I know you must be thinking, “Holy crap, is this guy nuts!” Just the title of this indicates, to some people in our industry, a lack of sanity.
Let me just remind you that you will always have competition. The marketplace will always have new people entering, at least if it looks like there is no downside to entering. After they are in, it may seem to some that there is only a downside. Their investment may seem to be evaporating, and requires them to put in more money. So, once they are in, they are going to do their best to save the initial investment.
For this reason, part of your business plan must focus on the competition. You will have to know exactly what they are doing and how. You may find quite a few surprises. You should invest in acquiring this knowledge. Usually you will only have to spend a short amount of time keeping up. But keep up.
About Price
Price is seldom an issue. Most Consumers are more concerned with wasting money than saving it. They are willing to spend money to get the job they want. If you are the low price, your Product or your labor may be seen as too cheap or inferior and it does not guarantee you the job. Very few people will deem it a bargain, instead you may be looked at suspiciously and have to justify your low price. Crazy, isn’t it? There are a very few people who may value a high price as indicative of the “best,” no matter the real quality of the Product. I have been looking for these high price shoppers and they are rare. Make sure you listen to the Consumer, and know your competition before you submit a bid.
Shop Before You Drop… Your Money into Any Business.
You will be amazed at how eager people in general are to tell you what they think or think they know. Be wary as they may be expressing how they feel today and not how business is consistently. This involves getting estimates, making calls, and what can be a loathsome process, where you meet the enemy and allow them to sell to you. At one time I hated doing this, then I realized they were all doing the same to me. Look at how they do things and at what they do well and do poorly. These are the honest tools to get more jobs.
Keep in mind that most will be enraged if they know that you are shopping. Find a job you understand in a friend’s home, or your own home, and make sure to get three estimates. Don’t hold your breath if some do not show, this happened to me over and over.
Story Number One
In one case, a friend was getting his bathroom completely remodeled and I needed to shop. So, I hung out with him. Out of ten bid request phone calls, only two showed up, neither completely bid the job. They wanted him to do some of the work, like material ordering. So, he called ten more Contractors. Finally, he received one honest bid, labor and material, from a calm and thorough Contractor. Twenty calls, one complete success. It takes time to shop materials and determine fees like permits and labor. After he purchased his remodel from this Contractor, most of the others finally called him back and were upset he had purchased. Amazing.
I hired the same Contractor after the work was finished to do work for my employer at the time. The point is keeping appointments and promises is the same as keeping your word. You could beat the competition by simply being honest and timely.
Story Number Two
In another case, I went to a Consumer’s home to give him an estimate. The Consumer had the brilliant idea to have many people out to bid the same work, on the same day, at the same time, to save himself time. Several of us decided to bid the same Product for the exact same price, some just drove away, none wanted to get into a bidding war.
When idea caught hold, we passed around a diagram, so we could photo it and write notes in case we were selected. We gave the Consumer the exact same information from about 11 companies. The Consumer just wanted the numbers and no Sales presentation and that is what he got. We learned about each other’s concerns and about how we bid jobs.
Later, several of us met for lunch and spoke about the business. One met me for breakfast once a month after that. He gave me another view regarding the same issues I was having. We cooperated on some work after that and talked for years about business. These trade relationships can benefit everyone which is why you should also join trade organizations to get hints.
Know Your Focus
So, some businesses focus on repairs and install only as a supplement to their main business. You may find some Contractors that install and only repair as a supplement. Others are focused on the high-end and some are more comfortable on the low-end. Find out who is what. Call them and most will tell you we are the best at doing blank. Make a checklist of what you will sell the features and benefits of working with you for. Determine as best you can what share of the market fits your model, and don’t forget to keep investigating. Ask every Consumer, whether you sell them or not, to tell you about the other bids they’ve obtained. If you were referred to them, I bet you are the only bidder.
Now, I never meant to say you would only have one competitor, or that you would not want to destroy them, but respect is what a worthy foe deserves. Did I mention never, ever, bad mouth the competition? It only reflects badly on one person, you. Know and respect the Competitors.
Ask and Ye Shall Receive Story Number Three
I would always ask a Consumer who was bidding against me. When one Consumer told me, I could tell him he would have good bids because I had shopped. I told him who would bid what and exactly what they would tell him. On a $5000 job, I could describe each of the other bids and what he would get.
He was shocked when I was exactly right, almost to the dollar. I even knew how long the appointment would take. When I got the job, he told me it was because I was the pro that would not bad mouth anyone. He also said I was spot-on and implied he liked both competitors. I realized that I was lucky to get the job because no one likes a know-it-all.
People will buy from people whose knowledge they respect, not just those they like. Knowing exactly how to install has always helped me. It is always better to be liked, but if you look like a pro, you can sell everyone, even those that are not your cup of tea.
Know the competition, learn from them, they are often the only ones who understand your struggles. Once you get to know them, they can also help you sell.
Dishonesty
A little about dishonest competition. You can offset the competition by simply informing Consumers. Tell them, or better yet, have a brochure about your company in a prepared package. Show Consumers your insurance and licenses, and make sure to leave them copies. They will expect the same from other bidders.
Take the time to tell them why you do things the right way and how insurance may not cover illegal or bad work from unlicensed Contractors. Background checks can be a great asset, especially with Consumers who have had bad experiences in the past. Your License board will have free brochures about what not to do when you hire. Know it and hand it out.
The point is that perhaps having an honest competitor is not such a bad thing. They shop for you, tell you what they are doing, and when they beat you, it is at a fair price. You can read their ads, websites, or even see them at the little league field or at trade shows and see their level of success.
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