Getting Out of the Bucket: Job Folders

A crucial component of getting out of the bucket is communicating with production personnel. If the owner is to be away from the job site, he must insure that the Project Manager has the information necessary to achieve customer satisfaction and meet the company’s standards. The Job Folder is an easy way to accomplish this. 

Unless the salesman/ owner is on the job site for most of a job, production personnel will frequently have questions or other issues that require the owner’s involvement. While many of these questions or issues are easy to deal with, they can create disruptions in the owner’s activities. A Job Folder can reduce the number of these questions and issues. A Job Folder can provide the Project Manager will all of the information and resources needed to successfully complete the job. Not only will this allow the Project Manager to better perform his job, it will allow the owner more time to perform his job. 

Both the organization and content of a Job Folder is very optional. However, it should contain all of the information that is likely to be required, as well as other resources that will aid the Project Manager is completing the job. The purpose of the Job Folder is to provide an organized, professional method for conveying information between sales, administration, and production. A thorough, well organized Job Folder can assist the Project Manager in job site management by providing him with the information resources he will need on the job. 

The contents of the Job Folder will be largely determined by your specific needs, such as the types of work you do, the Project Manager’s particular responsibilities, etc. This workshop will indicate the general types of information that should be included.  The primary purpose of the Job Folder is to relay information to and from Production. Information may come from sales or administration. Information from Production can include any forms used by Production, receipts, etc. 

An organized Job Folder provides easy access to the information it contains. And because all of the information related to the job should be contained in the Job Folder, it serves as the Project Manager’s “Bible” for the job. Probably the most important part of the Job Folder is the Work Order. This should include the Scope of Work, i.e., the specific work that will be performed. You may find it necessary or desirable to include the entire contract. This is an individual decision. If there are any special instructions, such as specific job sequencing, these too should be included. If you are aware of any hot buttons or special concerns on the part of the customer, include these as well. Remember, the purpose is to relay information—include any information about the job or the customer that could be helpful to the Project Manager. 

You should also include a material list. This list should include the types of products to be used, the quantity required, sheen levels, etc. Do the same with lumber, drywall materials, etc. This will provide the Project Manager with an opportunity to catch mistakes or material shortages earlier in the job (or before it starts). Include any forms used by Production. It might be wise to include additional copies in case more than one is needed or one gets dirty. Forms you might include are: Pre-job checklist, job completion form, and Change Order forms. 

A map to the job site can be helpful. If you live in a city that has a city map in booklet form, you can just give the coordinates. As an alternative, use Map Quest or a similar service to generate a map from the office to the job site. The organization of your Job Folder will have much to do with its usefulness. The more accessible the information, the more useful it will be. A three-ring binder makes an easy way to organize and protect the Job Folder. 

Using dividers will allow each section of information will be easily located. Again, there are options in how you divide the Job Folder. Keep in mind your purpose and organize the folder in a logical manner. 

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Published in: on May 20, 2007 at 2:18 pm  Leave a Comment  

Getting Out of the Bucket: Sales Presentations

The Sales Presentation is the culmination of the process of educating the customer. This is the time when all of the pieces are tied together and the solution to the customer’s problem is presented. Because customers seldom buy home improvement jobs, they are often unsure about what criteria to use when selecting a contractor. They may be unsure about what options to select, or if the proper scope of work has been proposed. The salesman should seek to present the customer will all of the factors involved in a painting project—materials, methods, manpower, and the monetary investment. 

When these factors are addressed properly and the customer is well educated, the natural conclusion of the sales process is a sold job. The most important part of any home improvement project is contractor selection. If the customer selects the right contractor he will have a much greater chance of satisfaction. Much of the sales presentation should focus on contractor selection. 

Selecting the right contractor requires that the customer understand the appropriate criteria to use. When two contractors look the same the customer will make his decision based on price. But when one contractor offers more value—and the customer understands the importance of that value—different criteria come into play. Our goal in the sales presentation is to explain these values. When selecting a contractor the customer should ask many questions. Such as:

  • How long have you been in business?
  • Have you done similar types of projects?
  • Are you certified and/ or licensed?
  • Do you carry sufficient insurance?
  • How is additional work handled?
  • Who will actually do the work?
  • What types of training does your company receive?

The answers to these questions will help the customer make a wise decision. 

To assist us in our sales presentation, we can use an Answer Book. The Answer Book is simply a compilation of our answers to all of the questions the customer should be asking of each contractor he interviews. The Answer Book provides a visual component that lends credibility to our presentation. Among the items the Answer Book should contain are:

  • Copy of Certificate of Insurance
  • Licenses and Certifications
  • Product literature
  • Customer list
  • Photos
  • Company history

With a well-organized Answer Book we have a script for our presentation. We simply go through the book explaining the various issues and components to hiring a contractor, and then provide our answers to the questions the customer should be asking. Sales is primarily an educational process. The Answer Book provides us with an easy method for insuring that we cover the important issues.

Published in: on May 12, 2007 at 6:04 am  Leave a Comment  

Getting Out of the Bucket: Differentiation

One of the most common complaints expressed by contractors is low-ball competition. There seems to be an endless supply of contractors who are willing to beat our price. 

Many contractors believe that customers will always go with the low price. This is simply not true. Consumers often pay more money for goods or services. But they must believe that they are getting something for the additional money.  

Consumers often pay more for convenience. Corner stores are one example. Many products cost more at the corner store, but the convenience offered makes the savings in time worth the additional money. Similarly with malls—prices tend to be higher, but a shopper can go to many different stores with ease. 

Consumers often pay more for quality. If they did, we’d all be driving Yugos. After all, a Yugo will do the same job as a Lexus— get us to our destination. But the Lexus does so with greater comfort and dependability. We can get a hamburger at McDonald’s or Fuddruckers, but there is a quality and price difference.  Consumers often pay more for service. A restaurant patron is perfectly capable of parking his car, but often will pay more for valet parking. Similarly, consumers often pay for extended warranties because of the peace of mind offered, ease of repairing or replacing defective products, etc. In short, consumers will pay more if they perceive that they will receive a greater value.

When a product or service looks the same as the competitor’s, consumers will make their decision largely on price. If we want to charge a higher price then, we must offer greater value.  The values desired by a particular customer may vary. Some may want convenience, some may want quality, some may want service. Some may want all three. Consequently, we should attempt to offer the broadest array of values as is reasonable. 

When the customer perceives a greater value, he will be willing to pay a higher price. But the customer will not perceive a greater value if he does not know it exists. In other words, we must do more than simply offer greater value, we must also communicate that fact to the customer.  Communicating the values offered by our company is primarily a marketing issue. But marketing is not the same as advertising. Marketing encompasses the entire way in which deliver our message. 

The image a company projects is a crucial part of communicating value. For example, a flier that is created with crayons will project a much different image than a four-color, professionally produced flier. The cleanliness and appearance of your signs, your employees, and your vehicles will all project a specific image regarding your company.  Advertising is the most common and broadest method for communicating the value offered by your company. It is important to understand that advertising must do more than tell the value offered—it must also show the value offered. If your ad states that you are a professional company, but looks like it was designed by a four-year-old, you will send a very mixed message. 

Consumers often need to be educated regarding the products to be used and the services offered. Consumer education helps the customer understand the value offered. Offering and communicating greater value is how we differentiate our company.

Published in: on May 5, 2007 at 7:08 am  Leave a Comment  

Getting Out of the Bucket: The Sales Process

Sales involves much more than simply throwing a number at the customer and hoping that he buys. Sales requires a process. A good contractor knows his trade well. He knows the products and procedures that are required to perform the job properly. He knows what values his company offers. The sales process revolves around educating the customer regarding these issues. 

A sales process does not need to be high pressure. It does not need to involve gimmicks. It does need to identify and address the customer’s needs and desires. It needs to address the customer’s problem and your solution to it. Most contractors spend very little time with the customer. They spend little time asking questions and listening to the answers. They believe that they are the expert, and they want to spend their time telling the customer how great they are. This is generally ineffective. 

Most contractors FAX or email their estimates. They do not explain how they will perform the work, why they specified certain products, or what intangible values the company offers.  Customers seldom buy on price alone. However, when each estimate and contractor looks essentially the same, he will buy on price. When he does not see a value difference, he will pay the least necessary to achieve the project he wants. 

A contractor can greatly improve his sales simply by utilizing a two-step sales process. The first step is to meet with the customer to review the job. The second step is to review the proposal with the customer.  During the first meeting with the customer we seek to understand the project and the customer’s needs, desires, and hot buttons. We seek to identify what kind of project the customer wants, and the criteria he will use for selecting a contractor. We do this by asking questions and listening to the answers. During the second meeting we present our solution to the customer. We propose a project that meets their needs, desires, and wants. We explain the materials we will use, the procedures we will follow, and all of the aspects of our company that provide value to the customer.

Published in: on May 3, 2007 at 4:43 pm  Leave a Comment  

Getting Out of the Bucket: Tracking Leads

Leads are the lifeblood of a successful contracting company. Without enough leads sales will languish. And when sales languish, crews do not stay busy. Sufficient leads also allow the contractor to charge the appropriate price to pay reasonable wages and make a profit. 

Successful lead generation requires consistent and varied marketing. It requires a broad mix of advertising media, as well as a system for tracking leads and analyzing marketing expenses. It requires a marketing plan. 

Many contractors believe that advertising is unnecessary, that repeat customers and referrals are sufficient. This is true if you only want a job. It is not true if you wish to grow your business. Customer retention and referrals are a part of the mix, but only a part. 

Many contractors look for the one form of advertising that will make their phone ring off the hook. They ask, “What form of advertising works best?” My standard answer is: the yellow pages doesn’t work, the internet doesn’t work, direct mail doesn’t work, yard signs don’t work, customer retention doesn’t work, etc. But if you do all of these you will have a powerful marketing package. 

The truth is, few, if any, advertising media will provide the level of leads required by the typical contractor. Successful marketing requires the use of multiple media to deliver your message.  Certainly some media is more effective than others. What works in one market may not work as effectively in another. What works one season may not work as well in another. The key is to throw a wide net, monitor the results, and make adjustments as necessary. In general, a marketing plan should include the following: 

  • Internet—A web site is an inexpensive investment and provides an opportunity to provide potential customers with extensive information.
  • Customer retention—It is far less expensive to retain customers than attract new customers. Regular contact with past customers will increase customer retention.
  • Proximity marketing—Marketing around upcoming or ongoing jobs can be effective. Use door hangers or direct mail to contact neighbors of your customers.
  • Print ads—Magazines and newspapers provide a means to reach a broad audience. Community newsletters allow you to target specific neighborhoods.
  • Signage—Every job site should have a sign for the duration of the job. Let the neighbors know who is doing the work. Vehicles should also have signage—they are rolling billboards.

Most contracting companies should spend between 5% and 10% of revenues on advertising. Budget your marketing expenses so that you can try multiple media. Tracking your leads is a crucial component of a successful marketing plan. Each customer should be asked how they heard about your company, and their answers should be logged. While it will take time to accumulate data, this information will eventually allow you to intelligently analyze your marketing efforts. The two analysis you will want to perform are: 

  • Cost per lead—This will tell you what it costs for each lead that you receive. This will allow you to compare a specific piece of advertising with your over all average.
  • Return on Investment (ROI)—This will tell you how much revenue each advertising dollar generates. If you are aiming to spend 10% of revenues on advertising, you will want to see an ROI of 10 or better.

By calculating these ratios you will be able to identify the advertising that produces the best results. Do not rely on your “gut” or any other non-scientific analysis—they are almost always wrong. The numbers don’t lie.

Published in: on May 1, 2007 at 4:10 pm  Leave a Comment  

Getting Out of the Bucket: Marketing Plan

Leads are the lifeblood of a successful contracting company. Without enough leads sales will languish. And when sales languish, crews do not stay busy. Sufficient leads also allow the contractor to charge the appropriate price to pay reasonable wages and make a profit. 

Successful lead generation requires consistent and varied marketing. It requires a broad mix of advertising media, as well as a system for tracking leads and analyzing marketing expenses. It requires a marketing plan. 

Many contractors believe that advertising is unnecessary, that repeat customers and referrals are sufficient. This is true if you only want a job. It is not true if you wish to grow your business. Customer retention and referrals are a part of the mix, but only a part. Arthur Middleton Hughes has a good article on the lifetime value of a customer on the Database Marketing Institute website.

Many contractors look for the one form of advertising that will make their phone ring off the hook. (This is a frequent question on many forums.) They ask, “What form of advertising works best?” My standard answer is: the yellow pages doesn’t work, the internet doesn’t work, direct mail doesn’t work, yard signs don’t work, customer retention doesn’t work, etc. But if you do all of these you will have a powerful marketing package. 

The truth is, few, if any, advertising media will provide the level of leads required by the typical contractor. Successful marketing requires the use of multiple media to deliver your message.  Certainly some media is more effective than others. What works in one market may not work as effectively in another. What works one season may not work as well in another. The key is to throw a wide net, monitor the results, and make adjustments as necessary. In general, a marketing plan should include the following: 

  • Internet—A web site is an inexpensive investment and provides an opportunity to provide potential customers with extensive information.
  • Customer retention—It is far less expensive to retain customers than attract new customers. Regular contact with past customers will increase customer retention.
  • Proximity marketing—Marketing around upcoming or ongoing jobs can be effective. Use door hangers or direct mail to contact neighbors of your customers.
  • Print ads—Magazines and newspapers provide a means to reach a broad audience. Community newsletters allow you to target specific neighborhoods.
  • Signage—Every job site should have a sign for the duration of the job. Let the neighbors know who is doing the work. Vehicles should also have signage—they are rolling billboards.

Most contracting companies should spend between 5% and 10% of revenues on advertising. Budget your marketing expenses so that you can try multiple media. Tracking lead data is an important part of your marketing plan. Tracking leads will allow you to modify your plan to achieve the best results.

Published in: on April 22, 2007 at 5:36 am  Leave a Comment  

Getting Out of the Bucket: Production Compensation

Many contractors worry that if they are not constantly on the job site supervising their employees, their payroll will skyrocket as employees work less efficiently. They worry that hourly employees will try to get as many hours as possible out of each job. 

The solution is relatively simple: don’t pay them by the hour; pay them by the job or task.  Such compensation systems go by numerous names—piece work or subcontracting are the most common. Regardless, such systems are performance based in that the employee is paid a specific amount to perform a specific task. The better his performance, the better his pay. 

Performance based compensation pays a set amount to the employee for the satisfactory completion of a task. For example, the employee may be paid $100 to paint a room. If he completes the work in 2 hours, he makes $50 per hour. If it takes him 8 hours, he makes $12.50 per hour. Many contractors fear that their employees will cut corners in a mad rush to complete the job.

The key is to have standards for the work—those standards should include customer satisfaction and the company’s standards. Until those standards are met, the job is not complete and the employee has not met your requirements.  When employees know the standards, and the consequences for not meeting those standards, they are generally inclined to meet them. At the same time, you do not need to baby sit or micromanage. In short, you have told your employees the desired results and the price you will pay for them to meet those results.  As a general rule, labor should constitute approximately 30% to 40% of the selling price. Thus, if you sell a job for $4,000 you would pay your employees $1,200 to $1,600 for performing the work. 

Performance based compensation provides the owner with fixed costs for his largest expense—labor. It provides the employee with an incentive to perform his work efficiently—the more efficiently he works the more he makes per hour. 

Some employees may not like performance based compensation. They may prefer the security of a fixed hourly wage. Such employees may not be the type you really want in your business. 

Performance based compensation places a definite responsibility on the estimator. Jobs must be priced fairly—jobs that are underbid will have a negative impact on production personnel. The estimator must always endeavor to price jobs properly, or risk a mutiny. As in all aspects of your business, you must always seek a win-win situation. If you want employees to provide quality work in an efficient manner, give them an incentive to do so. Provide them with the systems that will allow them to be more productive, and reward them when they are successful. They will make more money, and you will be on your way to getting out of the bucket and building a business that is not dependent on you.

Published in: on April 19, 2007 at 10:15 pm  Leave a Comment  

Getting Out of the Bucket: Production Training

Business owners often expect their employees to know the proper way to perform their job. We often expect them to have the same motivation, concern, expertise, and passion that we do. But we must understand that this expectation is not realistic.

The fact is, most employees do not share these qualities with the business owner. That is why they are employees. This is not a slam on employees—it is simply a fact that owners must recognize and accept. 

As owners we know the results that we want and expect. We would like to consistently achieve these results. Doing so would allow us to achieve our goals, reduce stress, and build our business. Consistently achieving these results means consistently taking the actions that lead to those results. More importantly, we cannot assume that our employees will do this. Indeed, we cannot even assume that they know what actions to take. Therefore, it is crucial that we identify the proper steps, document those steps, and then train those steps.  T

hese steps become the procedure for the specific task. So long as the steps are followed, the desired results will be the consequence. In other words, by developing and implementing procedures, we can eliminate the bottlenecks in our business and consistently achieve the results we desire.  Whenever possible, involve employees in the process of developing procedures. This includes both the training session and the follow up. Solicit their ideas on bottlenecks and possible solutions. Doing so will likely result in better ideas, and it will certainly improve their willingness to accept changes. 

Training involves more than merely throwing a procedures manual at the employee. The procedure should be explained and demonstrated. The employee should perform the procedure with supervision. Correct any mistakes that are made. When the employee is comfortable that he knows the procedure it becomes his responsibility to perform the task properly. With written procedures in place training becomes a matter of reviewing the appropriate procedures with the employee. He knows what is expected of him, and the owner no longer needs to micromanage.

Published in: on April 17, 2007 at 5:19 pm  Leave a Comment  

Getting Out of the Bucket: Production Procedures

Many contractors stay in the bucket because they fear a decline in the quality of work and customer satisfaction. They believe that they must continually monitor and supervise their employees. Such an attitude becomes self-fulfilling, as employees become dependent on the owner for quality control and guidance. 

For the most part, the problem does not lie with the employees, but rather the owner. More specifically, the owner’s attitude restricts employees, creates dependency, and prevents the delegation of responsibilities. As long as the owner believes that he must be a baby sitter, he will need to be one. 

This does not mean that the owner should simply hand responsibilities to his employees. Doing so could be disastrous for both the owner and the employee. Empowering employees requires more than a transfer of responsibility. 

Too often the owner focuses on the means rather than the ends. Too often he focuses on how tasks are performed rather than the desired results. As a result, he finds himself micromanaging his employees and he becomes trapped in a job, rather than the owner of a business. 

There are often numerous ways to accomplish a particular task. Certainly some methods are more efficient and effective than others. But if the owner continually focuses on the methods rather than the results, he can easily become mired in minor details that do little to help him accomplish his goals. 

Escaping this trap requires a change in thinking. It requires a mindset that focuses on the desired results. The owner’s primary job is to identify and articulate the company’s goals. He must then work with his employees to identify and develop the methods for accomplishing those goals. 

Those methods should be codified as written proceduresstep-by-step instructions for achieving a particular result.  

Consider the following example for making a perfect pot of coffee: 

  1. Place coffee filter in filter basket.
  2. Using scoop in coffee canister, place 5 level scoops of coffee into filter.
  3. Close filter basket.
  4. Measure 5 cups of water into carafe.
  5. Pour water into water reservoir.
  6. Place carafe on heating element.
  7. Press on button.

 

No matter who follows this procedure, the results will be the same. In other words, following the procedure will provide consistent results. 

The same approach can be followed for every task within our business. No matter who performs the task, the results will always be the same (if the procedure is followed). When the procedure is followed, the results are predictable, whether the owner is on the job site or 1,000 miles away. 

With procedures in place the owner no longer needs to worry about the quality of work. With procedures in place the owner no longer needs to baby sit and micromanage. With procedures in place the owner can get out of the bucket.

Published in: on April 12, 2007 at 9:20 pm  Leave a Comment  

Getting Out of the Bucket: Manage Your Time

Much has been written and spoken about time management and organization. Much of the reason is because time is a limited, finite resource. And because there always seems to be more to do than time allows, we struggle to squeeze as much into each day as is possible. The more efficiently we use our time, the better we are able to do this. While organization is a separate subject, it is related to time management. Indeed, disorganization is a primary cause of wasted time. Disorganization can cause us to waste time looking for keys, repeating tasks because we can’t find paperwork, etc. 

Disorganization can also create other inefficiencies. We may not bill a customer in a timely manner, or the bill may be in error, because we cannot locate the appropriate paperwork. We may order the wrong paint because we gave the wrong paint sample to the store worker. Our crew may have down time because arrangements weren’t made to have access to the doors. Disorganization can also have other, less tangible effects on our business. Customers may perceive us as unprofessional or sloppy. Employees and vendors may suffer from inaccurate or insufficient information. 

Organization is primarily an issue of systems— of having specific methods and procedures for accomplishing a task. It provides consistency and harmony, improves efficiency, and reduces stress.  Any long-term goal must be comprised of other goals—sub-goals. These sub-goals are hierarchical, that is, they are not equal in importance or significance. Consequently, we must recognize our priorities and focus on the most important of our goals. In other words, we must focus our efforts on those goals that will do the most to move us toward our Definite Chief Aim. 

A common obstacle to goal setting (and achievement) is perfectionism, that is, the belief that until a step or goal is 100% complete and flawless it isn’t completed. Perfectionism can result in a massive use of time and resources to accomplish small and almost inconsequential results. This does not mean that we should accept poor or mediocre results. It does mean that we must recognize when further effort will have minimal results. Again, we must recognize our priorities. Pareto’s Principle holds that 20% of a resource or effort creates 80% of the results. While this is not literally true, the essence often is. Applied to a business, we often spend vast amounts of time on tasks that net few results (urgent but not important). We deal with crises that have short term significance, but do little to move us towards our Definite Chief Aim.  

If we develop and implement systems within our business we can improve both our personal efficiency as well as that of our employees. Less effort is required to achieve the same results. When the owner of the business can work on tasks that are not urgent but important, he can maximize his time management and get the greatest results for his efforts. Systems also allow for tasks to be delegated to others, which can free the owner’s time. With systems in place, the owner can achieve consistent results without baby sitting. 

It is likely that there are tasks that you perform that are simply not important because they contribute nothing to your Definite Chief Aim. These tasks should be eliminated.  Identify the issues or activities that involve the greatest waste of time. Develop systems to achieve consistent results while eliminating the crises and time wasting activities. This will reduce stress, and create time to more to lesser issues. Stick to the process. There will likely be bumps in the road, but each effort that gains you time is priceless. The return on investment is exponential. If an hour of effort saves you ten minutes a day, you will have an additional ten minutes every day for the rest of your life.

Published in: on April 9, 2007 at 9:41 pm  Leave a Comment