How To Beat The Competition 1

[PressurePros 249]

I am going to do a series of articles here on TGS based upon what I have learned from various marketing gurus, my personal experience in the corporate and business world and what I have read from various contractors. This first article wil be an overview and the next few articles will dive more into details. The only thing you need to bring is an open, coachable mind.

Every business owner faces the same dilemmas.

• How do I keep that phone ringing?

• How can I hire help when I am not even sure I can keep myself busy?

• Where can I spend the least amount of money and get the best return?

SELLING ON PRICE

If anyone is from the same school of thought as I, then they understand that price is only one variable in the selling of service. It is a slippery slope to start undercutting and seling on price. Here are some things I have read on here and various BBS's.

"If you tried to get those prices down here, you'd get laughed at."

"All people are interested in around here is the price"

"Those HOA's.. it's always just about price"

"I'm competing against guys that advertise $99 house washes, what am I supposed to do?"

"The Yellow Pages suck, it's just a bunch of cheap people calling for the best price"

These are alll valid concerns but to a large degree, they are all false. Sure, people consider price when making a decision but not merely in the way you may think. The largest budget consideration for a consumer is not whether or not you are the most expensive, it's whether or not they think they can afford the service. Their answer is always "no". You're answer should be "you can't afford not to". More on selling the value of a service later.

If you are skimming this article, read this next line and paragraph a couple of times.

_____________________________________________

People shop on price because they do not know what else to base their decision upon.

It is your responsibility through marketing and sales to educate the public. People want to be sold. They don't want to be pressured, but people get high from buying goods or a service. I can tell you from the experience of being the highest guy in my marketplace that if you take the time to educate a person as to what they should be looking for, you will get the sale. Increased sales at higher profit margins means more advertising money to hinder your competition.

______________________________________________

I have heard this statement made and it's very accurate.

"If you want to see what, where and why Joe Smith buys, see the world through Joe Smith's eyes"

Joe Smith knows not to trust contractors. Joe Smith knows that the job he gets will probably be mediocre. Joe Smith knows that regardless of the price he is going to be ripped off. Why the hell would Joe Smith want to pay me top dollar when he knows all of these things? Is it because I am a better washer? No. What I am better at is making my customer feel at ease with his purchase and delivering on everything I promise.

Mr. John Smith, do you want:

• Your initial call returned within 12 hours?

• A clean cut person in company logo'd gear to come to your home for the estimate?

• A company representative that will listen and make suggestions based upon a detailed exterior evaluation of your property?

• The presentation of professionally designed literature that outlines services along with a full portfolio of before and after exterior restoration pictures?

• Toll Free numbers with automated extensions, direct cell numbers, logo'd trucks, the right equipment to start and complete the job, polite employees that speak clear English and wear ID badges?

• A company with a customer database that allows monthly follow up with newsletters letting you know what's going on with that company, local laws governing washing your car and a discount coupon for being a loyal customer?

These things cost Mr Homeowner and he knows it. If you are targeting a higher income demographic like I have seen many people suggest, these are the things he is looking for and is willing to pay a reasonable premium for. He sleeps well at night knowing the few extra dollars he is spending on my service means far less aggravation in the future.

Some old timers or newbies that insist it's still about price and will continue to sell based upon fear of learning and implementing new ideas may eventually stagnate, shrink then disappear. Think of any large company with which you have done business.. How many of those companies /stores /contractors (that sold unique products) did you give repeat business to? Were your decisions based solely on price?

Do you drink the soda that comes in three liter bottles for 49 cents? Do you buy the least expensive paint knowing it could (and probably will) look like crap? Would you hire a homeless guy that stands at the mini mart near your home to cut your lawn or paint your fence? Why not? He is cheapest. How about that doctor that went to Upstairs University as opposed to the guy from Johns Hopkin's? Will you let him operate on your kid if he offers a better rate?

A home is a person's largest expense in the course of their entire lifetime. New roofs cost $12,000. New Flagstone patios cost $8,000. New decks go for maybe $10,000. An exterior painting can set you back $3,000+. Everyone reading this that owns a home pays these prices. Why on earth would you sell yourself short and offer $150 whole house washes with gutter scrubbing? What makes you think that someone wants to hire a hack (which, until you educate them, is the way you are perceived) to possibly damage what they have worked so hard for? Educate..remove their fear and apprehensions..make yourself different!

Your goal is to make the customer believe that he would be CRAZY to hire anyone else. That he he will have absolutely no issue with work performed, your honesty or your business integrity.

My hope is that this message has reached one person. If you still doubt the validity of what I wrote I will list for you single crew service businesses doing $500k per year in Florida, Texas, and Arizona.

[Richard Ivy 14]

Excellent. Thanks Ken.

[bforbis 14]

Ken,

That was a great post. I have learned a lot from TGS and try everyday to put something new into action and improve on what I have. For example; Several months ago I think Jeff and a few others posted examples of "detailed" estimates and additional discussions on how to sell and delivery.

I reworked a flyer, my estimates/proposals and went to work selling to some businesses I wanted to target.

I came home today with two new accounts for monthly service at almost double the price I expected and scheduled meetings with district managers for a chain of restaurants.

THANKS TO EVERYONE FOR SHARING YOUR IDEAS AND PROVEN METHODS!

[Steve Kiser 14]

If you are skimming this article, read this next line and paragraph a couple of times.

_____________________________________________

People shop on price because they do not know what else to base their decision upon.

It is your responsibility through marketing and sales to educate the public. People want to be sold. They don't want to be pressured, but people get high from buying goods or a service. I can tell you from the experience of being the highest guy in my marketplace that if you take the time to educate a person as to what they should be looking for, you will get the sale. Increased sales at higher profit margins means more advertising money to hinder your competition.

Oh so true!!!! Awsome post

[Ron Musgraves 240]

Be consistent!!!!!!!!!!!!!!!!!! That’s all I can say, what ever you do stick with it and keep after them…

[PWkid 79]

My hope is that this message has reached one person. If you still doubt the validity of what I wrote I will list for you single crew service businesses doing $500k per year in Florida, Texas, and Arizona.

I will be there one day.I am close but not quite.

Thanks Ken.

[Mark Williamson 14]

I cant wait for more!! Selling my service.... Thats the difference between 50,000 AND 500,000 a year.

[Jeff 232]

Thanks Ken

Keep it coming

[PowerPlay 14]

This information is on time! I always enjoy reading more on these subjects.

Keep 'em coming Ken, and thanks!

[Littlefield 65]

Beth, can we get a copy of these put in the Library? I'd hate for some one to miss these later. Ken, very insightful. Looking forward to chapter 2!

[mikew 14]

Thanks Ken for taking the time to write this. Really great information. Looking forward to the next installment!

Mike

[eads 14]

An excellent and insightful post Ken. Looking forward to the next post.

[newlook 265]

Ken,

Great read and certainly ontime for the upcoming season. The only thing that I would add ~ I think Ron touched on ~ it is extremely important to not only stay consistent with your work but also stay consistent with your pricing. Always keep a mind set of how you can promote your business further.

Ken was not kidding about crews out there taking their sales of 500K. There are even some out there that did a million in '05.

Ken...great job.

[JFife 14]

Ken/carlos, etc., Is about 500k what you expect an efficient crew of (2) men to make in an entire working season?? (gross) Do you consider that the ultimate top-end, or just above average??

Carlos, when you speak of a crew making 1mil, are you meaning a crew of 2/3 guys, and the owner of the biz running the biz--marketing, paper, bids, etc.?? Or are you speaking of owner/op'd biz'?

Great words Ken! That was a good line--people shop on price because they don't know what else to base a decision on. Well put.

[Beth n Rod 1,279]

We sure can!

Ken would you like to put a copy of your post in the Library Forum? If it is too much trouble say the word and I will do it.

Beth

[PressurePros 249]

I'm glad so many of you enjoyed reading this. I love to write and I live business so something like this is a good outlet for me to give back to the community and to the new guy. Beth, I would be happy to have this in the library. If you wouldn't mind doing that for me I'd appreciate it as I am not sure what that entails?

Jon Fife, It's hard to speculate as to what is possible. I know one example I have is a guy that started a carpet cleaning business about 20 years ago. He has a single truck and crew. I don't know how many guys he uses. Through maximising his market, tweaking every last ounce of efficiency his one truck grosses back the amount mentioned. Put that into perspective with his $$ per ticket. The average carpet cleaning invoice has to be lower than the average cleaning/restoration invoice. It's a lofty goal, and there are a bunch of cynics (myself as well when I hear bloated claims) but obviously the hard work and proper marketing can pay off.

[Jarrod 22]

Nice post Ken!

[newlook 265]

Hey Jon,

I meant that the owner is running the office and doing the marketing while his crew(s) are out their doing the labor.

[JFife 14]

Carlos,

...so using your example (1mil), do you feel that this # is possible for a single crew of workers, while the owner is running the biz? Like you said, doing the marketing, sales, keeping the guys supplied, books, etc. I am just trying to see what you guys think an efficient "crew" should be able to do. I know there are variables---some jobs, like flatwork, don't have high 'per job' expenses, so theoretically, a $1000 flatwork job generates more profit than a $1000 deck job.

[John T 744]

Excellent Post Ken!!

I'm going to just speculate here since I can't back it with facts but I'm guessing to gross a 1,000,000 here in long Island NY maybe easier to attain since the prices of everything here has skyrocketed to the point where a starter house goes for about $400-$450,000. SO with that being said I would have to guestimate that to gross a Million plus you would have to have the owner of the business doing the estimates a basically running the business while he has about 6 employees out in the field doing the manual labor. Now with these 6 employee's they have to average about $170,000gross each to reach that lofty goal.

When I re-read what I wrote here I think the only way to reach that magic number of $1,000,000 gross you most likely will need a ton of commercial work.....and there we go back to that Commercial vs. residential work thats in another thread.

[JFife 14]

I too think 1mil is high for one crew, unless it is a biz that has high material cost (four guys could easily build 1mil. in houses in a year). I think if you had two real ballbreakers, you could hit 500k, working all year and nothing really bad happening (ie. lawsuits, etc).

John T, what does you partner do in biz a year?? Is he just a labor company or is he doing retail as well??

Here is a fun Question: How much money would you anticipate "bringing home" on these gross numbers??

250K

500K

1M

My numbers: You'd bring home 100K grossing 250K, 150K grossing 500K, and 200K-250K grossing 1M. (not mentioning the obvious variables)

I figure an owner op. can do about 200K in work a year, with a helper, maxed out. Of that, he can profit 100K. What do you think of my numbers, JohnT??

[newlook 265]

I am catching up on the thread. Great questions and good info. Jon, it would be very difficult if just one crew was blowing water and the owner was pushing paper to gross the million mark. Just my opinion. I am with John T. on this one...you would have to do alot of commercial work.

For us, we are involved in different industries. Concrete, powerwashing, landscape design and painting. By having different services affords us the opportunity to reach those financial bench marks we are currently discussing.

[John T 744]

I too think 1mil is high for one crew, unless it is a biz that has high material cost (four guys could easily build 1mil. in houses in a year). I think if you had two real ballbreakers, you could hit 500k, working all year and nothing really bad happening (ie. lawsuits, etc).

John T, what does you partner do in biz a year?? Is he just a labor company or is he doing retail as well??

Here is a fun Question: How much money would you anticipate "bringing home" on these gross numbers??

250K

500K

1M

My numbers: You'd bring home 100K grossing 250K, 150K grossing 500K, and 200K-250K grossing 1M. (not mentioning the obvious variables)

I figure an owner op. can do about 200K in work a year, with a helper, maxed out. Of that, he can profit 100K. What do you think of my numbers, JohnT??

As for my partner he's business grosses in the neighborhood of $3,000,000yr and his biggest part of his business is installing Built in Pools. He also has a cleaning service part where he does over 700 openings and 700 closings of the pools which both of these averaging over $200 each. He also has hundreds of weakly vacuuming's( not sure how many here) that average about $40/Pool. He owns the concrete forms to make the pools and he also installs Steel wall built in pools. On top of that he builds concrete pools for other pool companies and now he has just put together a Masonary end of his business..and the money there is insane..Now thats a great business alone to be in..All this and my partner is not even 40 yet..He can't retire fast enough here but he has 2 yrs to go to earn his pension then he's gone that very day.

Jon your Numbers sound about right. I know the bigger you get the smaller percentage you make which leads me back to my partner. He earns in the neighborhood of $300,000 which is about 10% of his gross and thats about right. The kicker once again is that he's adding that masonary end and that is where his number will go off the charts. He's figuring on selling around $600,000 worth of brick work for the patio's for his pools etc and out of that he expects to pocket at least 40% of the gross and that is an insane number but masonary is like that......Why do you think the MOB was always involved in Concrete?? It wasn't just for the cement shoes:)

[Jeff 232]

Are you guys talking 1 crew say 2 guys doing 1 mill?

Pwing I can see multiple crews making a total of 1M or more in a urban area and the owner doing all the sales etc. They would have to corner the market. In an urban area if someone was to do restoration cleaning I think that well over a mill or several million could be done. Im talking more than just pwing

My goal is to by 2008-2010 to have done 500K in one year. I just dont know if that 500K could be maintained year after year in this area just doing PWing & gutter cleaning. this would be running 3, 1-3 man crews with some additional labor as needed. Close to a 1/3 of that being profit. I dont think this is unobtainable goal for my area so I would think in a urban metropolitan area 1 mill could be done easy

To achieve 1 mill doing PWing tone of he hardest part is employees, maintaining reliable help

JL

[John T 744]

Jon here's a couple of pictures of a Pool/Patio and fence my partner put in my backyard 2 yrs ago and he only showed up to measure out where to put my pool and then he showed up after it was all done. He didn't put that Shed there in that one picture and can you see the water tanks next to my shed?? My wife keeps telling me to move those tanks somewhere else:)