand that their job is to make sure that they support you in doing the project right. This includes timely decisions, access to the job site, comfortable and hospitable work environment, and financial backing even when things change. Oh yea, and trust..... that if they do their job well, you will do yours well.
Now those are my kind of clients.
One catch..... you actually have to do your job well.
Rob Kress
It's been my experience, that the poorest people have been the Most appreciative. They have made certain to feed me, take a coffee break, and I'am smiling while thinking of past clients, these less well off finacially clients always, always want to pay me. Jim J