Questions from office hours.
About once a month, I hold Open Office Hours. This is how it works. We set up a GoToMeeting conference call, invite people on my email list and chat it up. We ask questions and present challenges. Together, we come up with some good answers and ideas. It’s casual, organic and really fun.
Following are a few terrific questions from my recent office hours. The responses are from me and other attendees. Perhaps the conversation will be of service to you. Enjoy!
Q: My service techs aren’t buying my prices. What can I do?
A: Take the techs through your step-by-step budgeting process so that they know how you came up with your price. A budget involves some guesswork. We can’t know what is going to happen. Budgeting is simply goal setting. This is what we want for sales, expenses and profit. This is what we would have to charge to make it happen. Some techs will be super interested. Some, not so much. However, it builds trust when you lay it out for them.
Lots of people struggle with self-esteem issues. In the “dirty jobs” industry, techs may be burdened with harmful baggage. In high school, many kids are steered towards shop class, and the implication is that they aren’t smart enough, or good enough, to go to college. However, college is no guarantee of a great career. We all know unemployed or underemployed kids with boat-anchor student loans. The smarter choice may be to develop trade skills and start earning $50,000-100,000, instead of carrying around that much in debt. Talk to your team about this.
Bring up news stories – like the crisis in Flint, Michigan – that highlight the importance of your industry. Share your own stories of discovering your worth and embracing your contributions to society.
Make the move to flat rate pricing. Work with your team to decide which tasks should go in the book and how many hours to assign them. Their involvement in the project sets that stage for meaningful conversation about the value of your services and how to best present them.
Suppose one of the techs says that customers sometimes quote “big box” store prices for materials, and questions why your prices don’t match theirs. That is a great opportunity to discuss the importance of high grade materials and proper installation. Your prices must cover professional wages for team members, dependable materials, all overhead, and appropriate profit. This allows you to do the right thing for your customers … including warranty work, as required.
Q: What if you have a tech who only charges the minimum fee?
A: Establish minimum levels of performance. Create benchmarks for sales and productivity. What is “good enough” at your company?
Get real with the tech. Have a candid conversation about his performance. It’s not cool for someone to work with you and not be successful. Consider how much time it will take to help the tech hit acceptable levels of sales and productivity. It sucks the dignity out of a person when they know, and the rest of the team knows, that they are losing. Help them get good, or move on.
The tech may need some sales training. There are some terrific sales trainers with expertise in our industry. Sign up for their webinars, or buy their books. Attend their seminars. Find a sales trainer who seems like a good fit for you and your company. Customize their sales system to work for you.
The tech may not be as technically skilled as he needs to be. Techs won’t sell what they can’t do. How do you find out what a particular tech’s challenge really is? You have to ride along. When you ride along, you have the opportunity to help a tech get better. If someone isn’t winning, they may be motivated, at least willing, to try something different. Or, you can determine that this position is just not a good fit.
Q: I’m a one-man shop. How can I compete with large companies?
A: Don’t try to compete on price. A bigger company can charge less than a small company because they will have more billable hours over which to distribute their costs. Consider that you only have so much time to sell. Maybe only 1,000 hours a year, as you work all by yourself.
Are you doing the accounting? Is your spouse or significant other? Make sure one of you figures out Quickbooks and commits to running reliable, weekly financial reports. Many contractors charge the “going rate” and fail to keep track of the money. Before long, the debt has piled high. To dig out of that, you will have to raise your prices to pay down debt as well as pay yourself what you deserve.
Don’t try to be the “one call does it all” service provider. Steer clear of really big jobs. Avoid new construction work. Leave that work to bigger companies. Look for a specialty area, and get rich in that niche. Note that this approach works best if there is a big enough population in your market area. If you live in a small town, you may need to offer more services. Or, add another revenue stream – real estate investing or an internet business – to your business holdings.
The niche approach can be a real winner. You can flip the whole marketing model around. Instead of doing anything to get a customer, have your customers compete to work with you. Be so good at your area of expertise that you can be selective about who you work for. Consider the “West Coast Chopper” guys who customize motorcycles. They don’t lower their prices to get customers. They say, “You want to work with us? Get in line. And, don’t fuss about our prices.” Then, they deliver such in-demand bikes that their customers pay extra to get in that line. You could say, “Mrs. Fenwicky, I can only work with a few customers at a time. I have become the premier expert in ________ (radiant heating, solar systems, home automation, energy efficient building), and as a result my calendar fills up quickly. Perhaps we can work together. The first step is that you fill out a customer application.”
Put a business plan together and engage that plan. Measure your results and make adjustments. A small company can be a successful company. Be, do and have what successful, profitable business owners do, no matter the size of your company.
Ellen Rohr provides “in the trenches” insight that business owners can relate to. Comments? Questions? A different view? Reach her at 417-753-1111 or firstname.lastname@example.org. You can also join the Bare Bones Biz community, at www.ellenrohr.com, for free tips, problem-solving webinars, money-making tools and lots of love.