Attract More General Contractor Plumbing Projects with the Following
This Article Will Focus On another tried and true method for attracting new plumbing projects.
Dig Your Well Before You Are Thirsty – Author Unknown
Dig Your Well Before You Are Thirsty – I do not know who to credit with that; however, it is one of the jewels in my Sales Script
Book without a proper reference. A lot of General Contractors, Plumbing Contractors and other contractors are having challenges adapting to the new economy. Plumbing Contractors who rely on the same General Contractors to supply jobs to bid on are finding it very difficult.
Too Many Plumbing Contractors are going out of business and for some perhaps it is inevitable, for most of them it is because they did not have good solid financial reports, a document Strategic Plan and a Board of Advisors including a qualified construction accountant. And almost as important they may have run into some serious personal and / or financial issues. That happens to all contractors myself included.
I Have Made More Mistakes – than ten of the average contractors put together. I’ve learned a great deal of hard, hard lessons and worked my way through a number of “Character Building Moments”. So what I am about to ask you to do is something I have done for many years during my contracting days and I still do a form of it in our Contractors Bookkeeping Services firm and it works massively!
Become Wildly Optimistic – It will scare you-know-what out of your competition and everyone around you will think you have become a “Nutter”. Just maintain your sanity and don’t do anything that will get you in trouble. Simply step outside your “Comfort Zone” and make some bold moves. Start by telling yourself:
I’m Fishing For Moby Dick
In An Inflatable Raft With Tarter Sauce!
Every Business Owner Is Constantly Bombarded By “Takers” – People wanting them to buy something, donate the fruits of their labor to a worthy cause, give till it hurts and so on which means they either give everything away and join the ranks of the homeless and penniless or they have to get tough and say no, a lot! After a while it becomes a knee-jerk reaction and here is how you can use it to your advantage.
Welcome Guest Vs. Unwelcome Pest – Whenever someone walks into a General Contractor’s office the people there immediately try to determine if they are a welcome guest or an unwelcome pest. Is the person there to hire their services = “Welcome Guest” or are they selling something = “Unwelcome Pest”.
Deliver Delicious Bakery Products!
If You Are A Plumbing Contractor – trade contractor, subcontractor or whatever you call yourself and you want more opportunities to bid jobs this one marketing method works and works big no matter where you are located. Big city small town, it does not matter.
Every General Contractor – gets hundreds if not thousands of sub-contractors, trade contractors, suppliers, bankers, customers and even construction accountants asking for something. So if you want to stand out in the crowds use this tiny bit of construction psychology because it works!
We Serve Contractors Bookkeeping Services Needs Across The USA – and have shared this idea to all of them at least once and only a few of them do it. Could be a variety of reasons, too much work to get to now, busy on other projects, who knows.
One Contractor – has elevated it to an art form or providing a variety of snacks on a regular basis and has reported back this is one of the best marketing ideas he has ever experienced and the R.O.I Return on Investment is much more than expected. I suggested sharing it with the other Brother and Sister Construction Contractors in the local area and he claimed that he tried, and they thought it was the dumbest thing they ever heard.
The Proactive Plumbing Contractor – with a dozen donuts or similar bakery products who walks into a General Contractor’s office is almost always a “Welcome Guest”. I say almost always because during our years as Plumbing Contractors I did this a lot and only one time did the General Contractor react badly because the person I met was attempting to lose weight.
This Simple Act Of Random Kindness – can make a shockingly colossal and most generous positive impact on your bank balance! In fact so that you may be inclined to fund several purchases of new toys for big boys like 4×4 trucks, motorcycles, all-terrain vehicles and perhaps some fun vacations!
Let’s Run The Numbers!
From The Calculating Mind – of the construction accountant writing this, Randal DeHart, everything must have a reasonable R.O.I. or Return On Investment. This means before you invest any money there needs to be a reasonable expectation that it will generate at least the Hurdle Rate % (that is equal to the % interest that can be earned if the money stayed in a safe place).
For Example – If you have some cash in the bank earning 2% interest every year then your hurdle rate is 2%. If you have investments in stocks, bonds and Treasury Bills and are averaging 5% your hurdle rate is 5%. Perhaps you have rental property generating annual returns of 10% that is your hurdle rate. You get the idea.
The Cost To Acquire A Customer
I will lead you down a simple path to determine what it costs to acquire a customer. We do this frequently and it requires a quite a lot of skill in Construction Accounting Financial Forecasting Models. However the steps below can get you started in the right direction. Please understand accounting starts from the beginning and ends at the present. Financial Forecasting Models start from in the present and project trends based on Financial Reports and a myriad other marketing and economic data.
Step #1 – Generate a Profit & Loss from the previous two years and isolate total income. (Note: All companies are only two years old regardless how long they have been in business because what happened more than two years ago doesn’t matter when developing a financial forecast.)
Step #2 – Isolate the amount of money invested marketing your Plumbing Company. (Note: Not investing money in marketing is like winking at a pretty girl or guy in the dark, you know you doing it but they don’t. Relying on word of mouth means being in a race for the championship of low price leaders…enough said…I hope!)
Step #3 – Isolate the number of customers or clients you have including General Contractors during the past two years.
Step #4 – Divide the total income from step #1 by the number of customers or clients in step #3 and you will have a rough idea of your sales per customer.
Step #5 – Divide the amount of money invested in marketing your Plumbing Company by the number of customers or clients in step #3. (Note: 80% of marketing is done to keep current customers and only 20% is designed to attract new ones. I have studied marketing extensively and will offer this one hint. Why do you suppose the car manufacturers invest so much money advertising their products when most people continue to purchase similar makes and models over and over?)
Step #6 – Multiple the net Profit Percentage shown on your Profit & Loss by the sales per customer in step #4 to generate a rough idea of the net worth of a customer to your Plumbing Company. (Note: this is one of the numbers that becomes very important if you ever want to sell your Plumbing Company…enough said.)
Step #7 – Customer gross profit in step #6 minus marketing cost in step #5 = Customer Net Profit.
Step #8 – Where MR > MC (is the Marginal Revenue greater than the Marginal Cost?) and risk is manageable do the deal. MR>MC is a long discussion for more on it click here
Step #9 – Where is Break-Even or how far can I go before it is time to quit doing it?
Let’s See An Example And Be Forewarned
Your Results May Even Not Come Close
Step #1 – Income = $500, 000.
Step #2 – Marketing = $20,000
Step #3 – Customers = 100
Step #4 – Sales Per Customer $500,000 / 100 = $5,000
Step #5 – Marketing Cost Per Customer $10,000 / 100 = $100
Step #6 – Customer Gross Profit 15% Profit X $5,000 = $750
Step #7 – Customer Net Profit $750 – $100 = $650
Step #8 – MR Customer Net Profit $750 – MC $100 = $550
Step #9 – $550 / [Cost of one dozen bakery products $20 + Vehicle Mileage Costs $5] = 22
If you do not generate a new paying customer after 22 of these contacts STOP!! In most cases you should generate enough new customers to more than offset the costs of doing it.
No selling, No Cold Calling Just Drop And Go!
Here Is How It Works:
- Make a list with two columns. One column has general contractors you know you want to work for and the other column has
general contractors you within ten miles of your business is located.
- Only target companies that have an office or a warehouse type space. NO RESIDENCES! You do not want to bother a contractor you do not know at his or her home this could be dangerous and it is never a good idea.
- Arrive between 09:30 AM and 11:30 AM. The morning rush of phone calls, dispatches, emergencies and related chaos is over and people are settled in and thinking about a snack.
- Buy from a store or bakery, DO NOT BAKE, a dozen donuts or pastry products preferably in a plain white windowed bakery box. If they don’t have a plain white box use whatever the store has available, DO NOT RE-PACKAGE ANYTHING!
- Tape one of your business cards on all sides including the top and bottom of the box.
- Thank them for all they do to support the community, smile and leave.
What To Expect:
- Surprise is the most common reaction. The receptionist or whomever sees you coming and thinks you are up to no good and wanting something. Once they figure out you are bringing something and extending a gesture of friendship they warm up fairly quickly. Limit chit chat and get out quick, they will respect you for it.
- Sometimes they will want to engage you in conversation and when that happens be polite and say now is not a good time and try to set an appointment for a later day. In most cases they will appreciate you for it because they were not expecting you now and it raise your credibility level as a professional.
- Every so often someone will say they don’t like what you brought and simply ask if there is something else they would prefer. Then you can decide the best course of action later.
- On rare occasions people have been rude, nasty and asked to leave and never return. In that case SAY NOTHING put a blank look on your face and quietly leave, disappear, go bye-bye.
- This is where it helps to have Deflect-O-Matic skin (Randalism). Nothing a stranger says to you is about you. It is always a paradigm based upon false assumptions or a reflection of something on their mind and you are at the right place at the wrong time. Shake it off and move on.
- The final most common response is the person who receives the gift with ease and grace.
- After you leave their office go somewhere and make notes about the visit. Your first impression of their place of business speaks volumes if you know what to look for. Just know that everything you experienced is a reflection of the management at that general contractors company. There is a lot of information hidden in the preceding sentence.
In Summary we have a number of outsourced accounting clients that own and operate general construction companies and sub-contractors and trade contractors that we provide all of the contractors bookkeeping services and provide some one on one consulting. That means we see the profit and loss reports before and after they try this and we know this real world training in direct marketing works.
We Get Thousands Of Visits Every Month – on our website www.FastEasyAccounting and I would venture to say less than a dozen sub or trade contractors will try this every year. Of that number two or three will continue the process and one will elevate it to an art form and increase their construction company’s sales and profits to the point nobody except all of us here at Fast Easy Accounting would believe possible and to that person I say go for it! Please leave a comment below and tell me what you think.
Thinking About Outsourcing Your Contractors Bookkeeping Services?
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 Accounting Specialist, Bill.Com Guru and Tsheets ProAdvisor.
I leave you with this heartfelt blessing – “Your best days are still ahead of you so be bold, trust The Universe, have fun, think young and give it all you got so that when we meet in a better place in the distant future we will have lots of stories of tragedy and triumph to share and laugh about.”
Randal L. DeHart, PMP, QPA