Have you ever “gone for it” only to discover that you hadn’t really prepared to take care of it?
Have you ever thought, “This will get better,” only to find it progressively worsening?
Have you ever found “just the right person” to fill a vacancy on your team and then discovered the thing (s)he does best is lie?
Then, continue reading for practical insights and approaches to dealing with some challenges of running a construction contracting business.
Contractor Horror Story 1 – I got the bid.
We recently learned of a young fellow (we’ll call him Mark) who had worked in his trade for a little over five years. Mark felt that he wanted to set out on his own. So he did. From getting his license to hiring a few hands and all the other details involved, he put together a new construction business.
Then, wham! Reality hit. He realized he had gotten his first job with a bid that would not cover his expenses.
We don’t know how Mark’s story will end. We do know that a few more mature contractors offered him some advice along the lines of, “Every nail, every screw, every minute, every possible overhead charge, every gram of gas, every possible delay must be accounted for before you bid.” Another said, “Have a conversation with the client, be honest, hope for mercy.” Yet another advised, “I agree, talk to the client, but my first visit would be to my attorney with the contract.”
Mark’s case is not unusual. He was about three-fourths of the way through the project and ran out of funds. We know some contractors with similar (but less disastrous) problems. While they can get through the job, pay their employees, and pay their bills, nothing is left over at the end of the day. They make no profit, and they live from job to job without being able to save, invest, or grow.
Our advice to Mark is similar to that of the more mature contractors. We would emphasize that he should know his numbers and plan for profit before he bids.
One final bit of advice that Mark received from a seasoned contractor was, “The good news is you paid for a real education, so don’t waste it.”
We agree.
Contractor Horror Story 2 – I didn’t charge for the estimate.
Yes, we know this one is controversial. Should you or shouldn’t you charge for the estimate? And we know that different circumstances will come into play. But in the overall scheme of things, deciding to charge for estimates allows you to:
Pre-qualify potential clients.
Compensate for your time.
Reduce the perception that your services are not valuable.
The following story concerns an accounting professional, but the concepts and propositions apply to other professions, including construction contracting.
The founder and owner of The Profit Constructors, Tonya Schulte, in her position as a mentor to another construction-centric accounting professional, suggested that her mentee begin charging for estimates. The mentee had expressed frustration with the many tire kickers she had encountered. Even though frustrated, it took a little while before the mentee decided to try it.
When she did, she called Tonya and was fully elated with the outcome. No, she didn’t persuade the prospect to come on board. But she was pretty happy that she had not put hours of her time into preparing a proposal, more time discussing it with the prospect, and then finding out that nothing would come of it. This mentee has changed her processes and now charges for all her estimates. Her firm is thriving and growing, and she has less frustration concerning those who don’t know what they’re searching for, those who simply can’t afford her services, the tire kickers, or other time wasters that might come her way.
You must inform prospects from the get-go when deciding to charge for estimates. Don’t surprise anyone with a bill they didn’t expect.
For a fuller explanation of the concept, read this article, It’s Time to Stop Estimating for Free, by Bryan Kaplan. Bryan’s article is directed at home builders and remodelers but can easily be put to use by a variety of construction contractors.
Contractor Horror Story 3 – I ignored the red flags.
We know a contractor who is full of integrity. He treats others fairly and generously. His clients, employees, and suppliers know they can count on him to be considerate, honest, and above board in his dealings.
One of the problems this contractor (we’ll call him Derik) has is that he tends to think that others will also behave with integrity, even though there is plenty of proof that many do not. Occasionally, Derik comes across folks who not only don’t know how to spell integrity but don’t have an ounce of integrity in their being.
Big smiles, firm handshakes, and all the “regular stuff” that happens between people agreeing to a construction contract can become skewed when one or the other is a stinker.
Derik had spent some time with the representatives of a big-name construction firm, gone through the pre-bid stages, submitted his bid, gotten the bid, and became excited about the possibilities ahead.
He admitted later that he had seen a few things that seemed off but ignored them because of his excitement over the project. While there were many red flags Derik noticed along the way, they can be encapsulated by these three categories:
A tendency to manipulate.
Lying for personal gain.
No care for the well-being of others.
Being ever vigilant doesn’t mean you don’t trust anyone; it means you must be attuned to what is happening around you, even when you’re chomping at the bit to get in the game. Remember that even big-name contractors can have stinkers on their payroll. Watch for them.
Contractor Horror Story 4 – I opened the email.
The data on your email account is much more valuable than you might at first think. A pair of examples are:
A scammer who gains access to your business email could steal all your contacts.
They could also send spam from your domain name and IP addresses.
According to TechJury.net, Email is responsible for 91% of all cyber-attacks. (See point #11 in the list.)
Critical components of a comprehensive cybersecurity strategy include:
Regular security assessments
Employee training programs
Incident response plans
Recently, our team received the following message (in Slack) from Tonya Schulte, the founder and owner of The Profit Constructors:
To put a finer point on last week’s discussion on cyber security: Here is another main reason to continue redirecting clients AWAY from email and to our portals and Slack. I just read a Facebook post about someone who opened a file sent from a ‘potential client’ who looked legit and installed ransomware on her laptop.
A reply to her Facebook post was from someone well-known in our industry who said she also got hit because she got what looked like a legitimate email from an actual (newer) client who insisted she sign an NDA (non-disclosure agreement.) So she opened it and was hacked, AND it sent the same email to everyone in her contact list.
TechTarget recommends these Top 15 email security best practices for 2024.
Contractor Horror Story 5 – I hired the wrong person.
The time and money spent on locating, hiring, training, and bringing an employee into the fold is well worth it when you get the right person. But finding out you hired the wrong person is a pain in the posterior.
In the article, Avoid the 5 Construction Donkeys that we posted a while back, we said, “We’re going to look at the five donkeys as construction subcontractors in the following article. You can just as quickly look at ways to deal with any of your employees who fall into one or more donkey categories.”
The article mentions these five donkeys:
Slacker
Whiner
Blamer
Stealer
Duller
If you’ve hired someone who turns out to be a donkey, click the link to the article, which offers practical advice on how to deal with each situation.
Bonus Contractor Horror Story – I didn’t get feedback when my bid wasn’t chosen.
Get feedback every time your bid is NOT chosen. It is simple to ask, “Why didn’t I get the bid?” It isn’t meant to be a contentious question. It is intended to add to your knowledge and help you bid better in the future.
Ambitious Construction Contractors look to The Profit Constructors to provide advocacy in dealing with:
Clients and customers
Employees and subcontractors
Vendors and service providers
Governmental entities
Working with The Profit Constructors gives Construction Contractors the means to organize their operations in ways that help them:
Remain informed
Avoid hassles
Reduce risks
Be future-ready
Ready for action? Or want to know more? Get in touch today to schedule a complimentary discovery call. 866-629-7735
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