Monday, October 21, 2013

Hey contractors you d better pick the right market for your business


Hey Contractors, Youd Better Pick The Right Market For Your Business


I hear two complaints CONSTANTLY from contractors.


1. I cant find enough good work.


2. I cant find enough good workers.


What most contractors fail to realize is that the two problems are closely related. The first causes the second. And both are a function of the market you operate in.


Finding an adequate supply of good workers can always be solved with money. If you can afford to pay the wages workers want and give them the hours they need, they will flock to y...


Construction, contractor, business, advice, coaching


I hear two complaints CONSTANTLY from contractors.


1. I cant find enough good work.


2. I cant find enough good workers.


What most contractors fail to realize is that the two problems are closely related. The first causes the second. And both are a function of the market you operate in.


Finding an adequate supply of good workers can always be solved with money. If you can afford to pay the wages workers want and give them the hours they need, they will flock to your company.


A lack of high margins is what complicates staffing.


The market you sell to greatly affects your ability to make money and your ability to hire good workers.


You need to choose your market wisely, very wisely.


Before permanently committing your destiny to a market (including the one you are currently focused on) you must research the following issues.


1. Can you track down enough prospects?


2. Can you market to the prospects cost effectively?


3. Do clients value anything beyond lowest price?


4. Does the work require expensive equipment?


5. Can you find enough sufficiently skilled people to do the work at the wages you can pay?


6. Is competition weak?


7. Are margins high?


8. Do you have the cash reserves to survive the markets pay cycle?


The greater your number of "nos", the more you will struggle. Here are the facts of business life:


Fact #1: You may be the best at what you do but no one is going to pay you for it if they dont value it.


Fact #2: Heavy competition leads to price competition.


Fact #3: If you cant market your business cost-effectively, youll waste all of your income chasing leads.


Fact #4: If you cant hire workers, you cant grow a business.


Business boils down to solving problems of value more efficiently than your competition. Choosing the right market essentially means picking one from which you can generate good leads; for which you afford to hire the right workers; and for which you can afford to buy the right equipment.


Choosing the right market is essential to realizing your financial goals. You cannot overcome a bad market.


Bad markets translate into low profit margins.


Low profit margins mean that you cant afford to pay above market wages. So you will struggle to find reliable, hard working, skilled workers.


Low profit margins mean that you cant afford to take a bath on ANY job. So you sit tight on your foreman, which makes him sit tight on his crews.


That drives good workers away.


When you compare your market to your capabilities, you may discover that the current fit isnt good. Don't fret, you may have several attractive options.


You may find that your current capabilities and services fit a different client than you have traditionally pursued. I see this often. A contractor builds a company perfectly suited for commercial work yet is chasing residential work.


You may find that you need to narrow your focus to a specific size and type of project and become the best, most efficient in that niche. Dont try to be a "full service" shop for every possible client. Thats recipe for certain failure.


If you find yourself in need of a new market, prepare for a tough transition.


You may need to overhaul your marketing system, your selling approach, and possibly your equipment fleet. You may need to let go of some workers and find new ones. Your job costing data may be rendered completely useless.


Your decision will be governed by many factors, not the least of which is the strength of your relationship with your present clients and your companys reputation on the street. If your relationships are strong, you should be able to raise your prices sufficiently to recruit and retain skilled workers. If not, you need to throw those relationships overboard and start anew.


If your street reputation is strongly identified for a given market, rebuild your company around that market or shut it down and open up under a new name. Changing your brand image is almost impossible. Either work within it or flush it.


Nine times out of ten, a haphazard approach to market selection seals the contractor's fate: failure. Great advertising campaigns, superior operations management, and a tight money control will not overcome a poorly selected market.


Did you fail to research the eight basic strategic marketing questions? No time like the present to run through them. It's the first step to building a really successful business.


 



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