In 1953, Walt Disney said ‘We will do what we do so well that they will come back and see it again and again and next time they will bring their friends. I think he got the experience thing right.

This last week, I had the opportunity to have one of these true experiences. I attended the EntreLeadership Masters Series conference in Tucson, AZ. They build the experience  by handling all the details starting with meeting us at the front lobby when we pulled up. They took our bags and led us to the front desk to make sure the check-in was trouble free. As they were making a point during the week using a movie theater story, they set us up during break by serving movie theater type treats. They made the point of honoring history by bringing us to the Pima Air and Space Museum and  doing the presentation in front of the sister warship to the one that dropped the atomic bomb during World War II.  Every one of these points was made well because they didn’t just tell us the words. The points were made and will be remembered because they built the full experience and we were able to live it.

What do you do to build the experience for your customers? Tell us about it in the comments below.

In this book, Collins looks at companies that at one time were mainstays in the US economy – companies like Zenith, Circuit City, A&P and more. Today, these companies are gone. What makes companies who were so big and successful for years and yet, ultimately fail.  He indicates that when companies start their downfall, they go through five stages. These are:

• Stage 1 – Hubris Born of Success
• Stage 2 – Undisciplined Pursuit of More
• Stage 3 – Denial of Risk and Peril
• Stage 4 – Grasping for Salvation
• Stage 5 – Capitulation to Irrelevance or Death

In here, he shares a story of Bill Lazier, a professor at Stanford Graduate School of Business. In his course on small business management, he would press students on why companies are failing. As they came up with different ideas like marketing, strategy, brand and more, he would keep pushing them. He would end up the exercise by turning and writing on the board the word

C A S H!

He would follow this up with the following:

“Never forget, you pay your bills with cash. You can be profitable and bankrupt. In the entrepreneurial phase, leaders struggle just to get enough cash to become self-sustaining, but as an organization becomes big and successful, cash consciousness atrophies. Leaders in successful companies worry more about earnings. But organizations do not die from lack of earnings. They die from a lack of cash.

We need to understand the cash position in our company. There are two main causes of company failures. Improper labor pricing and poor cash flow. I have worked with company after company in the last several years who turned themselves around and started making money but still have major financial problems (or even failure) as a result of the demands on cash flow. Remember, your P & L is not the same as your cash flow.

It’s a Quick Read
One of the nice things about this book is that Collins packs a lot of information in very few pages. You don’t have to be a speed reader to get through this in short order. As I said earlier, this book is a must read for any contractor. Put it on your reading list today.

Have you read How the Mighty Fall? Let us know your thoughts on it.

This morning, in the row in front of me was a pair of young parents with their five-year old son. This was obviously the boy’s first flight as his parents were talking to him and building the excitement level. As we a pulled away from the gate and started taxiing, they were telling him what was happening. “Feel the plane moving? Here we go!” The delight in this kid was clear. Mom was talking to him as if he were on a rocket getting ready to take off and he was loving it. As we came up to the runway, she was telling him “Look, there’s the runway for blast-off! Are you ready?” His reply was simply “Whoa! that’s really long.” As we turned the corner and lined up, she was asking, “Are we straightened out and lined up with the runway yet?” His excitement was growing by the second.

The captain powered up the engines and the plane started to move. Again, mom was telling him, “Here we go. Watch outside. We’ll go faster and faster”. The boy started giggling as the plane picked up speed. “Are we going faster” and “Watch, pretty soon the front of the plane will lift off the ground and we’ll blast off” mom said. The giggling and exclamations of “WHOA!” only got louder. As we continued to pick up speed and climb, his delight was infectious and every adult within three rows was grinning at his enthusiasm. It was fun to see someone so excited over experiencing something new.

Rekindle your start-up excitement
Remember when you felt that kind of excitement in your business? When you started, you were just blasting off. Each day was fun and brought new challenges but that was okay because you were going to conquer the world. Have you lost that feeling? Today, are those challenges “just something else to beat you down”? If so, stop what you are doing. Think back to that time when you did have the excitement. What was different?

Chances are, you will answer something to the affect that “you didn’t know any better” or that “you didn’t know what you didn’t know”, or “ignorance is bliss – I was young and stupid”. That may have been true and there is nothing wrong with not knowing but you can’t stay there. Remember most contractors today are owned by people who are great craftsmen who had a dream but were never taught how to run a business. As I said, there is nothing wrong with not knowing. There is something wrong with not doing something about it. Part of your success is dependent on knowing the business side of your business, reading and understanding the profit and loss statement, cash flow budget and payables and receivables reports. If you don’t know these, get yourself in a program such as our Basic Business Boot Camp that can teach you. It’s not hard. In fact, it’s easier than most of the technical stuff that you already know.

Reach down within yourself and find that excitement of embarking on a new challenge. Today is a new day and now you know some of what you don’t know. Today is the day that will be the new beginning for your company. If you have a solid handle on these things, find the areas that you are still week in and improve those. If you know of someone who needs to read this message, pass this on to them. It could change their life.

What do you do to rekindle the excitement like the young boy on this morning’s flight? Tell us about it.

Celebration is important. It’s often said that we need to have a BHAG, that is a Big Hairy Audacious Goal. Many times, the goals that we have within our companies are BHAGs and it takes a lot of work and change in order to accomplish them. Surrounding yourself with good team members makes this much easier but if we don’t celebrate milestones along the way, your team will likely become demotivated.

As I have mentioned in this blog before, I am training to run my first half marathon. I ran a 10K run 20 years ago and I thought it was going to kill me. I was physically ill for three days afterwards. When I decided last year that I wanted to do this again, I recognized that I would have to work on it. I was not a runner. I would find myself struggling as I ran across the street to the neighbors house. I decided that this time, I would have to do this right. As a result I put together a time line to train for this run. I created a number of milestones. Each time I hit another milestone, I celebrate. It’s a point and a date that I can point to that shows me that I am making progress.

This week I hit another one of those milestones. I hit the 200 mile mark. For someone who is not a runner, thinking that I have now run over 200 miles is a huge accomplishment. I live in Green Bay, WI and for me that’s like running to Chicago. To me, that is incredibly motivating. If I have already run over 200 miles, I can definitely run 13.

By celebrating key points along the way to your main goal, you will keep your team motivated and help them see they are making progress. Each time I hit a new distance (6 miles, 7 miles, etc) it helps me know progress is being made. I can think back to the days of running two or three miles and being winded.

How do you celebrate milestones with your team? Tell us about it.

Many contractors have been hurting over the past 3 years. They have felt the pain of the economy and it’s impact on their company. Again, I ask is this pain ever good?

Over 20 years ago, I decided that I was going to run a 10K. For those of you who are not runners, that’s 6.2 miles. I figured it wouldn’t be a big deal. Everyone always told me that I “look like a runner”. If I actually looked like a runner, I should be running. I signed up for the Bellin Run in Green Bay that year. I was young and prepped by doing a couple of practice runs of a shorter distance. I figured that if I could run half the distance in practice, I would be OK doing the full 10K. I knew I was not going to win the race but I figured if I could finish in under an hour I would be happy.

The day of the run came and I crossed the starting line with incredible eagerness. I was surprised at how slow the crowd of 5000+ runners moved for the first mile. I kept pushing to pass people and keep up my pace. This work was draining and I found that by mile 2.5, I was really winded. By mile 3, I had to walk for a bit to catch my breath. I did finish the run but suffered the next three days. I’m not talking sore muscles. I was physically ill for three days. I vowed I would never do that again.

Over the next few years, I found myself wondering why I couldn’t run a mere six miles without suffering the way I did. I concluded that I just didn’t prepare adequately. Each year as June approached, I found myself thinking I should try it again but each year it came and went and I didn’t start the prep work early enough. Last year, as it came and went again, I decided I was sick of just thinking about it and registered for another 10K run in fall. I had three months to get ready for this one and three months later, I finished the 10K in better time than I had 20 years earlier and felt pretty good…physically and mentally.

A New Challenge
When I finished that run, I knew that proper preparation is a good thing. I decided to push myself farther and registered for a half marathon this spring. I did six miles but could I do 13.2? I have been following a training regime that was designed for first timers. I started training in January for a run in late May. I started out running two to three miles, three times per week. Now after three months of training, I ran 9.7 miles for the first time in my life. There are a lot of mornings that when I get up, I really don’t want to go run. Many times after running, I have sore muscles and aches. Each day gets better and better and I am able to run farther with greater ease. I think back to that first run almost a year ago and chuckle as I remember being out of breath and questioning my sanity a half mile down the road.

Do Something
The pain is good! It stretches me and helps me to grow. I decided I wanted to run and didn’t want to suffer every time I did it. That meant I needed to do things differently. One of the things they teach me as I go through the training routine is to test what works and what doesn’t work. You don’t want to try something different on race day and find out it doesn’t work for you. Saturday tends to be a longer training run. I will vary what I eat on Friday to find out how it affects my energy level on Saturday. If it doesn’t help me, I change it. I will try to dress differently and see how it helps me. I know what clothes to wear when it’s 20 degrees outside, what to wear when it’s 40 and what to wear when it’s 70. It makes a big difference but I know I won’t be surprised come race day. The reason that I know is that I tried it and made mistakes and suffered the pain. I logged what worked and what didn’t work and can make good decisions as a result. That pain helped me grow.

Do you log the pain in your company? Do you try things and then measure the results? For me, it’s easy to measure the results in running – distance and pace. What are your metrics? What do you want to grow or improve? Figure out how to measure it. Then try something different and see if it changes. Does it get better or worse? If it gets worse, that is something you need to design out of the process. When I eat the wrong foods or wear the wrong clothes and I find myself struggling to finish my run, I make note to avoid that combination from that point forward. If you never experience pain, you will never reap the rewards. Pain is good…in moderation. A little pain is growth. When you hurt, do you learn from it and build on it or do you sit back and let the pain go away, only to do things the same way tomorrow?

What do you do to stretch yourself and your company? Tell us about it.

Lee came up with a solution that works for him several years ago. He went down to Office Depot and bought some Post-It notes. He put the Post-Its on his dashboard to cover up the warning lights. That way, when the light came on, he couldn’t see it. He found that if he didn’t know the problem was there, it didn’t bother him. He had much less stress in his life. As you can imagine, it wasn’t any good for his car, but he felt better. After about a year of this, his car did actually quit…and it was permanent. When I asked him about it, he told me he never knew there was a problem.

Many business owners are the same way. If they don’t know there is a problem, they don’t have to worry about it. Ignorance truly is bliss! Your company has dashboard lights that will tell you when there is something going wrong. If you don’t watch for them, you will never see when your company’s engine is about to quit…permanently. Some of these dashboard lights are:

1. Do you pay yourself a regular and reasonable salary? If you don’t, this tells me something about the health of your company. Your pricing is not adequate to handle all the costs of running your business. You should not consider whatever is left after you pay your bills as your wages. You need to build a reasonable wage into your pricing.

2. Do you bring your line of credit back to zero at least once or twice per year? If you don’t, this tells your banker something about the financial health of your company. A line of credit is intended only for short term borrowing against receivables. A properly used line of credit will have lots of activity and come back to zero at least once or twice per year. If your not doing this, you don’t need a line of credit, you need a loan.

3. Are you current with your suppliers? Your payables should tell you something about the financial health of your company. If you are not paying off your suppliers every month, you are either not handling your cash flow properly or your pricing is not in line. Which ever it is, fix it.

4. Do you pay cash for your trucks? Equipment replacement costs are the second greatest expense you have in your company. If you don’t plan for it, you end up having to take out loans. I was taught at an early age, there are two ways to buy something. You can buy it and then pay for it, or you can pay for it and then buy it. One will just cost you a lot more. Many consider payments on trucks a necessary evil. If this is you, you have bought into a great myth. Even in today’s economy, contractors are paying cash for trucks. They are just planning ahead.

5. Are you current with your taxes? If there is one thing you never want to fall behind on it’s taxes. Make sure your quarterlies and estimates are paid on time. The interest and penalties charged by your state and the IRS are huge and will suck the life out of your company. The worst part is, they really don’t have to negotiate with you. They just come and take stuff.

6. Do you have real cash left over at the end of the year? Not money on paper. Not your P&L showing you that you made money last year but real cash left over in your bank account even after you have accomplished the items above. There are real differences between accounting and cash flow. You can’t run your business from your P&L. You have to run it based on the money coming into and out of your check book. If there is nothing left over, you need to find out why.

There is nothing wrong with not knowing what one of these dashboard lights is telling you. I don’t always know what every one of the lights are that come on on my car’s dashboard but I know where to go to find out. There is nothing wrong with not knowing how to accomplish these things. Not doing something about not knowing is a problem.

What are your dashboard lights telling you? Share it with us.

To contrast this, I recently had a young couple in one of my classes who was incredibly successful from a financial standpoint. His profits were great and he was completely debt free. What made these two companies different from each other? I can tell you that company #2 did have a different issue that needed to be dealt with.

Why is a one man company so difficult?
The reason that running a one man company profitable is so difficult stems from two different areas. The first is that the general perception is that one man companies have no overhead and are small companies. The general media tells us that the rate charged for this size company should be very low…and we believe it.

The second – and real answer – is actually very simple. In every one of my Boot Camps, I tell the companies there that it is all about the billable hours. In a one man company, there are so precious few billable hours to cover overhead. The one man company owner needs to not only do all the work, but also the sales, the paperwork, collect the money, order materials, pay the bills and anything and everything else that might need to be done. Sure, you make some money on materials to cover overhead but the majority of it needs to be covered by labor. The fewer the billable hours, the more you need to charge per hour in order to cover the remaining overhead. The one man company will need to charge a high labor rate in order to cover the costs of running the company.

So what did make the second company different? Well, he had a much different mindset than the typical one man company owner. He started his business with the mindset that when he worked for someone else, he was paid for 40 hours per week. Now that he owned the company himself, he still needed to be paid for 40 hours per week by someone. This means that if he only had six billable hours on Monday, then he needed to bill out ten billable hours on Tuesday. He always made sure he billed out 40 hours per week. On top of that, be billed it all at about $180 / hour and used Up-Front Pricing.

As I mentioned earlier, this guy did have a different issue. He was a working madman. He put in an incredible number of hours each and every week. There were no vacations. No such thing as a sick day or in many cases, holidays off. As many of you know, you can’t hold this pace forever. He had been doing it for several years now and was starting to feel the toll. With his structure, the plan he had was to hire someone to work in the field and cut his billable hours to 20 per week but didn’t want to do this until he knew that he could pay someone for the long term. He will be successful because he knows what he needed to learn in order to maintain his profitability.

Do you know what you need to charge in order to cover your overhead and generate a reasonable profit? If not, attend one of our Basic Business Boot Camps currently scheduled around the country.

We got prices from several different venues. When we started to get into more of the details, we found out that on top of the base fee, there were added set-up fees, tapping fees, food service fees, clean-up fees and more.

We finally checked in with one more place and found it incredibly refreshing. They had one fee for the hall that covered everything. We ordered the food and any silverware, napkins etc. was included in the price. It is comforting to know that there will be no surprises when we go to settle up the final bill. We already know the total cost of the event.

My question is what are those contractors who are still on time and material billing waiting for? Do they enjoy frustrating their customers?

Make the change to up front pricing today. It will change the financial look of your company and provide a level of satisfaction to your customers that T & M billing will never do.

What I was greeted with when I got to Toronto was quite the opposite. The reason they had two sessions in each city was the overwhelming eagerness that these guys had for training. The venues that were booked could only hold 60-75 people and every session at every location was packed. On top of that, we started a few of the sessions early because every person who registered was there and ready to go 30-45 minutes early.

Once we got started in each session, the whole group was paying attention, asking questions and actively engaged. As an instructor, it’s fun to teach classes like this. The time goes fast and it gives me real energy to lead sessions like these.

My question for you is this – are you and your team members that eager to get additional training and improve your skills. It doesn’t matter how long you’ve been in this industry, you need to constantly be improving yourself.

Continuous training is important. For years, I have always encouraged every person on my immediate team to improve themselves every year. If we were going to improve what we offered to our customers, we had to improve our knowledge. W have to make ourselves easier and more valuable to do business with. I would ask every team member to think about their skills and knowledge, and where they felt they could use improvement. I would ask them to finish the statement “I could better take care of our customers if I knew ____________ better”. From some I might hear something like learning how to use the computer better. We would go out and find a class at the local technical college. From others, I might get a request for an advanced training program on the products or services that we offered. For these, we might get them registered for a program that covered that area. For others, it might be general business training or working toward a degree that would benefit their work within our company. I also continued to increase my knowledge level.

So what are you doing to improve the total product that you and your company offers. If you he absolute best at what you do five years ago and you are still doing things the same today, you’re getting left behind..what are you doing for yourself personally and your team to be improving what you have to offer? Let us know…

Bill Kinnard
Grandy & Associates

Two years ago, I was preparing to sell my house. On a Saturday morning, as we were heavy into the final cleaning, getting ready for the real estate agent to come over for the listing and to take the pictures and video of the house, I found a trail of water leaking out of the bottom of our water heater and across the basement floor. The original water heater was a plumbers brand water heater and was good quality but it was past it’s design life and owed me nothing. I remember thinking “It’s Saturday morning…it’s not likely that I can get my hands on a new power vented water heater this morning with out a lot of extra charges (I know, those same charges that I teach you about charging), and I don’t need a plumber to install it. Remember, I did this stuff for years and taught other contractors how to do it. It’s a simple job.

I have to admit, I let my integrity slip and ran down to the big box store to pick up a new water heater. I remember thinking “I wont own the house so I don’t have to go with my usual quality”. A real integrity slip I know! I regret it today.

As it turns out, we did not sell the house – we are still here in Wisconsin and Last Friday I found myself without hot water. A quick troubleshooting session proved that the problem was the thermostatic control valve. I called the big box store where it came from only to find out they did not stock the parts for the more expensive power vented units. I would have to call the manufacturer. When I did, they told me they would happily ship one out at no charge but since it was now New Years Eve (Saturday morning), they would have to wait until Tuesday to ship it out. That’s 5 days without hot water!

I humbled myself enough to call a plumber friend of mine and asked what the chances are that he would have a valve that might work in this case. He was nice enough not to laugh me off the phone. Thanks Rick! I checked all over town and got the same answer. Finally, Wednesday morning came and the valve would be arriving. Keep in mind that this is now 5 days into it and although I used it as an excuse to go to the gym each day and work out just so I could benefit from the hot shower afterwards, my wife was not as pleased. I called the manufacturer to get a tracking number on the shipment only to learn that they were out of this part and as a result, had not shipped anything. AARRGGHH!

Long story – short, they found a replacement, shipped it next day air and as of Friday, I had hot water. There was not enough value in what I saved on that water heater to do it again. Are you telling your customers the whole story? You do so much right. Your are there for them when there is a problem. You run after hours service. Sure there is a cost for it but let me tell you, I paid a price for not having that service and it’s not worth it. Tell your story every time you are in front of your customer. Don’t leave anything out-even if you think it’s obvious and everyone knows that. That’s not the case. When the value exceeds the price, the customer will buy.

Don’t let your customers pay the price I did. Build the value in everything you do!