How to Close More Deals

In this segment, we are going to discuss a very hot topic. How to close more deals.

This will be a four-part series, so keep coming back for more valuable information.

Now, let's get started.

Being a successful contractor requires two parallel mind setting processes. Getting Sales, and getting them at a price that makes you money (see my eBook – “How to Calculate Your Money-Making Markup!”).

One does not work without the other.

Now here is the problem.

Too many contractors are following a single and dangerous mindset. Getting the job.

Unfortunately, this throws them into the coliseum of rabid dogs who are also fighting to get the job.

The result?

Low pricing! 

The real question you need to ask yourself is this.

Are you selling low price or … are you selling value?

If you are selling low price, you really don’t care about making money. Instead, you just want the job and hope for the best.

However …

If you know you provide vale and a uniqueness with your service that the prospective client cannot get from the competition, you need to develop an approach that will accomplish just that. I cover this in more detail in my book: “How to Market & Sell Your Construction Services like Magic!”

In the next three blog articles I will lead you through the steps one at a time.

I am not going to discuss marketing or developing your promotional materials. If you want more on that, you can get my eBook: “The Contractor’s Magical Marketing Tool Belt!” which is loaded which is loaded with examples and information.

In this blog, I am going to discuss the first step. The one you must accomplish first.

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Qualifying Leads

This starts the minute you have first contact with the prospective client. The cornerstone in this system consists of two things:

1.      The questions you ask

2.      The record of the answers.

By designing the questions, your goal is to uncover enough information to validate the value of expending your time with this prospective client. You are trying to uncover whether they are serious, or fit your needs.

Let me give you an example.

I had a high-end roofing contractor who only did slate roofs. To make it even better, he only worked in three specific towns. His qualifying questions was: “In which town is the home located?” If you didn’t live in one of his three towns, you weren’t one of his customers.

Another contractor did high-end kitchens. His average job size was $150k. This made his qualifying question simple. “How much do you expect to spend?”

In my own construction business, my best customers were waterfront facilities. That made my niche and qualifying customer question very easy. “Is this a waterfront facility, and if so, on what body of water is it located?”

Once you have qualified the client as an ideal prospective customer, you can move onto the next series of questions that allow you to drill down for more information on your qualifying sheet.

Qualifying Lead Sheet

Today we have different forms of media that we can keep and track information. It can be on paper, spreadsheet or a good CRM software.

How you keep it doesn’t matter, it is just important to keep it.

The qualifying lead sheet stays in the process for the customer from initial contact, to sales person, to estimator, to job supervisor. It has all the pertinent information gathered on the client from their first call to the end of the job.

By having this information and correlating it, you can develop the profile of your best customers from the psychographics, demographics and geographic. This will help also reduce your advertising costs and focus your marketing dollars with accuracy.

This is important.

When you qualifying your prospective clients, you will reduce the wasted time on clients who will never buy from you, and increase your capture rate. All at higher dollars!

Next week I will talk a little more on the type of drill-down questions you need to ask. Until then, happy hunting!

You Can't Go Back!

Something about getting older, maybe it is because of time and experience.

 

Have you ever realize that you wish you could have done something differently?

 

Maybe ... better?

 

Unfortunately, you can't go back.

 

You see ...

 

Time only moves in one direction ... forward. So we can't go and correct our mistakes. We can only learn from them and correct what we doing as we go forward.

 

If you understand what I mean.

 

Then you realize that the time to correct things is now, not later.

 

Remember ...

 

You can't go back.

 

I can absolutely guarantee you that this principle applies to your business as well.

 

So the question is?

 

Could you sharpen your business knowledge and skills?

 

Or ...

 

Sharpen existing ones?

 

Use a mentor to help you?

 

Take your business to a higher level?

 

All good reasons. Don't you agree?

 

From my experience as a coach and mentor working with hundreds of contractors, the answer is yes.

 

The only ones I've never been ale to help are those that stubbornly refuse to get help, and those who won't follow my directions.

 

So the next question is ...

 

Are you astute enough to realize that you could benefit from some help, or so stubborn that you refuse to get it, and later wish you had?

 

You'll never know until you reach out for it.

Speaking of reaching out.

If you would like to talk and discover how I can help you and your business, you can set up a phone conversation by clicking here!

Do you know where you make your money?

http://www.contractorcoaching.com/mentors.php

The Golden Hard Hat Mentoring Program - "Taking Care of Business!"

If you think every different type of job you do is making you money, you may be sadly disappointed.

Not every job or type of work makes you money.

In fact, some are real losers.

In a competitive market your competition’s willingness to take the job cheap, or below your costs, hurts your Sales and bottom-line.

On the other hand …

Some owners may also be leeches of your profit margin. Slow payment, expecting you to do extra work for nothing, and the never-ending punch list.

It is painful to think what work will make you money but not really know, can steer you in the wrong direction.

This is where knowing your business metrics and having the right tools will help you optimize your approach to getting work.

Making smart decisions based on valuable information is the key.

Understanding your business metrics makes your business work for you.

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However, if you don’t know your own business metrics, you become the victim of your own ignorance.

Let me explain what I mean.

When I first started out as a contractor, I thought I made money on every job.

Unfortunately, that wasn't the case. Some made money, others made less or none.

This bothered me.

I kept asking myself the question: “Why?”

At a glance, I couldn't uncover the underlying details.

I kept thinking, what is causing me the problem?

With that drill-down question, I embarked on developing a method of uncovering and revealing what was really going on. In other words, the metrics.

You see, most contractors focus on the basic Job Cost VS Estimate result.

This is fine because it will tell you if you brought it in as estimated or if you didn't.

Sadly, it doesn't reveal what is really going on under the covers. The real root problem or problems.

In my “Golden Hard Hat Mentoring Program,” I give my clients my Job Characteristic Spreadsheet that points to the plus and minus of the project, expending of company’s resources, and even … the owner.

This drills down farther than the typical job cost report.

It also flashes to you the good, bad and ugly of the job, so you can make intelligent decisions about the work or owner.

The report displays the time to complete, size and type of work, as well as the consumption rate of the company’s resources.

The report also informs us to the turnover rate, profitability, and the collection cycles of the owners.

This compliments the company’s volume derivation and distribution of management time which establishes the best economic goals for the company to pursue.

The metrics are revealed in color. Red is dangerous, Yellow is warning, and Green is good.

Figure 1 Job Characteristics Report of www.hgassociates.com

To optimize your construction company’s profitability and maximum use of capabilities and capacities, understand where and with what work and/or owner you make your highest return for your effort. This is the smartest way to jump-start your company’s success.

By understanding the metrics, you’ll be able to focus in on the work where you make money and get paid.

Again …

Knowing your business metrics is the key to success.

Are YOU a Victim of “Cash Crunch?”

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Are YOU a Victim of “Cash Crunch?”

As a business owner, you usually have many hats you have to wear.

On top of that, you've got a couple of dozen ‘urgent’ priorities dragging you away from what needs to be done.

With so much going on, being pulled in so many different directions, it is difficult to focus on what is most important to your business.

However, a word of caution …

Whatever situation your construction business is in now.

It is usually NOT just one ‘thing’ that is holding you back.

Instead there is a whole bunch of little things that conveniently slip under your radar.

On their own, they may not grab your attention.

Add them up all together and it is a different problem.

You see …

They feed off of each other.

They even have the ability to run a muck in what appears to be a healthy company, slowly, ever so slowly, making it sick and sicker.

Let me ask you a question.

Have you ever found yourself desperate for cash?

You might realize it after you've paid your bills, maybe not all of them, and found not enough left to pay you?

If that is the case, you’re suffering a ‘cash crunch.’

Cash crunches are the result of those pesky ‘little things’ that slipped under your radar.

It happens when you’re not paying attention to your business metrics.

The next thing you know, you’re caught short and … in a ‘cash crunch.’

Let me dig a little deeper..

Cash flow is the lifeblood of your construction business.

Without it, you find yourself shackle to an 800 pound Gorilla. Not nice.

With poor cash flow you find yourself …

>>>Wondering where all the money went.

>>> STRUGGLING to pay your bills.

>>> Robbing Peter to pay Paul.

>>> Doing without for yourself and your family so you can try and keep the business alive.

Or even worse …

Not paying all your bills including Uncle Sam!

Seriously, put some thought into this. Aren't you missing something?

I can tell you the answer is a resounding YES!

What this boils down to is NOT understanding your business metrics.

As I said earlier, cash flow is the lifeblood of your business.

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With that thought in mind, here are some metrics you need to know.

ACC – Account collection cycle. Basically, how long does it take you to get paid on your receivables?

CCC- Contract to cash conversion. How long from the time you start the work until you get paid the last dollar owed to you.

Working capital. The amount of money available to you after you've paid your liabilities.

Capital Reserve. The amount of capital you need to have available to you in order to pay your bills according to your ACC.

And that’s just for starters.

I usually find that these other following items impact cash flow.

Pricing model. The amount you markup your work to arrive at a selling price.

Leakage. What you are unnecessarily expending with no return for its loss.

Seepage. What you freely give away to get the work.

Haltering. Taking on too much in Sales without the capital funding or the resources to support it.

So if you find yourself at the end of a month, good or bad in revenue, still scratching your head wondering where the money went …

You have a serious cash crunch problem, and … you need help NOW!

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Talk to Henry!

To schedule a no-obligation conversation with Henry Goudreau, America's #1 Business-Building Coach for Contractors, click here!

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Why People Won’t Buy From You

Have you ever gone through a sales presentation thinking this is really best for the customer, and then they do not buy?

You can’t force anyone to buy your services. However, you can take action to avoid the reasons they play out in their head for not making the purchase. Hopefully, by doing this, you’ll encourage them to buy instead.

Today, people are wrapped up in themselves and their daily lives. They are often too busy to stand back and analyze what is best for them. They will make time for what is important to them, but not necessarily what is important for them. Instead, they conjure up all kinds of excuses for not doing it. 

To remove them from this vicious circle of no, show them how your product or service will truly benefit them, all while touching their emotional touchstone.

Understand that everyone buys for emotional reasons. These emotional buying triggers are:

• They need something

• They want something

• They desire something

• They have a problem they want solved

No one likes to be sold. This is even true for you. However, everyone likes to buy. Any form of steering them away from being sold to the enjoyment of buying can also speed your closing along the way.

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Other people have a fear of buying. What if it is a mistake? This is where your testimonials and credibility plays an important factor. Find a shortcut from the doubt to the benefits that they will enjoy after they made the purchase. Show them how you’ll eliminate their perceived doubts, step-by-step.

Others may not understand what they are purchasing.

Provide as much information on the product benefits since the average person can emotionally tie to benefits over technical specifications. I've seen contractors go deep into technical specifications and jargon completely losing their clients attention. You are trying to sell the value, or as famously said, the sizzle, not the steak.

Still others are focused on price. It is true everyone wants the best price. It is also true that there are some people who will be never satisfied with whatever low price they get. I’m not a fan of being the low price. Instead, price out what it will take to give them what you promised with a reasonable profit. 

Realize this.

When your customer is focused on a lower price one of two things is taking place.

1. The person just wants cheap and most likely will be a problem for you if you drop your price.

2. You have failed to touch their emotional buying so they are resorting to logic which is price.

If you can't get them focused off of price remember Kenny Roger's song the Gambler; "

"You've got to know when to hold em, know when to fold them, know when to walk away."

Learn to ask questions that will help you uncover their emotional buying trigger that they are using, then adjust your sales process to satisfying that trigger. You’ll close more deals at your pricing and a lot faster.

Understanding the Business Metric of Volume Derivation

I was reading a question posed on one of the construction group forums last week that asked how much volume a contractor should have to be successful and make a profit.

Unfortunately, the basis of the question is wrong to begin with. It assumes that there is a ‘magical’ amount that makes things work (I had to laugh when I saw some of the answers, especially from so-called ‘experts’). Sadly, there is no one size fits all.

Here is how it really works.

The idea is to develop a realistic model of a company’s capacity to perform within its marketplace, an optimum market mix, and the optimum use of the time and skills of its management staff.

The key word here is “Optimization.” That means utilizing the full capabilities and capacities of the company.

The derivation is based on an optimum Distribution of Management Time, typical Job Characteristics of the market, and the Overhead Expenditures needed to attain a balance among sales, production and finance.

These three sources of information formulated from the existing company provide the base for the model that will guide company’s capacity to sell, perform, and finance its volume according to capacity.

The company’s Volume Derivation combines data from the Distribution of Management Time, the Distribution of Job Characteristics and other pertinent statistics such as capture rates and markup rates to perform a series of calculations. This is the capability of the company to achieve the volume.

It is these calculations that set the sales goal for the company and its people. These calculations also balance the Sales production and Financial Capabilities of the company, which drives the optimization factor.

I teach this to my Golden Hard Hat Mentoring Group. That is why they understand what they need to produce for sales and by utilizing the Job Characteristic Report, which sales optimize profitability and management time.

Unfortunately …

Most contractors try and sell as much as possible, mostly at low pricing models. Selling alone will not make a company successful, and neither will the advice of a consultant or coach who doesn't understand Volume Derivation. 

Remember, optimization of the company’s metrics will always produce the best results.

Do You Understand Your Business Metrics?

Are you struggling with your businesses because you don’t understand what drives it?

Every business focuses on making sales, paying the bills, and hopefully making a profit.

However, there are other financial and performance measurements that can provide early warning signals and detailed avenues to greater success.

At this point, you may be asking …

What are business metrics?

They are a unit or units of measure to gauge and detail a company’s performance and provide the company’s management with standards of improvement.

For example.

You may ‘think’ it would be a great idea to hire a new employee. Maybe, you think it might make things easier for you, or grow your business. The true answer is, how do you know? Can you prove it’s in your best interests?

It is NOT what you ‘think’ is best, it is what you can justify within your exiting capabilities and capacities of your business.

In my Golden Hard Hat Mentoring Program, I show owners of construction businesses how to measure, track, analyze and justify their business metrics. In hiring people, we use the program’s distribution of time to develop the metrics for each position within the company. Based on the strategic business plan we have developed together, and the existing performance of the company, we can clearly justify when it is required by performance for new hires, thereby eliminating a top heavy business.

Another example that I see so often, is the ‘thinking’ of which work is most profitable for the business. Unfortunately, for most owners, this is nothing more than a thought based on emotions. Remember, we want to measure, track, analyze and justify. To do that, we use the program’s Job Characteristic Report to show us, based on our specific parameters, type of work, or owner that provides us with the highest return for our efforts, thereby eliminating that work or owner who hurts our bottom-line performance.

Even one more element is understanding your pipeline and backlog metric. As we all know backlog is the amount of work you have in the work process at various degrees of completion. Your pipeline is the amount of work you expect to funnel into your backlog through your marketing, lead capture and capture rate of the leads into signed contracts. Based on your turnover metric, we can calculate your maximum and minimum backlog you should have at any given time.

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The use of business metrics, including the measuring, tracking, analyzing, and justifying help keep the business on its target, and within the capabilities and capacities of the business. As in all things, it is critical to the success of the business to know the right parameters – and then to know how to use them. Measuring with the wrong metrics can do more damage than good.

Here are five easy tips:

1.      Understand and know your businesses capabilities and capacities. I hate to say this but I see too many contractors get themselves into trouble because they do not understand their capability and capacity. You only have so much time, money, employees, equipment, knowledge and experience. Use it wisely.

2.      Understand measure, track, analyze and justify. Every element of your business should be exposed to this concept. Accountability is fundamental to effective management and decision making.

3.      Determine the correct metrics. You need to determine the correct metrics, and then make sure you fully understand them and have the proper tools and information for measurement. Choose your metrics that best fit what matters to your strategic business goal, from which individual objectives are created.

4.      Avoid the pitfall of ambiguity. Your metrics must be extremely clear. A broad goal like ‘increase sales” can leave everyone with different ideas, thereby producing failure. Your metrics should be so clear that an outside person could come in and check whether the objective has been met. Clarity produces certainty.

5.      Invest in the knowledge, help and tools that deliver. To make this work for you, you need a working knowledge and real-time feedback. In the Golden Hard Hat Mentoring Program we provide owners of contracting businesses, the knowledge, resources and spreadsheets that feed the vital information to the owner via dashboards that allow them to quickly view and analyze its performance.

     Here is an example of a dashboard that show the financial and employee metrics to do its

     yearly volume:

From this snapshot, we can see the following metrics from a fictitious company we will name, Your Construction Company.

The company plans to do $1,000,000 in volume at a markup rate of 1.45, and produce a bottom-line of $85,000 after paying its owner a reasonable salary. The company will need a capital reserve of $152,500 in either a line of credit or cash, or a combination of the both to properly fund its goal.

It collects on its receivables every two months, and it takes the company approximately 150 days to complete its average project.

The maximum backlog amount it can’t exceed is $200,000 and its minimum backlog amount in cannot go under in order to maintain its goal is $145,161.

As long as the company controls its expenditures and reaches its goals in all areas, its break-even volume is $725,806.

Based on its capture rate, the company will have to bid approximately $14,285,714 of new work in order to produce its desired volume of one million. This metric indicates that either estimating or the companies target market may have to be reviewed.

According to its time management requirements, it has the correct number of estimators, and project managers. It has an excess in salespersons which indicate that with proper modifications in its sales people it could increase sales.

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    Talk to Henry

To schedule a no-obligation conversation with Henry Goudreau, "America's #1 Business-Building resource for Contractors," click here!

Let us help you build a BETTER, more PROFITABLE, more ORGANIZED construction business.

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Keep in mind that you will need to reevaluate and adjust your metrics as your business priorities change. Fortunately, this program shows you how to accomplish that. Such knowledge is extremely helpful in making every effort to achieve what you set out in your strategic plan, even if your targets were off.

Unfortunately, too many owners of construction business don’t always recognize what makes their businesses work thereby stunting growth, profitability, and the freedom they desire in their lifestyle. When you invest time and thought into setting, monitoring, sharing, and refining your metrics, you’ll be amazed at how much more in tune you are to the state of your business, and how much more easily you can make the critical decisions that can catapult your business’ success.

Remember, your business metrics is what drives your business to success!

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