Licensed, Insured AND Worker's Comp?

[geobet1 14]

I've read numerous posts here and on other boards about low-ballers. I've also discovered that the universal approach on this and other boards, in dealing with them, is to simply take the high road, i.e., explain to the client the benefit of your services and that your higher embedded costs for your business vs the unlicensed, uninsured and obviously worker's comp deficient "low-baller" is greater. HELLO! . . . anyone thinking that the playing field isn't level?

Convincing the client that your services cost more, because you're legal bases are "covered", is, in my experience, at best ineffective in my operating area. It apparently falls on deaf ears.

In calling back on several lost bids, I've discovered that price alone was the real motivating factor for their decision. And, in the client's words, their rationale was, "Don't you all do the same thing anyway?" In other words, they don't place a premium on the core supporting values and associated costs that are fundemental in driving an effective, legally compliant business. Such concerns are not on their radar. They're price shoppers. Obviously, shame on them! They should know better! Especially as a result of all the media coverage concerning prosecutions of illegal contractors that have and still are progressing due to our past hurricanes.

They simply wanted the "lowest" price. And, before you speculate otherwise, these clients are affluent retirees and can well afford any of our prices. And, guess who got the jobs . . . the low ballers driving around in a moss covered pickup truck with hand lettered cardboard signs duct taped to the doors , or a yugo with three bald tires and a donut, hauling a "Harry Home owner" pressure washer banging around in the back seat!

From documentation posted on this and other boards, the majority of pw'ers appear to be educated and articulate. And in most cases have built their business from scratch and are very proud of their accomplishments. But, as saturated as this market is, as a group, or at least as individuals, we should become much more proactive. Legal competition is one thing. We each expect it and deal with it daily. But the competition presented by the low ballers isn't only unfair, it's illegal. In my mind, simply taking the high road, educating our customer base and hoping the low-ballers will eventually fail on their own, while our bottom line is not improving, or worse yet, erroding, is not an effective counter action strategy. Competition is heathly for our industry and the consumer - but only if the playing field is level to begin with.

Having painted all this as a background, here's my suggestion to mitigating the problem. As long as we're content with status- quo, taking the high road, and the low-ballers go unchallenged, there will never be a level playing field. Fight for your piece of turf - don't roll over and hope it goes away. Don't let the low ballers eat your lunch. Get proactive and challenge them!

Obviously, it's tough to verify a low-baller's insurance coverage, but doable. And, in my investigations, even if they have no insurance, most, if they've got an once of grey matter, will have a county occupational license, if its required. Here the cost for a county license in either nominal or simply not required. If it's required, it is verifiable.

So, if the low ballers can portray themselves to the public as licensed and insured - verify it! Start with your own operational area and check to see if they are. If they aren't - drop a dime on them! Don't sit there and let them feast at YOUR customer base.

Worker's comp is another area to hammer them with. It is easy to identify them. Hopefully your state has a web site where contractor coverage, by the public, can be verified. I know Florida has one. It is very user friendly. If your state doesn't have one, then call and ask how you can verify coverage.

As noted earlier in this post and in one yesterday, the auditors for worker's comp in Florida have been given a clear mandate - get rid of the non-compliant contractors. Drive them out of business, issue stop work orders on the entire construction site (not just the work they contracted to do) until they get coverage, confiscate their inventory and records and fine or jail them. And the fines are designed to be more than just a slap on the wrist. Treble costs of what the actual coverage would have been for a min. of one year, plus prosecution and court costs. Now, that's hammering down with a passion!

Essentially, for our purposes, it is open season on the non-compliant pw contractor(s). Shame the states don't post a bounty, it could be lucrative. But, shame on each one of us as compliant contractors if we don't start reacting. As for me, I've identified several in my area and having spotlighted them, I intend to not just drop a dime on them, but smack'em with heaviest hammer I can find - workers comp compliance auditors!

Enough editorializing - hope my post has prompted some thought on the issue.

[Beth n Rod 1,279]

These issues and more have been discussed at length and unless the local governments do as you have mentioned it is nothing more than us policing them. We are active in our state reporting illegal pw'ing (I won't even give them the courtesy of calling them a business) and it is to no avail. They are still out there doing what they do best...screw things up so much that the customer HAS to call a competent contractor.

We educate our customers on the issues you have brought forth including literature informing them that in essence by hiring these illegitimates they are helping them to operate "Illegally!" That has taken a few by the short hairs and gotten clients to think twice about price over legitimacy. Insurance and the other requirements are for their protection as well and we let them know it along with the clarification that we all are not doing 'it' the same. There is a science to what we do and the experience is more than a number of years in business.

I agree that more needs to be done and being complacent doesn't make them go away. It is a major responsibility to be in business but it is an even bigger challenge to police the industry. Yes, eventually they will come to see the difference in some way or another be it from a sharing of an experience from a close friend or whatever influence may make an impression, but in the mean time, we work hard to get in front of our clients so that they don't just get a piece of paper with a description and a price on it left stuck in the front door along with a business card. Sales is not just a way to get the money but a way to secure the relationship.

Rod!~

[geobet1 14]

Thanks for your response and insight.

Policing the industry is perhaps beyond our collective scope. However, policing our own small individual footprint, within this industry, isn't. Forget about lobbying local and state officials. The results at best are ineffective. It takes time, money and contacts. And, PWNA, as a lobbying entity, pales in size compared to groups and lobbyists actively engaged by fortune 500 companies and associated labor groups lobbying both state and local officials. But, do hold the department responsible for policing enforcement for licensing and workers comp accountable! That's what they are paid to do.

If they aren't responsible- call your states' elected representatives and begin registering complaints. Put the heat on! Esculate the complaints. But, do whatever it takes to make them responsible and hold them accountable for enforcing their own defined policies and procedures.

I don't mean to convey that we should attack the problem by applying a remedial approach with a "blanket" mentality. I am, however, suggesting that we assume a more aggressive and dynamic posture by taking a more myoptic, surgical approach to effect a remedy, rather than simply relying on lobbying, continuing to educate the public, etc., etc. That approach apparently ain't working!

Maryland probably is a bit more varied in its approach in dealing with illegal contractors than Florida. Then again, Maryland probably doesn't still have whole neighborhoods of homes with blue tarps for roofs almost two years after major hurricanes ripped them off. Not to mention tons of seniors ripped off by illegal contractors who are still waiting on roofs and other repairs they've already made deposits on while the illegal contractors have carpet bagged it out of town with their money. That's why Florida has become so aggressive in compliance enforcement.

Perhaps, in your case, your operational footprint could reasonably consist of the entire state. And, I fully recognize the unique challanges involved. However, for the main body comprised of us "little guys", if each of us would merely focus on "thinning out" the illegal contractors in our own small geographical or operational areas, in the manner I suggested, sooner or later results would become apparent. Essentially, clean up our own backyards first and foremost. By the way, the "illegals" I turned in today were received with the upmost interest by the investigator I spoke with. Plus, she even offered to call me back with the results of the inspection. Now, that my friend is policy enforcement in action. None of us, as legally compliant contractors, should settle for anything less.

[Beth n Rod 1,279]

By the way George....welcome to TGS! It's good having you here!

Beth :cup:

[PressurePros 248]

George, thank you for some good insight and a well constructed post. I don't neccessarily agree with your contention points though. If a customer formulates his decision making based upon price, you have failed as a salesman. One can argue and divert attention from this fact as much as they would like, but it still remains that you left doubt on the table and the customer skipped to the bottom line.

If one focuses on the large issues of illegals and low ballers and tries to tackle them from the top down, they will fail. If, on the other hand, a contractor spends his time and energy working on marketing, refining sales technique and educating his customer base person by person he will be successful in accomplishing postive change.

I understand Florida's whole circumstance of gypsy contractors, illegals and low ballers has perpetuated a market of very wary, very tight fisted customers. I run into them every day here as well, Florida does not have that market cornered. Energy should be spent on positive return. In my opinion, calling government agencies yields little more than lip service and much too little ROI for the time spent. Negative campaigns yield negative results over the long haul. Your investigator amy ahve feigned "the utmost interest" in your reporting until the reality of the 100 priority tasks her boss has given retake precedence and your "file" gets lost in the paper work shuffle. Cynical? Perhaps. Still waiting for results to prove me wrong.

[aloha pc 14]

I can tell you first hand, bidding jobs in Florida, its unfortunate, but most only seem to care about the bottom line. A real source of frustration is bidding a roof for 450 only to hear I got a bid already for $200 from so and so. Unfortunate, but many people shut down after hearing a higher price even after discussing exactly why someone would or could give such a ridiculous price. There is not a level playing field, no union and customers will use this as a way to get a bidding war which I dont get into.

I always try to get face time with people because I believe I can sell them on my service and let them see how capable I am of cleaning their home. I get alot of calls who tell me to just leave the bid on the door, I'm getting other estimates and we ' ll call you which everyone knows what that means. Lowest bid wins!!!!!

[PressurePros 248]

Aloha, I respect your opinion and marketplace but what do you do when given that approach (leave it in the door) That would not be a demographic I would target. My opinion on the topic more in depth here

http://forums.thegrimescene.com/showthread.php?p=68490#post68490

[Richard 17]

As usuall.Well put Ken.

It's all about the sales ability.You have two ears and one mouth.If you learn to listen twice as much as you talk,you'll find out their hot buttons. Straight commision sales people are among the highest paid proffesions. Period. If you spend more time qualifying, and counceling,you'll spend less time trying to close the deal.You also need to know when to shut up and just ask for the order!

[Beth n Rod 1,279]

Ken,

Way cool avatar.

Beth

[Beth n Rod 1,279]

A real source of frustration is bidding a roof for 450 only to hear I got a bid already for $200 from so and so.

My response to this would be (like those in Missouri don't here this one enough) "Show me!" Most times they cannot produce the proposal which means they are playing you and trying to get you to drop your price.

This may not always be the case but experience has taught me that people like to play games and most of all with contractors. There are many out there who do not know the lengths people will go to and they inadvertently help to bottom out the market by not holding their ground just because they are either desperate for the money or novice in the realm of sales.

I agree with Ken is some respects that there are some naturals in sales but there are others who become great at sales because they take their business seriously and remember what they went through to get as far as they have. They learn from others, read up on the subject, take a sales course, ask questions and eventually learn the way things work in order to become a seasoned salesman. They even evaluate what they did that could have gone wrong and tried new things in order to not make the same mistake.

I used to be called "Luke Saleswalker" at my last job in Radio Shack by my manager but he didn't understand that I was paying attention to a key thing that he had overlooked. Returns! I had the lowest return rate of anyone in the store and that meant something to me because I don't like to be disappointed by having high sales figures one week and then come in after a day off and find that some other sales associate took a refund on my sale(s) and in some instances then sold them on something else on an alternate ticket to get the $$$. I could count on my commissions to stay paid. I used to over qualify my customers to the point of sending them somewhere else if there was any question that what we had was not right for them. There were instances where they would come back and either buy what we had from me or something else because they trusted me not to high pressure them into something they didn't want or need just to get the sale. I had a good client base and they would always ask for me. That was more important than making the quick $$$. I developed return business and a relationship with each customer I could.

Rod!~

[Beth n Rod 1,279]

It's all about the sales ability.You have two ears and one mouth.If you learn to listen twice as much as you talk,you'll find out their hot buttons. Straight commision sales people are among the highest paid proffesions. Period. If you spend more time qualifying, and counceling,you'll spend less time trying to close the deal.You also need to know when to shut up and just ask for the order!

Very well stated! How long were you in sales?

Beth

[geobet1 14]

Whoa, Hoss(s)!! Someone opened the gate, let my point out and it got lost. Let's try this approach.

Who has the price advantage - You or the lowballer?

If your operating costs include the sum total costs of your Insurance, License AND Worker's Comp., and your competitor is a lowballer who, maybe has Insurance, might have a license but probably doesn't have Workers Comp., the lowballer has the pricing advantange from the get-go! Forget about whether he's legal or not. Forget about how much more sophisticated your sales and marketing strageties are compared to his. His embedded operating costs are lower, period! Because he's illegal, he can afford to lowball the bid and could probably care less that his sales approach isn't as unique as yours. Why should he. He's just got another Job. Yours! The playing field isn't level! That's my premise point!!

Now, to your point about salesmanship; "If a customer formulates his decision making based upon price, you have failed as a salesman." I could argue that alleged "truism" seven ways from Sunday. In fact, I often did with my instructors.

Suffice it to say that, I beg to differ! There are simply too many variables and intangibles involved in the intricate and delicate dance of the customer negotiation processes to qualify that statement as a true narrative of ones' sales effort let alone as an valid indicator of the degree, or lack thereof, of success.

I'm not unfamiliar with all the warm and fuzzies about sales and marketing techniques and how their proper and enthusiastic implementation can overcome customer objection, at nauseum. Gets to be sorta like a cult religion, with all the slang, catch-phrases, secret handshakes, etc., As a Realtor for a number of years, I was baptized up to the eyeballs with all the latest and greatest.

For simplicity purposes, think about it this way; if you, me and a lowballer were each competing for the same housewash job from a retired client with only X dollars to spend, and we each had the same volume of Dale Carnige crap ozzing out of all our bodily cavities and pores, I could slug it out in the mud with you toe to toe all day long and wouldn't feel bad if I lost the job to you. You simply outsold me! You out manuvered and outshined me! Way to go! You deserved the win and the job. You've proven to be the better salesman.

But, if the job went to the lowballer, who doesn't have the same imbedded costs as either you nor I, then, yes, I'd be a bit ticked! Could it be that one of the three of us had an unfair advantage - imbedded cost? It wasn't you and it wasn't me, and it definately wasn't a level playing field!! Had to be the lowballer!

The premise of "If one focuses on the larger issues of illegals and low ballers and tries to tackle them from the top down, they will fail", is not my intended point at all. And it could quite possibly create an unfair damper for other "newbies" (god, I HATE that word!, it's defamatory, degrading and tantamount to walking around with a neon sign on your forehead flashing, "look at the no-brained Newbie!") that are anxious and enthusiastic about effecting changes in their new business environment.

Certainly, "attacking the problem from the top down", wasn't my goal. Too big an issue! But, if we'd attack the problem from within our own area of operation - the magnitude of the problem shrinks - the numbers reduce. Unless your area is the size of Pa.

My operational footprint is two counties - certainly not the entire state of Florida. And probably pretty representative of most contractors. So, yes, I think I can make a difference. All it takes is a phone call, the issuance of a case ID number, the investigators name and a little perseverance better known as follow-up! You already do it with your customers. Do it with your illegal competitors. Another way to look at it - eliminating illegal competition thins out out the ranks, creates a level playing field and improves the odds. It ain't rocket science. At the risk of over simplifaction, this ain't rocket science and definately not cynical.

Richard, I'm not sure I even understand what "If you spend more time qualifying, and counceling,you'll spend less time trying to close the deal.You also need to know when to shut up and just ask for the order!", means.

At the risk of misinterpretation, if you spend more time "qualifying and counceling" wouldn't that alert you to whether you have a deal at all? Wouldn't exploration of these indecises also provide additional clues as to when to "shut up and just ask for the order"? And when would one recognize that they have arrived at that decision point to, just ask for the order?"

[Beth n Rod 1,279]

Richard, I'm not sure I even understand what "If you spend more time qualifying, and counceling,you'll spend less time trying to close the deal.You also need to know when to shut up and just ask for the order!", means.

It's a consultative sales technique, and it works like a charm. Been using it for years.

Beth

[geobet1 14]

In the "Red Neck" venacular, "Dazzle the Client"!

Just spit-balling, and at the risk of over simplification, consultative sales technique, for the uninitiated, and the catch phrase challenged, (and other "newbies" who may be tuning in and wondering what the h*#@ are they talking about), simply implies a mantra of dialogue, either via phone or in person, to determine the clients' wants, needs, affordability, etc., and to determine if a cohesive match exists for your service and at a given price.

Hopefully you're presentation was articulate enough to have been successful in cementing your company's profile, and its superior level of benefits, in the clients mind. To the point that your presentation has established a "high-water" mark from which to judge all other competing bids. And hopefully, you won.

Now that we've not only beat this horse to death, but taken it out and shot it, then hung it to be sure it's dead - maybe back to the point of "fingering" lowballers, huh?

[JFife 14]

Agreed....I'd also like to hear more input on "outing" lowballers. Actually, not lowballers but those without the proper ins, WC, etc. To the person that started the post, I think I'd follow through real hard on the people you turned in, and find out if it made a difference. I'd say there's a good chance it gets shuffled to the back, typical local govt. Take the "personal" out of it, and see if the system works. If it does, I'd pursue other contractors. If it doesn't, I'd make a decision whether you want to 'prove a point',etc., or just get on with things.

You could become the Rosa Parks of WC enforcment, and make contracting in FL better for all. Or you may just waste a lot of time, money, but mostly, energy. How strongly do you feel about it? IMO, sometimes you just get punched in the gut, and you gotta walk away. I was just in a lawsuit with a non-paying customer, and ended up settling for half of what they owed me. The job was perfect. We did everything we were contracted to do. But they didn't pay at the end. So I sued......I probably could have won in court, but they'd have turned around and counter-sued me for something silly. Who wins?? I took half the money, and put that stresser to sleep.

I think there is a value to taking the high road. Not that tattling is the low road. I know this isn't analagous, but it's like comparing Walmart to their competition. Their competitors cannot compete on price, and some gripe and say walmart is cheating, not paying workers fair, etc. But some figure out how to use it to their advantage. Offer a more hands-on service. I read an interesting article recently of how Maytag stores have tried to battle the bigbox strores by offering free testings of their machines....you bring in your own laundry. Outside the box.

I think the battle to eliminate the lowballer(including the un-insured,etc) parallels this. Have you ever thought about REFERRING out the lowballer?? I've done this...I have a competitor that charges way less than me. Any job that comes my way that I don't want, I refer my lowball competitor. Hey--keep them busy doing the crap I don't want frees up the good stuff for me, right?? If you are working customers that are WILLING to buy from the scumbags, they aren't the ones you want anyway!

So next time you (anyone) bids a roof, do a professional sale, bid is $400, they say they've got a bid for $200, say, "aahhhhh, are you looking for the lowest bid?? I'm sorry, I was bidding a quality service, guaranteed not to kill plants, ec. You know what? There are guys out there that will do it for less than $200. Call Billybob Roofs, I'd say there's a possibility he'd spray some bleach on your roof for $75-100. That might be a better fit for what you are going for." ....It'll either work as a close for you, or it will keep a lowball competitor busy, and screw up that person's property (no, I don't feel bad about that).

[PressurePros 248]

Politics are politics. It is obvious how much passion they breed even in a post that seems benign. My issue with politics is this. Come over to my house on Sunday I will grill you steak and lobster and we will discuss politics and affecting change. Come Monday morning my crews will be busy, I will be negotiating more deals, expanding my customer base and thinking of ways that I missed that I can make more money. If, on the other hand you wanna be Rosa Parks and lobby on Capitol Hill or spend all morning in your Congressman's office, I have respect for you. Someone has to do it. It just won't be me. Guess that makes me a capitalistic, republican pig....

Oink.

[PressurePros 248]

George, here is what it comes down to.

If you know all of the components for successful selling, that would make you a successful real estate agent. Why would you trade that in for a business where you cannot compete and cannot make any money? Buy a retail franchise and run a store. Will you then complain that Walmart buys their products from China? How about a little Mom and Pop Hardware store? Oops, forget that, Home Depot is nearby. EVERY small business owner feels that their playing field is unfair. Its the nature of the beast. You know what else is nature of the beast? Those small guys go out of business quickly. Anyone who takes shortcuts in business usually fails. And for every clown out there, there are three more behind him.

I'll leave it at that. I know I won't change your mind.

[geobet1 14]

Jon & Ken: Good responses. I appreciate the effort and opinions. I'm flattered by the references to Miss Rosa. I'm old enough to personally remember her challenges and sacrifices. I'm certainly not deserving of the comparison. I understand the intent, so I'll consider it a compliment and ignore the cynicism.

Ken, as to, "Why would you trade that (real estate) in for a business where you cannot compete and cannot make any money?" Ouch!! Come on, Ken, pull in the talons and stay outta that knife drawer!

However, to briefly answer the question, I'm fortunate to be a young energetic, goal oriented retiree. I don't endorse retirment without a purpose - it sucks! I'm very blessed and fortunate indeed. I never said I can't compete and as for making money, well revenues are a bit ahead of where I projected them to be when I started late last year and surprisingly, expenses are somewhat less than expected.

This is but one of several retirement ventures that I've been blessed with the resources, opportunities and a generous allotment of time to pursue. And, obviously, I'm passionate about certain aspects of it. And, I gotta admit, yes, I love taking on the "bullys-on-the-block"; the lowballers who think they're above playing by the rules everyone else is obligated to. As for "trading the real estate business for this", even a blind hog can find a acorn once in a while. Meaning, it doesn't take too long to discover that real estate investments and acquistions generate more return (and risk - who doesn't love the risk joy ride?) and can subsequently be much more lucrative than commissions. Just simple math.

Now, having said all that, who else can I turn in for worker's comp non-compliance? God, I love a challenge! Makes ya feel so young and alive. I keep hoping for the state to institute a bounty - yet another way to earn a buck.

[JFife 14]

George,

.....you'd be a GREAT person to spend some time pursuing this. Why?? You are probably older than most of us, more respected, may not need the money as badly (retiree), and you probably have a strong sense of right and wrong, and are offended greatly by anything less. Go for it! I'll be anxious to hear your results, and if the locals come through. There is a guy down there named 'Mike Williamson' that you might look into outing, LOL:) j/k Update us whenever you hear something,

[PressurePros 248]

Ken, as to, "Why would you trade that (real estate) in for a business where you cannot compete and cannot make any money?" Ouch!! Come on, Ken, pull in the talons and stay outta that knife drawer!

There was absolutely no malice or ill intent meant to be borne from the question. I was merely asking the obvious. You are reading too much into words that have no emotional intent. Since you have clarified your position I understand more clearly. I agree with Jon, please take on the challenge. We need active spokespeople who are less sizzle and more fauna. If you have the time and resources you should put all the damn yokels out of business.

I'd appreciate you understanding that this message board and many others are filled with idea people. Some come and stay, most come and go. What you have discussed here has ben approached before. Your task may be no smaller than stopping the floods of illegals that pour over the border every day or akin to the cargo ships loaded with cocaine laden fire extinguishers. it just doesn't seem to end. This lofty goal you speak of, with no background of whom you are and what interest in our industry you represent sends my "spidy sense" tingling. Its nothing against you.

[geobet1 14]

Jon: You're right on target. Thanks for the comments.

Ken: Certainly, no offense taken. I agree with your characterization, re; Idea People. I gotta admit, I much prefer the journey in reaching a goal than simply "thinking" about it. More hands on and much more satisfaction!

Guys, please keep in mind that, as I intimated earlier, I have no intent to take my goal to a global application and save the world. But, by good fortune and circumstance, I can certainly devoted some time to try and make my own small piece of it - should I dare to say it? - a more level playing field. And, by the way, Jon - Mike is bullet proof. He's a bit over an hour away and outside my turf - but I did check. This quest is a continuing saga. But like I said earlier, I really, really, realllllllllly enjoy the challenge! I haven't had so much fun lately. I'll post the good bad and the ugly.