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This Article Will Focus On sharing some business strategies guaranteed to work for Plumbing Contractors or mechanical contractors to operate and grow their construction companies.
Success Is A Few Simple Disciplines Practiced Everyday
Failure Is A Few Simple Errors Repeated Every Day
If You Know The Answers; The Questions Will Not Bother You. During your time in school when you took an exam or a test and you knew the material inside and out it was fast and easy. The exams and tests for the classes where you did not know the material was a struggle. Having a Business Process Management Plan can provide you the answers you need to operate and grow your Plumbing and Mechanical Contracting Company.
Every Plumbing and Mechanical Contractor I have ever met all want a business that operates like a merry go round: safe, boring, predictable and generating a substantial amount of cash flow and profit. A Plumbing and Mechanical Contracting Company they can be proud of owning.
Too many Plumbing and Mechanical Contracting Companies terrorize the owners by operating like a runaway roller coaster of pain and horror, with no brakes, almost tipping over on every dangerous curve, completely unpredictable and always in a cash crisis. The most common phrase I hear is “I am one job away from making it big or going bankrupt!”
Strategy #1 Marketing
Marketing is a huge subject so I will cover just one marketing strategy that ALWAYS works. Give your customers and clients what they want, not what you think they need.
There Is A Lot Of Information In That Statement. From having interviewed thousands of homeowners and business owners who had recently hired Plumbing and Mechanical Contractors and other contractors to build a new building, remodel an existing building or having suffered through a minor repair the number one driver of satisfaction vs. dissatisfaction is getting what they wanted.
For Example we purchased a small office building a few years ago which we completely remodeled in less than thirty days. We gutted the interior and installed all new wiring, network cabling, plumbing, insulation, drywall and finishes before we moved into it. I have been involved in construction for over thirty years so I knew what to expect.
In Spite Of A Clearly Defined Scope Of Work for each trade contractor, only three of them followed the specs as presented. I spent 50% of my time arguing, firing and hiring other trade contractors in order to get 90% of what I wanted.
Due To Time Constraints, I chose to ignore the other 10% and we subsequently hired new trade contractors to fix those issues a year later. It needs to be noted we did not take the low bidder on any trade contractor, we chose based upon the skill level and their perceived ability to perform at a high level.
If You Will Give Your Customers And Clients exactly what they want, as long as it meets local building codes and engineering specifications, they will love you for it, you will make a ton of money on change orders and your repeat and referral business will soar to new heights.
This Strategy Does Not Apply to developers and general contractors who specialize in production work and treating everything and every Plumbing and Mechanical Contracting Company as a piece of meat and a commodity to be squeezed for the every penny of cost savings possible. If you serve that market, we are not much use to you.
Strategy #2 Accounting
Understand Money Is Made In The Office; Not In The Field; Strategy vs. Tactics (Randalism) This is so counter intuitive to most Plumbing and Mechanical Contractors and other contractors we have worked with because you have been conditioned to believe office is overhead and therefore an expense and therefore a waste of money. Yet nothing could be further from the truth.
Develop A Comprehensive Business Strategy for your contracting company, and then follow it without question during the day to day operations.
Golden Four Hour Block every week set aside a four hour block of time for reviewing and updating your business strategy by
paying close attention to your contractors accounting reports. In the beginning I suggest Saturday, go to your office and make certain everyone understands you are not to be disturbed.
Review The Five Key Performance Indicators In QuickBooks and if you need to know what they are click here. Next, study the ratios in your Profit & Loss and Job Costing Reports and look for patterns. They are everywhere and the patterns will tell you everything you need to know about your Plumbing and Mechanical Contracting Company.
During The Years We Owned And Operated a variety of construction companies including Plumbing Contracting Companies every Saturday I would spend several hours reviewing a combination of over one hundred Key Performance Indicators and Ratios and compared the results with our Business Plan and Projections. These Golden Hours generated so much cash flow and profit that I had a hard time convincing the members of my Board of Advisors the numbers were real. The income tax returns and bank statements confirmed my reports.
We Have Worked With Hundreds Of Contractors and the ones that follow this formula ALWAYS manage to take their contracting company off the runaway roller coaster of pain and horror, with no brakes, almost tipping over on every dangerous curve, completely unpredictable and always in a cash crisis and move it onto the merry go round of peace of mind. Contractors who allow anyone to interrupt the precious Golden Four Hour Block are doomed to spend the rest of their lives riding on the roller coaster of pain and horror until a massive tragedy or old age destroys them.
Strategy #3 Production
Your Strategic Advantage. During the process of developing your Comprehensive Business Strategy there is a section devoted to understanding your Plumbing and Mechanical Contractor Company Strengths, Weaknesses, Opportunities and Threats also known as SWOT Analysis.
One Strategy That ALWAYS Works is to first focus on your strengths. What does your Plumbing and Mechanical Contracting Company do better than anyone else? Look at your list of Strengths and pick the ones that have the highest profit margins according to your QuickBooks Job Profitability Reports and focus on streamlining them so they become extremely efficient. One of the tools you can use is What It Ten Minutes Costing Your Company.
One Of Our Contractor Coaching Clients Cleans And Services Swimming Pools in the Pacific Northwest, there are few swimming pools because the weather is not as warm as the southern climates.
He Faced A Lot Of Price Pressure because many of his competitors offered similar services at lower prices. His competitive advantage was having grown up in a wealthy neighborhood and having attended a prestigious high school and then acquiring an undergrad degree from a well respected university meant he understood the thinking patterns of people living in affluent neighborhoods.
When We Asked Why he was cleaning and servicing pools he said he liked being his own boss and being outdoors part of the time.
We Worked With Him To Develop his Contracting Company Business Process Management Plan and in the process, we discovered he had invested time and money and acquired the proper licenses to repair swimming pool pumps, valves, piping and related equipment. Whenever the project was beyond his scope of knowledge and skill sets, he had a relationship with a large pool installation and repair firm that he could bring in as a subcontractor.
We Helped Him Upgrade His Clientele and begin servicing affluent neighborhoods occupied by people with pools and a lot of disposable income. He increased his prices by over 500% and offered three comprehensive service agreement packages, Bronze Silver Gold with different levels of service. We helped him select and modify a spreadsheet system to predict Meantime Between Failure (MBF) for predictive modeling to estimate when it is prudent to change filters and equipment that is prone to wearing out.
His Strategic Advantage Is he keeps his clients pools running smoothly and they never have to think about it, in fact, for the most part they forget he even exists. His contracting companyenjoys a net profit of over $100,000 each year and he has had several offers to sell his company. However, it is a reliable source of income; he works four days a week and takes vacations so why sell it?
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About The Author:
Randal DeHart, PMP, QPA is the co-founder of Business Consulting And Accounting in Lynnwood Washington, www.FastEasyAccounting.Com He is the leading expert in outsourced construction bookkeeping and accounting services for small construction companies across the USA. He is experienced as a Plumbing Contractor, General Contractor, Project Management Professional, Construction Accountant, Intuit ProAdvisor, QuickBooks For Contractors Expert and Xero Contractor Accounting Specialist, Bill.Com Guru and Tsheets ProAdvisor. Check out our Contractor Success Map Podcast on iTunes and Follow Randal on Google+
I leave you with this heartfelt blessing “Hard work is a great way to get some exercise and clear your mind; however, it will not make you wealthy. You have a duty to become wealthy so you can inspire your brothers and sisters who are contractors to acquire wealth. All contractors who bring value to other people’s lives deserve to be wealthy and to have the opportunity to use your wealth to help make the world a better place for everyone.”
Randal L. DeHart, PMP, QPA