How to Spot a Contractor Without a Functioning Brain

STOP ... Doing This!


The contractor was desperate and I could hear the fear in his voice. "I need work really bad," he said to me, "I can't pay my bills, how can I bid the jobs cheaper? I've got a guy, who will give me a job for 5% over costs. What shall I do?""

The truth is, he can't take this job or any other for that amount. After I looked at his financials, this contractor didn't even understand that he was bidding too cheap already and losing a ton of money.

You see. The numbers don't lie. If you do not have a clue or a handle on your numbers, you're a contractor without a functioning brain. To be truthful, you're a train wreck about to happen.

You make your money with your business skills, not your construction skills!

Let me show you what I mean.

The average contractor, doing about $700,000 a year, has an overhead expense of about 25%. Some are higher, and others are lower, but it is a good average.

This means his overhead or burden to support his field operations is costing him around $175,000. Not a lot of money, and it doesn't include any profit. In order to generate at least a 10% profit margin above and beyond his overhead costs, he would need to mark up his estimates by 1.35 or more.

In other words, a $10,000 estimated cost would have to be sold for $13,500, and enough sales, ($700,000 at that mark up of 1.35) to make what he wants.

His margin of error is his 10% profit or $70,000. One bad estimate, or Sales below the $700,000 mark, one price increase not properly covered, and costs start to devour the profit first.

For an example, let's say that he lands a $700,000 job for costs plus 5%. His total Sales would be $735,000. Costs would be $700,000, leaving the difference to cover his overhead and profit. What is the result?

A net loss of $210,000!

Let me show you. -

$175,000 overhead + $70,000 profit = $245,000 - $35,000 = -$210,000

There is no way that volume can make this up. Too many are selling jobs too cheap just to get the work, and that is a perfect recipe for financial failure.

As sung by Kenny Rogers in the song "The Gambler," "You've got to know when to hold, know when to fold them, and know when to walk away!" You'll lose less money by walking away.

If you would like to learn how I can help you get a handle on your business, check out and get my FREE Coaching Report by clicking on the report.

Why suffer the consequences of not having a handle on your business? It's costing you more than you think without it!

Stop Doing This or Go Broke!

This is serious ...

As a friend, and hopefully your mentor, I hope you're not doing this.

I know times are hard, jobs are difficult to get and few and far in between.

But ...

Dropping your price to get the work, isn't worth it!

Let me explain.

I've been overwhelmed by contractors coming to me in desperate situations. What I'm seeing is desperation, pure and simple.

Understand this ...

Bad decisions will cost you money, cost you time and eat into your profits. In the worst case, one bad decision can totally kill off your business. That means, taking work for nothing is a losing proposition!

If you want to lose money, stay home and watch Opray, you'll lose less money!

Every single contractor who has come to me, when I look at their financial, has taken work below costs and ... volume doesn't make it up. It just makes it worse!

When you are in some kind of pain – physical or emotional or financial— any kind of discomfort – you tend to act on things you believe will alleviate that pain. And your belief that something will help grows stronger the longer the pain goes on. After a while, anything with a remote chance can look like a winner. Wishful thinking starts to seem quite grounded, and grasping at straws feels like anything but.

In other words, you make BAD decisions!

It’s to decide in favor of something we think will bring gains today or tomorrow than for a strategy which may take weeks, months, or longer, to materialize. This means a fortune-changing strategy, which will help us, can get sacrificed to something mediocre we think will help us with a short-term remedy.

So, why did they do it? Grasp for straws? Settle for failure?

Here is what I found.

• They didn't know their numbers.
• They didn't have a strategy.
• They didn't market.

They short-changed their chances for success, because they didn't know. In other words, they allowed themselves, through desperation, to become the victim.

Listen, the economy is tough, and it will be tough for a long time. As a matter of fact, it will never go back to the way it was. That is a thing of the past. You need to adapt.

How you can get started.

1. Take the time and calculate your markup. Even better, calculate three. A low one which I like to call my last chance or worst case. The one you think is right and an optimistic one. Then calculate the results of each one if they were used. Which result do you like? Run with that one. If someone wants you to do it for less, walk away.

2. Develop a strategy. You know times are tough, how will you compete? What will you do? Lay out a plan and work the plan.

3. Learn how to market your construction services. Get your business out in front of your prospective customers. Don't wait for them to come to you.

Every contractor whom I am working with who is doing the above with me is getting work and making money. It's not easy and there is not a ton of it out there, but they are getting their share. Taking work for nothing, leaving money on the table just to get a job with high hopes, is a poor strategy.

I hope this will help some of you to start making a better decision on getting your work at the right price.

A Contractor's Thought About the Future of Our Industry

The results are in. Last week Washington announced that the unemployment rate dropped to 9% and that industry had created 36,000 new jobs. If you listened to the media, miracles have been spun and the future is bright and rosy, or is it?


The truth is, the math doesn’t add up. If 36,000 new jobs had been created and 600,000 fewer people were off the unemployment line, what happened to the unmentioned 564,000 people? It appears that Washington and the media isn’t going to talk about them. I guess they’re invisible.

And this is only the beginning.

Look around you, things have changed and our world is different. The two biggest sectors of industry that employed people, Manufacturing and Construction have been silently shuttered. Over 43,000 manufacturing plants have been shut down since NAFTA took hold in 1994. That means jobs that we no longer have and jobs that have left this country.

The unemployment rate in the construction industry now exceeds 20%. Unfortunately, that number only counts that collecting unemployment. However, what about the self-employed contractors who can’t collect because they are ineligible, don’t have work or customers to support their basic needs and are slowly devouring their life’s savings?

When you look at it in this manner, you might be wondering, how worse can it get?

Here’s a thought or two to chew on.

Real estate is dead. Waiting for it to return would be like waiting for typewriters to replace the IPad. Furthermore, if it does, we could be looking at 20 to 30 years down the road. It also brings another burden to bear. So many people have their money tied up in real estate, they will be caught short and forced to live where they are and not move up like in the past.

That means repairs, remodeling and renovation will be more attractive than new construction.

Let me explain.

In case you hadn’t noticed costs are escalating. This is in part to the reckless spending in Washington, bailouts and stimulus and of course, quantitative easing. All this has contributed to the devaluing of our dollar, and that means rising costs (inflation). Higher construction costs make staying where you are and repairing, remodeling, renovating, or renting, more attractive.

To further add to this is rising fuel costs. People will be caught between an axe and a grindstone if they live too far from work. This will start a trend to live closer to work and a need to cut down on travel costs. Younger workers and families who can’t afford to buy will be renters. I believe we will see an up- trend in communities of homes and apartments built closer to work hubs.

The truth is things will not get better until Washington does some serious cutting and focuses on re-building our manufacturing base. Without manufacturing at reasonable and competitive wages without all the messy government regulations, our nation cannot start producing the products that made this country great to begin with.

Lets be realistic, this being a nation of consumers isn’t working.

Construction also is a big factor is solving the unemployment problem. Unfortunately, government is broke. Trillions have been foolishly spent on the shovel ready jobs that produced very little of anything. That means that a prime opportunity to jumpstart the economy with public works projects have passed, and we’re left paying the tab. What really amazes me is that no one is screaming and wanting to know where all that money went.

At the present pace that Washington is working on solving our financial mess, we could be looking at 50 years or more. However, we the people with our voting rights can change that quickly. Every American needs to take a hard look at their incumbent and not be afraid to vote them out for those who promise tough reforms on the tough issues. Never mind how much pork they brought home, the pig is dead because they’ve skinned it alive already.

Without the working middle class that pays taxes and buy products, and can’t do so if they do not have their jobs in manufacturing and construction, nothing changes.

The result?

We will have no choice but to live within our means. It is being forced upon us. The options you have today will be gone tomorrow. A lot more is going to change and you better be prepared to change with it, or it will feel like a steam roller running over you.

Now is the time to take a deep breath and realize what is happening around you. Change is upon you and if you ignore that change and fail to adapt yourself to it, you will get left behind. And yes, I am doing the same for myself that I am recommending right now to you.

The way I see construction changing is simple. People will still have to spend some money, and they will be selective. I can almost guarantee you that where they live and work will be a priority. That means repairing, remodeling, and renovating in both the residential and commercial sectors will produce a demand. That demand won’t be overwhelming, which means the smart and astute will get what work there is. They will have to market and control their costs. Waiting for your phone to start ringing off the hook with work means you’ll be waiting a long time. Working for nothing or too cheap, means you’ll be broke.

All of us have to pay our debts, live within our means and force our elected officials to do the right thing. Keynesian economics and its big government approach as the solution to our problem is the problem!

We are a great nation filled with great people who have brought huge leaps in progress to the world with our free thinking, products, innovations and ideas.

Some say that the whole idea of America being the leader of the world is over and that free enterprise is dead.

I say hogwash to that.

Our Founding Fathers knew they were embarking on a daring experiment. They laid the groundwork and gave us the map to follow. Somewhere, we’ve gotten off the path, and we need to get back on it.

What a novel idea they had, free men free to be innovative, creative and enterprising. To be whatever they wanted to be, to go as far as they wanted. No wonder it worked so well.

The truth is no other country has ever done a better job of reigning supreme over the world than America.

It is said that if a great nation doesn’t rule, then an un-great one will.

Some say it will be China. However, they can’t walk the talk. Think about it. Are they as innovative as us? Are they as technologically advanced as us? The answer is no. Their GDP is only one-third the size of ours. At their present pace of growth, it will take them 20 to 30 years to catch us.

Unfortunately though,

The problem is that our present government will do its best to screw things up, but we have no one to blame but ourselves. Americans have to be far more intelligent and less emotional when it comes to the voting booth. We need to get back to our roots, our constitution and the fundamentals that our Founding Fathers established for us to be the great nation of free men and woman whom they envisioned.

In the future we must be careful how we cast our vote. We must understand the issues that confront us, the problems that besiege us, and the actions that must be taken, no matter how difficult, in order to free us from them. We must elect those who will do our bidding and not use our vote for their own selfish means, self-centered goals and financial goals. It's time that they got paid what they are worth, and that means they are getting paid too much!

The greatest strength of our country is its people. We are innovative; free thinking, hard-working and industrious. Our most powerful asset is our ideas.

When you set ideas free, you set business free and everyone benefits. Government can’t do that. Reality is, we need government to get out of the way!

I believe that we can get back to doing that, set our ideas and innovation into motion and this is the key to latch onto: Ideas and innovation set free today will become the breakthroughs of tomorrow.

Right now the economy is a roller coaster ride, putting your stomach in the uncomfortable feeling of being stuck in your throat. It’s hard to think about anything, let alone getting ahead. Especially when you have so much pressure squeezing you from all sides, and you have no clue what tomorrow will bring you.

It’s almost a flight or fight decision.

It must be similar to what the cave man felt when a mastodon showed up at the cave door.

Like the cave man, it’s important to keep a clear head and not let your emotions take over. You need to examine the situation, plan, take action and keep a clear head. Because …

It’s not the size of the mastodon that is the problem …
It’s the size of the opening to the cave.

You see, there might not be such as big as a problem for you that you perceived at first. Instead of being reactive, maybe you just need to be “active” and build a smaller opening to your cave.

America’s future and your own, depends on what you do today. I can not emphasize this enough.

The time for panic is over; the need for despair behind us no matter what the future brings us. Now is the time to sharpen your business saw, clean your tools, mend your fences, learn how to market your construction services, and slash the fat out of your operating expenses.

The time to get started is now.

Our free ideas, free market, and free enterprise are still the best way to turn this country around and get it back on track. The sooner we start working on it and demanding our politicians work on doing the right things for us, the quicker we can get back to work.

Let’s put our house in order and notify our government to stop trying to transform our America into something that we neither want nor will not work.

We don’t care about the rest of the world; it is time for the rest of the world to lift itself up to our standards. You politicians have had your chance, now do it our way. We’re ready to get back to being number one again, and we know what works. Its American innovation, entrepreneurship, leadership and ideas, now step aside because we’ve got work to do.

The State of Our Industry

Another year has passed us by, and we are no better off than we were one, two or three years ago. As a matter of fact, too many contractors find themselves a lot worse off and a future that is bleak, if not unpredictable.

To be honest because someone has to be, gone are the promised results from trillions in dollars and whatever else this Administration has promised.

Gone is the promise that if we "invest" unemployment would not reach 8% Instead, we have a wildly underestimated unemployment rate of 9.6% To be honest, and as I have said someone has to be. Unemployment is somewhere around 16% (M6 numbers) and if we take into account all the small business owners who are unable to earn enough and going without, it is encroaching 25%

Gone is the promise of "shovel ready jobs." Instead, hard-earned taxpayers dollars have been wasted on highway signs boasting of results never produced and their insidious lies to the American people, and other pork they shoved down our throats.

Gone is far more than I believe the average American realizes.

Had we a crystal ball, possibly we could have seen through the inability and the inexperience of this Administration to improve the American economy. Maybe, people would have seen the fallacy of Green and LEED. Let's be honest (since someone has to be), until costs come down, demand goes up and there is an incentive (taxes) Green, and LEED is D.O.A., or at best, hemorrhaging profusely.

Good News and Bad News

Unemployment will not be addressed until Americans feel confident that Washington has a plan to control spending, balance the budget, and reduce the deficit. Meanwhile, big business will continue to keep its operations employment lean and hoarde their earnings, and small business will pay the price for being small and being the target of progressive politics.

If anything, I hope that you understand that you cannot wait for the Big Government of Washington to solve your business problems. Instead, you need a plan of your own. Here is why.

Housing will remain in a flux for most home builders until the inventory is reduced, or they come up with a better mousetrap. That mousetrap will have to be small, affordable, efficient, convenient and close to the homeowners place of work. Okay homebuilders, I just gave you the formula for your success.

Remodeling, renovating, and repairs will lead many to sales providing . . . they market properly. People and business will stay put until they feel confident. They will remodel, renovate, or repair what they have. If you are already in this sector of the industry, low expenses and smart marketing will be the key to your success.

Commercial construction will be plagued by its inventory and this is a major concern. Delinquencies and the failure of our banks to lend will keep the return of this sector in a head hold for years to come. Again, look to remodel, renovate, and repair to commercial properties as your major source of income. Low expenses and targeted marketing will be your tools for success.

Many were pinning their hopes for survival on the Promised Land of Infrastructure. With a broke Federal government and many state government's teetering on the abyss of bankruptcy, forget it because it ain't gonna happen! I hate to say it, but the HUGE union pensions for government employees, and the COSTLY progressive entitlements will keep them in the red or until they can shake these gorillas off their backs through bankruptcy court.

Agriculture is doing well so expect to see capital investment made in this industry. I believe that there is great potential for manufacturing. I see a lot of us getting fed up with China and its inferior products, for example 'drywall.' If you're like me, I would rather spend a little more but get the great quality and reliability from a product that says: "MADE IN AMERICA." To hell with the Chinese and their crap.

In the petroleum industry drilling is as dead, just like Obama intended. Watch the natural gas industry because Pickens was right. At this present moment big petroleum is looking to buy out the ng producers. What do they know? Well, oil is getting expensive and we have plenty of natural gas and Americans won't like paying $7 or more per gallon for diesel or gasoline. If they bring it on-line they will have to spend billions redoing their infrastructure

The good news is that the country will not come to a screeching halt. Life will go on. The affluent are still spending and people are finding a way to address their needs. You will see sales but few of them. At least nothing like five years ago. Those that will survive and thrive will have to educate themselves on managing their business far more efficiently than they do today. They will have to produce lean production costs, controlling overhead costs and producing effective and targeted marketing.

In short order, if you do not have a plan and strategy coupled with an adapted business mindset and focused marketing to capture your fair share of the limited sales opportunities that will present themselves within your marketplace. You are screwed. We are in this for the long-haul.

If anything, I hope this insight will help many of you. Maybe even rattle of few cages, so to speak. The doom and gloom will be a reality for those who do nothing to improve their businesses. Success will come from adapting, improving, change and something called evolution-flexibility.

Will you evolve or become extinct?

If you would like to discover how to evolve and adapt, I will be addressing this at my yearly SUPER Business-Building Conference in Orlando this March 21, 22, 23, 2011. So, be careful; if you do nothing or decide to do something for yourself and your business, it will profoundly determine your future.

Two 'Things" You Need to Know About Your Customers

"Henry, this has been my best year yet!" the conversation went, "as a matter of fact, I'm stepping up my marketing to make 2011 even better!"

Good news to hear from a contractor doing his work here in the Sarasota area, most certainly an area hard-hit by this down economy.

How is he doing it?

Simple, by focusing on what emotions and emotional drivers his prospective customer is using.

First, you must understand that everyone buys from emotion. Those emotions are want, need, desire and/or looking for a solution to their problem.

However, it is even more important to understand what is driving that emotion. There are two emotional drivers, necessity and narcissism.

Let me explain.

If a person's home burnt down, it would have to be re-built so they would have a place to live, that is a need and re-building it is a necessity. The emotions would be need and seeking a solution for their problem by the driver of neccessity, a place to live.

If a person was making more money and wanted to express their new found business success by owning a bigger, newer home so they could impress their family and colleagues with their new found success and status symbol, their emotions would be of want and desire driven by their narcissism.

As you can see, each is using an emotion but they are driven by a different driver, which brings a different perspective.

In order to execute a great marketing and selling program it is important not only what emotions the prospective customers are using to buy, but what driver is motivating that emotion.

I'll touch deeper into this in March at the SUPER Business-Building Conference for Contractors.

Meanwhile . . .

Good marketing!

2011 – The Good, the Bad, or the Ugly?

Here we go again, another year, another dollar … maybe? Again, we find ourselves facing another year of “known’s” and “unknowns”. Unfortunately, the “knowns” are uninspiring, at best.

Where ever you turn. You read articles in the newspapers, or hear news clips from the radio, or watch the humdrum of TV news, either the economy is upbeat or down in the dumps. It seems that they can’t get the story straight. Then again, the media aren’t the media anymore.

The truth is, it is costing more to live, and it doesn’t look any better for the future. There is a drag on the economy, but it is making a slow rebound and there will be a great need for the services that our industry offers. However, emphasis is on the word "slow."

I do expect that government funded projects will stall dramatically due to deficit and debt that continue to grow at the state and Federal level. The crutch that has to be worn is that the Obama Administration really missed the ball with its stimulus debacle. Instead of throwing billions of our hard-earned tax dollars at silly partisan sinkholes, it should have plowed more money into the infrastructure and really kick-started the economy. After all Construction is the Achilles Heel of the economy.

If you remember, Vice-President Joe Biden broadcasted that as a result of the stimulus spending, it would be creating 500,000 jobs a month this year. Hmm? Still waiting!

Housing will be slow but the “Big Gorillas” of the new home industry, are buying tracks of land at discounted prices as they look to the possible future of building new homes. The truth is no one knows when that will be, so possibly they could have waited and bought it even cheaper. Time will tell the wisdom of this decision.

Interest rates will undoubtedly have to climb and wage earners have to be willing to spend, but with an unemployment rate that officially (that’s a laugh in itself) scratching at 10% (more like 18%) I doubt we’ll see many movements in that arena soon since so many are 'giving up' finding work rather than Amercians going back to work we can't believe the numbers.

Expect prices to rise dramatically as gas approaches $5 a gallon, which is on the near future horizon, but also understand why. As the Fed keeps printing money it devalues our dollar. Our dollar is the World Reserve Currency. Unlike other countries that have to buy US Dollars to purchase oil, we don’t so we’ve always had an advantage in the cost of oil being less for us. There is behind the scene meddling by a number of countries (China, Russia, Saudi Arabia, India to name a few) to remove our dollar as the World Currency. If that succeeds, we could see $7.00 or more per gallon for the fuel that powers our economy. Watch this closely!

If interest rates creep up, I would expect a small flood of work to come on hand as owners attempt to take advantage of the last of the low interest rates. The only real problem is the banks. It appears that ‘holding’ money seems to be a better advantage for them until the Fed removes their “binky” and strips away the nipple that has been feeding them.

Therefore, I would expect service side of the industry to do well as owners want to keep existing properties up to date. Handyman services should also do well as homeowners look forward to repairing, as well as remodeling for those who want to update.

On the commercial side manufacturing and agricultural are showing signs of a strong comeback. Retail is at a crossroad. The holidays of 2010 showed many of them that they can make more money on-line than in the expensive upkeep of a box store. I would expect to see retail downsize it stores in lieu of the bigger profits that can be made on-line. Already, many big name brands are scouting this arena. Does that mean that shopping malls could be our next big ghost towns? Could be but only time will tell.

Hopefully, this year will be the last of the bottoms, and we truly start a climb out. I expect things to be slow, for some, they won’t even notice if a recovery is taking place. I don’t believe anyone can sit on the sidelines and wait. You must be proactive, get out and get your sniper scope clearly focused on what the prospective client is looking for and discover how you can get them to realize you’ve got it for them.

There will be sales out there, few but for those you have the ability to market your construction services will do much better than those who are sitting home waiting for the phone to ring.

Take heed in this advice, things are changing and you best change with them. If you are still stuck in the last century you will soon find yourself a dinosaur … extinct!

Marketing your construction services is the key to success in 2011 and beyond.

For those of you who serious about being successful in this economy and realize that change is necessary, you can spend three days with me in Orlando, Florida on March 21, 22 & 23, 2011. We’ll spend three days revamping your business plan and strategy so you can better position your business to getting more sales. This includes working on your marketing plan as well. Find out more at: http://www.contractorssuperconference.com/

6 Ways to Increase Your Self-Esteem, Boost Your Self-Confidence, and Motivate Your Creativity!

Contractors are amazing people. We build something out of another person’s dreams, and we love doing it. We possess the skills to turn nothing into something.

However, what happens when things turn sour? When you have nothing to focus your creative energy upon? Do you find yourself lacking the self-esteem, self-confidence, or the motivation to get something going?

We measure the value of a person not by his or her falling down, but what they do with themselves when they pick themselves up. The true measure of you as a person is when you take responsibility and action for your better being.

Today the economy is hurting a lot of people. It is knocking them down. Will they get up and do something, or allow themselves to feel beaten?

Just this morning, I listened to a man, practically in tears because he had no work. He was losing his cable service, fearing his cell phone was next and was focusing all of his being on being knocked down. “What do I do?” He asked, “Who will help me?”

It happens to all of us at one time or another, but we need to pick ourselves up, dust ourselves off, and do something for ourselves. If someone wants to lend you a helping hand, say “Thank you” and as soon as you’re able, pay them back. If they won’t accept it, then donate your time to community service; find something you can do to help someone else in need.

Since we all will experience a moment of self-questioning, here are 6 steps you can follow to help you get through the down moments.

First, greet people; go out of your way to say “Hello!” Look them in the eye, ask them how they are and shake their hand. If you’re on the phone, answer it pleasantly with a happy tone to your voice. It will make all the difference in your own feelings, as well as those you are making contact with.

Secondly, tell the people you love that you love them! Give them a hug, don’t ignore them, speak with them, and ask them about themselves. We are social beings, and the most important people in our social network are the people we love. Never be afraid to show them how much you love them.

Thirdly, don’t be afraid to compliment others, and gracefully receive compliments from others.

Fourthly, be aware of negative thinking. Yes, you have a problem, recognize it and start developing a plan to correct it. Stay away from negative people; they are your positive energy sucking leeches. Get out and find positive thinking business owners, meet with them, share your ideas, listen to theirs and find a way that you could implement them into your plan. Network your community. Doing something is better than doing nothing!

Fifthly, develop a plan a day ahead to keep you productive for tomorrow. What are the best things that you could work on tomorrow that would help you get out of your present situation? List them, and do them! That fear in your stomach will either make you sick, or you can use it to make tomorrow a better day. Don’t allow yourself to fall victim to ‘paralysis by analysis.’

Sixth and last, learn from your problems so you never do them or get caught by them again. My dad always told me that everyone makes a mistake once in their life, but to make it again is just plain stupid! See your mistakes, problems, shortcomings as opportunities. Own up to your shortcomings, but do whatever you have to do to correct them. This economy is not the end of your career as a contractor, unless you allow it to be.

Even if you feel that everything in your life is going poorly, be aware that in the end, only you are ideally positioned to correct them. A failure is something you have done; it may very well be something you will do again on your journey of being a person --- but failure is not YOU!

Yesterday, I read an article on the new Chevrolet Volt. It goes for 40 miles on its batteries before its gasoline engine kicks in to re-charge the batteries. You see, unless it is parked in a garage near an electrical outlet, it will charge itself while it is in motion.

Why do I tell you this?

Taking action is creating motion. Bodies in motions produce energy of some kind. The only way you will ever get through your problems is by getting yourself in motion. Take positive action and DO NOT EXPECT anyone else to pick you up.

However, to prove my point.

As I sit here typing this blog, an electrical contractor just came to my front door and hung a door hanger. Its message was simple: “Need an Electrician?” Just so happens I have an outlet that is giving me a problem.

You see . . . positive action produces positive results!