Three things contractors must know to grow
Contractors who are operating from their business’s sweet spot can continue to grow while also having more time to themselves outside of work. If that’s something you’d like to work toward, start with this episode. We identify the three key things you MUST know in order to sustainably grow your construction company.
Topics we cover in this episode include:
- How to identify your unique offering
- How to identify your top clients
- Why top revenue clients may not be your best clients
- How to systematize your business
- How to identify where you should focus your efforts first
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Rob Williams, Profit Strategist | IronGateESS.com
Wade Carpenter, CPA, CGMA | CarpenterCPAs.com
Stephen Brown, Bonding Expert | McWins.com
TRANSCRIPT
[00:00:00] Rob Williams: Welcome to the Contractor Success Forum. Today we’re talking about three things contractors must know to grow their business.
And who do we have here to talk about this today? We have Wade Carpenter, Carpenter and Company, CPAs. And we have Stephen Brown with McDaniel-Whitley Bonding and Insurance Agency, and I am Rob Williams, author of the up and coming, The Pumpkin Plan for Contractors book, and IronGate Entrepreneurial Support Systems. And today we are talking about three things that contractors must know to grow their business
Is that–
[00:00:45] Stephen Brown: There’s only three things, that’s crazy.
[00:00:47] Rob Williams: Yeah, just three things. There are three things, I guess there can be three things, but this is sort of like a reverse guarantee. This doesn’t, if you do these three things, I guess you’re not guaranteed, but if you don’t do these three things, you’re guaranteed not to grow. So how about that? That’s like a reverse guarantee.
[00:01:05] Stephen Brown: Okay. Well, you know, give us a guarantee. Three things that we could bank on for contractors to grow their business.
Have a unique offering
[00:01:13] Rob Williams: The first thing that you need to do is you’ve got to have a unique offering. Your business has got to be something that you are passionate about that is unique and different. It’s not just the same–
[00:01:26] Stephen Brown: What do you mean? Like a trade specialty or what do you mean by that, unique offering?
[00:01:33] Rob Williams: Yeah, it could be a trade specialty. It’s actually a combination of a lot of different things. So what makes you different? That makes you where somebody is not offering the exact same thing. It’s not a commodity. It’s like when I was selling two by fours and lumbers. It’s not different. Now when I put it together into a truss package, and I was sort of the only one here. There’s another one here. But it was unique and different because it comes in a truss and your house is done. So it is a unique thing as opposed to stick framing.
[00:02:05] Stephen Brown: I remember they were beautiful trusses. And I had no immediate need for one, but I know I wanted one when I saw them.
[00:02:11] Rob Williams: They were great. I was actually in a Chipotle yesterday and they had exposed wood trusses in there and I was like, oh man, if I still had that, I probably would’ve built these. So, they were up there, the truss plates, and nobody had written any dirty words or something. I was actually thinking about that.
I was like, oh my God, I can think about this going through the plant and no smart ass can write something on here, which was always happening. It’s oh my God, I hope sheetrock is covering that up. So.
How to figure out your unique offering
[00:02:36] Stephen Brown: Well, how can you figure out what your unique offering is? How can you zone in and get a grip on what that is?
[00:02:43] Rob Williams: Well, there are a lot of different ways to do that. A lot of it’s what not to do. I think the first thing we do when we start our business, especially when we’re growing, is we look at the big guy and we say, I wanna be like them.
And we say, what’s the first thing we do? And just about anybody, when we start our business, we look at their website and we try to make our website look just like theirs, but just a little bit better. So we’re doing what they’re doing, we just think we’re gonna do it better.
Or we wanna be just like that big guy. I think that’s the most common thing. And I was in that boat. It’s oh, I wanna do all the things that are just like this guy. And so then you just make yourself a commodity and then you’re in a pricing situation, so you always have downward pricing pressure because you cannot necessarily ask what your product is worth anymore. You’re now fighting for who is the cheapest.
We’re gonna be less than that guy. That’s what we’re selling rather than adding the value. I tell you what’s an interesting story. We were just doing this offer drill with somebody about making the offer more, what you can stack things. What’s more and more to make your offer more and more unique.
And maybe it doesn’t even cost you anything. You just have something. It may be like checklists that you might put with your products or just some other services that doesn’t really cost you anything and then you can get that value up. But as soon as you’re a commodity and it’s just all the bids come in, which in our business that’s an interesting thing that comes up because you have all these bid services and the first thing they say is, I can’t be different. We just turn in these bids. But that’s not even true!
With the guys I know, with my trust business, when we’d be in these bid services, sometimes we’d just turn in the bids and we were a commodity and those were always low margins unless we just happened to be the only bidder.
But a lot of the time that bid situation started a conversation with us because, I don’t actually remember the rules, but I don’t think they have to take the lowest bid. They can take the one they want.
[00:04:52] Wade Carpenter: But typically that’s the one they’re gonna take is the low bid. So you’re just competing with just whoever gets to the lowest number. And, you know, I think a lot of contractors right now, we’re starting a new year as we’re recording this one. And they’re probably, saying at this point, you know, I didn’t do as well this year as I’d hoped to do.
And I had all these big plans and I think I see a lot of contractors out there, they figure out, well, hey, I’m gonna do all this advertising or go join this trade organization and do all these things and they never materialize. So, how does this unique offering, I mean, how can they pivot that to getting the work they want and the work that they make more money on?
Identify your top clients
[00:05:35] Rob Williams: That is a great question, which leads us to the second blank here. The second part is identify your top clients. So what we do with that is you ask them what makes you unique and you ask them to find out something that they want.
So, but first, who is they? And identify your top clients, the ones you wanna work with. Stephen, I think sometimes I hear you guys in bonding, talking a lot about having a niche, the niche that you work for. So who is that group?
I know we’ve talked about so much with you seeing the bonding that they have a, there’s a niche product that we’re talking about, our top offering, but a niche type of customer. Do they build small buildings? Do they build medical offices or who is that?
[00:06:20] Stephen Brown: Well, guarantee that you have a customer that you like the most, and you probably like them the most because they’re fair and easy to deal with, and you can make a fair profit on it.
[00:06:30] Rob Williams: Oh yeah.
[00:06:32] Stephen Brown: So there is a reason that customer that you like so much wants to do business with you. There’s a reason. What makes you unique and what makes you different. Is that what you’re saying?
[00:06:43] Rob Williams: Yeah, it is. But okay. In this case, we are actually trying to identify who, we like this now we’re being selfish. We’re not trying to be unique. I’m glad you said that because it sometimes it is confusing of when we’re trying to make ourselves the unique one, that was the first one.
Now we find out who is the unique group that we like that, who do we wanna do business with? And we actually have a way to determine that. We call it the Client Assessment. So if somebody wants to find out a little bit more to do that, we’re actually in the process of making some videos and some webinars and seminars on that plus other subjects similarly.
But just real briefly, you just make a spreadsheet, list it. Order your companies by revenue. The most revenue to the bottom. If you do that. And then you can have, we call it a, C or C. A Crush or Cringe function. And then you can have many other columns, do they pay you or something? What are the important columns to you?
[00:07:42] Stephen Brown: Do they pay you? Yeah, that’s a good one.
[00:07:44] Rob Williams: That’s always a big one.
Clients with the top revenue may not be your best clients
[00:07:45] Wade Carpenter: Well, I was gonna say, it is not just necessarily the ones you like and not necessarily the top revenue, because that can be a trap as well.
You can look at how fast do they pay you? What kind of profit are you making? We talk about the throughput. Are you getting that job in and out? Where can you make your money? Where’s your expertise? So is that what you’re talking about with the top clients?
[00:08:04] Rob Williams: It is. That’s exactly right. And the revenue, we like to put it in revenue because we find out who likes us. People lie through common courtesy. When you ask them if they like you. Judge it by where they’re putting their money. If they’re spending a lot of money on you, they’re not lying.
When I see you Stephen, we say, hi, how you doing? Said, oh, I’m great. Well, I may not tell you. Yeah, my kid’s got covid. I got all this stuff, and I don’t feel very well. I’m–
[00:08:29] Stephen Brown: Yeah. Well, good. Good luck to you, buddy.
[00:08:31] Rob Williams: Yeah, we lie about that. You don’t wanna hear about all this bad stuff. So when we say how we’re doing, people lie about that. So.
[00:08:38] Stephen Brown: That’s not true. Rob. I do wanna know.
[00:08:40] Rob Williams: That doesn’t mean we’re gonna like them back. Like Walmart, and actually even FedEx here in Memphis. They put so many people out of business, they’re hard to deal with. And I also think about how when we were basically the Walmart of the home building business. We were big people. I keep thinking about how I was probably not somebody’s favorite, even though we were big, we were really hard on them. Beating down the prices and people not being able to make the margins and stuff. So I think a lot of people wanted our business, but that could have been the worst thing for us because we had a lot of pricing pressure on them. So they probably would’ve ranked us lowest on margins.
[00:09:18] Wade Carpenter: Yeah using the Walmart analogy, they may have wanted the big dollar revenue, but a lot of times Walmart will beat up their vendors. They nitpick on the prices and, I’ve seen some general contractors do that. They’ll go through subs left and right and just back charge their way to-
[00:09:36] Rob Williams: We didn’t know we were being mean. We just knew we had to do it to be able to sell these affordable housings. We were the price competitive product at the time. So we had to be really tough on the pricing for people to have those jobs. We were happy to be providing jobs and everything, but maybe the workers that were getting paid by the hour were making the most money because the owner didn’t have much margin after it was all over. So.
[00:10:01] Stephen Brown: That’s kinda the point you were making, wasn’t it, Wade?
[00:10:04] Wade Carpenter: Yeah, and again, just because they’re the biggest revenue, that can be the biggest trap.
[00:10:10] Rob Williams: So as we’re talking about this, we’re looking at this diagram, these three circles that we have. So you can download this little article we have on there. And so we first talked about have your unique offering and then we just talked about identifying your top clients.
Which by the way, the one thing I didn’t say about that is when you make that spreadsheet, it can be different from everybody. You can work with somebody like me or Wade or somebody else to identify what is it about you? Maybe you’re a real strong cash position, so maybe you’re not concerned about the longer payables. That may be your competitive advantage where you’re gonna get business because it’s 60, 90 day terms.
Maybe you’re growing and you need that cash. So your best client is gonna be somebody that pays you in seven days, or pays you for materials upfront, or something like that. So each business is gonna have a different one. So it’s gonna be a different fit of who is the ideal client. And maybe you like to argue, maybe you just love to come to work and scream and yell and argue.
So that cringe person, because I talked to that crush or cringe factor is when the, you pick up the phone, do you like, cringe? The big trick to that if you’re cringing, is you just start pressing that mute button on and off. Hey I think I’m going out of–oh– sorry. Okay. And the phone goes out, so, that’s your crush or cringe model. So.
[00:11:26] Stephen Brown: Absolutely. I don’t have any clients like that. I just love talking to everyone of them. Okay. All right.
[00:11:33] Wade Carpenter: That’s a good PR.
[00:11:34] Rob Williams: Yeah, that’s right. You actually, I’m embarrassed to say that because I’ve got these little headset things that really do go out a lot. They’re these Bluetooth, so now anybody, anytime these go out, people are gonna think I’m hanging up on them.
[00:11:47] Stephen Brown: They’re gonna think you’re jerking them– hey, for professionals, service providers, the most important thing is are they taking your advice? Are they paying their bills on time? That’s it.
But as a contractor, you’ve gotta understand what unique offering that makes you better than any of your competitors. And then you’ve gotta understand what your key clients are. What’s the third one?
Systemize your business
[00:12:14] Rob Williams: The third one is, can you systemize this business? Is systemization possible? And so, what does that mean? I know Wade likes the system stuff also a lot, so.
[00:12:25] Stephen Brown: You know, like in a restaurant if they don’t serve the exact same food and it tastes the same way the last time you had it when you liked it in order, you’re not gonna be back.
[00:12:35] Wade Carpenter: Right.
[00:12:36] Stephen Brown: There’s gotta be all these systems in place to make that unique offering perfect for those best clients over and over again.
[00:12:45] Rob Williams: Yep. It’s interesting you said that too because my first impression when I heard these concepts from the Pumpkin Plan and The Sweet Spot, how to develop your seed, that’s kinda where this comes from, is you system systemize things like we did in lean manufacturing so you can be cheaper or provide a better service.
But today we’re actually talking about systemizing so you can grow. So my first t hought was like, Stephen, we do this for efficiency and we do it for consistent delivery of the service, but repetitively doing it, if you don’t have this systematized, we find this with contractors all the time. You can only grow to the amount that you work your ass off until you don’t have any more capacity.
Because how many times have we heard a contractor say, well hey, I’m full, I can’t do anymore. I’ve been like, I was like, I don’t want anymore work. My plate is full. I don’t have it. Well, you systematize what you do so somebody else can do that work, not you as the owner. So that’s our point today, is systematizing it so you can grow. So you’re not just limited to what you can do.
[00:13:59] Wade Carpenter: I know we’ve used the example of bath fitters on here before, but you know, if you’re doing something consistently, the same way every time, you gotta be more efficient at it. And unfortunately, in construction, a lot of times you have these one off projects that are very different.
To the extent you can get the same kind of like kitchens or bathrooms or whatever your niche is, then that is where you can say, hey, we know we’re always gonna have this. We can create a checklist and we can say, hey, this is what we need to do to get the job done. We can get in, get out, make more money, make the client happier.
[00:14:35] Rob Williams: Yep. And be able to do more. When you can’t systematize it, you’re just trading time for money because you are out there doing the work and it’s as many as you can do. If you don’t have to be on that job and you can write up the processes and procedures to have someone else deliver all of that work without you being there, then you can grow.
You can’t grow, you’re limited to what you can do, if you don’t have that systematized.
Which that brings up now, how do you identify on these three circles, which we didn’t actually describe it. We have this Venn diagram, and you have three circles overlapping each other.
So we have your unique offering up on the top right. And then you have your top client on the top left, and then your yeah, if you can see it. There you go. And we can see if you’re watching this on YouTube, you can see it and your system’s on the bottom. But if you don’t have your unique offering and you do have your top client and your system, then you’re gonna have that downward price pressure.
So if you’re feeling that you can’t get more for your product, look and see if you’re unique. If you raise your price and everybody goes away, most people have just not tried raising their price to what they’re worth. Figure out what you’re worth. If people start leaving, then you’re probably not unique.
Let’s go to the bottom one. If you don’t have your systems, but you do have your unique offering and your top client, then your trading time for money. If you can work eight hours, you can make that much money. If you can work 12 hours a day, you can make more money because you’re performing the work.
Now, there are some people, they have a unique offering, they’re passionate about it. Actually, I’ve seen this a lot. We’ve got a lot of inventors and ideas. They have this great product offering that they love, they’re passionate about it. They may have invented it.
And then they have a system to get this done, but they don’t have any clients. Nobody wants it. Well, we have a special term for this, and you know what that term is called? We just say you’re screwed. So you’re screwed you can’t nobody wants it. So, I’ve seen the inventors’ great ideas out there.
So that’s where you are with that. So on that beautiful note, those are our three things that you have to have to grow your business.
[00:16:50] Stephen Brown: All right. Gotta have ’em.
[00:16:53] Rob Williams: A lot of people when they get this seed, you guys, you contractors. You may have to invent it a couple of times, keep going after it.
Be persistent, get it. But this is where you can really hit that home run and grow. We won’t guarantee that your first idea if you do these is going to work every time. But we can guarantee you that if you don’t have them, you cannot grow colossally, as we say, into a giant pumpkin. For our pumpkin farmers, which is a different aspect, which we discuss in the Pumpkin Plan for Contractors book, which will be coming to you soon because I’m writing it and I’m doing all this research with Stephen and Wade and all of our listeners out there.
[00:17:32] Stephen Brown: Great, Rob. It sounds wonderful.
[00:17:35] Wade Carpenter: Yeah, this has been great, Rob. I think a lot of people are out there, they just get so frustrated. They can’t grow. They keep doing the same thing. And it can be scary. Just like my own practice. I’ve been really good with contractors for years, but when I finally said, hey, contractors are all I’m doing, you get this mindset like, I’m gonna lose all this other business.
And it really will change your life once you embrace it and you find that niche. So it can be scary to get there. Probably didn’t say that very eloquently, but it can be a very scary thing.
[00:18:06] Rob Williams: Yeah.
[00:18:07] Wade Carpenter: So I’m glad You bringing these things up.
[00:18:09] Stephen Brown: The forest through the trees. You’re so busy. and that’s what you’re saying. You gotta take the time to, to think this out and put these systems in place.
How to identify which area you need to focus on
[00:18:17] Rob Williams: Yeah, and I guess I’m glad you said that Wade, identifying this one summary of it. So if you guys can listen to this one and take it away. If you’re having a problem with this, which everybody will have, you’re having a problem in your business growing, because we’re writing the book for contractors that wanna grow their business, but they’re having a hard time being profitable while they grow. Or having enough time after they do it. So you wanna grow your business to have a better lifestyle, not a worse lifestyle. So our passion is to transform the contractors.
So how do you do that? When you’re looking at these, if you are having a problem getting enough money for your a product, well first you have to ask for it and you have to figure out what you should be getting, what your value is. But if you can’t get that means somebody else is providing it, or it doesn’t have the value.
On the other hand, if you are working your butt off and you just can’t work anymore, there’s no time for you, look at your systems, your systemization. If you have your systemization, you’ve got a unique offering, but you just don’t have anybody that wants it, it’s not about the price. We’d say you’re screwed, but actually you can identify your ideal clients and start asking them.
Ask them questions about, what is it about our industry? You may not wanna word it about you because as we said earlier, people lie about it, so ask them what is it about my industry that’s wrong? What is that? And ask them these questions. That probably means that’s what you need to work on. So, those are the three ways to identify. I think that’s a real strong takeaway. Identify which issue you have and which area you need to work on first.
So hopefully that will help some of our guys and get some value to the Contractor, Success, Forum. And we appreciate everybody coming out here today and helping us. And we have Wade Carpenter, Carpenter and Company CPAs. And we have Stephen Brown with McDaniel-Whitley Bonding and Insurance Agency. And I am Rob Williams, again, author of the Pumpkin Plan for Contractors, soon to be, and IronGate Entrepreneurial Support Systems.
So we appreciate you listening to the Contractor Success Forum. If you’re on the podcast, find us on YouTube and see us there.
You could see the diagram.
[00:20:26] Stephen Brown: Go to our website.
[00:20:27] Rob Williams: Yes, and go to our website, Contractor Success Forum dot com and get lots of great information. So, and if you need me and more info information about this, it’s IronGateESS.com.
Appreciate it, and everybody have a great day. And come back and listen to the Contractor success Forum. Oh, by the way, help us out. Subscribe like us, do those things. Please subscribe on the YouTube channel and that will help us get, we need to get to certain numbers so more people can hear this, so they’ll put this in front of more people.
So thanks a lot and come back and see the Contractor Success Forum. We’ll see ya.