Grandy

You’re on a road trip with the family. It seems like you should have arrived at your destination by now. The kids are asking, “Are we there yet?” and your wife gently suggests that you might be lost. What’s your reaction? “I’m not lost, we will arrive soon.” Twenty minutes later your wife asks you to pull into the next service station to ask for directions. You become a bit irritated, and continue driving. Another 30 minutes pass and the kids are getting impatient while your wife is getting angrier and angrier. With tempers getting shorter as the road trip gets longer, you finally pull over and ask for directions. Ten minutes later you arrive at your destination … late and frustrated.

What just happened? One word: Pride. There was no way anybody was going to tell you what to do. Was it worth the price? You could have saved valuable time. The kids wouldn’t have been upset, and the “I told you so,” look on your wife’s face would never have occurred. If you had simply swallowed your pride and admitted you were lost and pulled over to ask for directions an hour ago, it all could have been avoided. The fruit of pride is expensive!

There is a Proverb you might be familiar with. It says “Pride goes before a fall.” In essence it means being self-centered, while refusing to ask for help, will cost you. The cost on the above road trip was time and bruised relationships.

What about your business? Are you making a profit? Do you have problems with technician productivity? Are you getting the reports you need to manage your business? Perhaps some of your employees aren’t coming to work on time or aren’t filling out their paperwork properly. How well do you handle customer complaints? Does your total marketing program still solely rely on your large yellow page ad that isn’t producing quality leads? Chances are you are dealing with at least one of these issues. Now before we address the core problem let’s talk about a related topic.

Do you know why trades companies are called independent contractors? The answer is right in the name; we are called independent contractors because we are independent! As problems occur within our businesses, our thinking tends to go something like this: “I’ll bet I am the only contractor that struggles in this area. I’m not going to ask for help because people will laugh at me for not knowing the answer. I will work through it … eventually.” That is called pride! The reality is that there is nothing new under the sun. Every problem you currently have, or will ever have, has been experienced by almost every other contractor within the trades industry.

So what’s the solution? Ask for help. If you need help with marketing, attend a marketing class. If you want to understand the business-side of your business better then think about attending our two-day Planning for Profit class. If you need help creating a Company Policy Manual, do a Google search and look for sources that can help you. If your techs struggle when it comes to customer service, provide some training. If your closing rate is low when it comes to your sales, then join your fellow contractors in a sales training class.

Swallow your pride and get some help. When you do attend a class, a light bulb will be turned on in lots of ways. First of all you will find a room full of contractors struggling with the same issues you are dealing with. As information is presented in class, and discussed between attendees, you will find answers to your questions. Best of all you will make new friends, usually in non-competing territories, that you can begin to network with. Next time you face a “new” problem you can call Jim, Sally or William to see if they can offer some input. Again, the reality is that every contractor has either faced the problem you are facing, is currently going through the problem or will be facing it before long.

Too many quality contractors go out of business each year because of pride! Remember our road trip? Asking for directions when you first became lost would have saved time and preserved family relationships. The same principle applies within your business, but the consequences are far greater than strained relationships. When it comes to pride within your business you are opening the door to failure. If pride continues it could even put you out of business!

Really great sales people ask a lot of questions. Why do you think they do that? They do it to determine what the customer’s needs are … so they can fill them!

Let’s visit a high-end retail clothing store. As a matter of fact, I was recently with my wife in a high end women’s clothing store that’s “guy friendly” – it has nice comfortable chairs if your wife is shopping there for a while!

As soon as my wife stepped through the front door one of the associates greeted her and immediately asked her if she was looking for something in particular. After a few short questions, the associate walked my wife to the area of the store containing the items she was looking for. As they were walking, the associate noted the newest items in the store and even pointed out where the sale items were. The associate continued making suggestions and even carried items of various sizes back and forth to the dressing room where my wife tried them on. To make a long story short, my wife ended up with a sizable purchase, partly because the associate asked questions.

The principles are identical in the trades industry. The tech may have been called to a home or office for a specific repair, but the potential sales are far greater than that. Note, my wife entered the store looking for one item, but left the store with several non-related items, thanks in part to the associate asking questions. If you are a tech, I encourage you to ask some general questions when you walk through the customer’s front door. Here are just a few to get you thinking:

• Do you have any rooms that are warmer or cooler than the rest? (Potential sale: Zoning)
• Do you have difficulty reading the thermostat? (As people get older those little letters and numbers are harder to see. Potential sale: Large viewing area on a new thermostat)
• Do you travel a lot? (If the answer is yes, then installing a setback thermostat may be in order to reduce utilities while they are away for the home. Potential sale: Setback thermostat)
• Do you, or any family members, have allergies? (Now you can talk indoor air quality. Potential sale: High end electrostatic air filter sale)
• Do you ever run out of hot water while taking a bath or shower, especially when you have overnight guests? (If the answer is yes they might want to look at a larger, more efficient, water heater. Potential sale: Fifty gallon high efficiency water heater or perhaps a tankless, instant, water heater)

Asking questions can generate a substantial number of add on sales. My wife wasn’t even thinking about the jacket she purchased when she entered the store. However, when the associate told her about the latest and greatest in jackets, she bought one. Again, you entered the home to fix the furnace, or to repair the leaking facet, or fix an electrical problem but by asking a few questions you might just sell a setback thermostat, zoning system or air cleaner. Remember, when you are in the customer’s home you are the expert so talk about things that could actually be of significant benefit to the customer. How do you know what those “significant benefits” are? You ask questions!

*Published with permission in November, 2014 newsletter*

The Ask Dave series is brought to you by the Dave Ramsey EntreLeadership team. In this series, Dave Ramsey will answer questions that come into his radio show or at his live EntreLeadership events across the country. Dave will address a couple of questions each month with the same methodology that he uses everyday in running his business.

Re-ignite The Fire

Dear Dave,
How do you reignite a sales team member’s fire once they have reached a financial goal they set for themselves? – David

Dear David,
I love team members who have the energy and drive to go out and make the sales. But when it comes to this type of work, you’ve always got to be on the lookout for someone who is there simply to collect big checks.

I call a person who is on some type of commission, and brings in more than they cost you per unit, a tiger. These are the types you want in commission-based roles, because they enjoy the chase and the thrill of the hunt. But it’s a little difficult to change things with people who are already in place and have been with you a long time. You can talk to them about the situation and their goals, or you can change the environment around them or their compensation structure and give them every opportunity to catch fire again.

But I think the best thing is to spend lots of time and effort in the beginning making sure you pick the right people for the right jobs. At my company we stress the importance of having a crusade mentality. You have to be on fire for what you’re doing. You have to love your job, love the reason you’re here and love doing work that matters. We’re a Super Bowl team, David. We’re not setting a goal of getting to the playoffs. We’re playing for the ring every time.

You have to understand that what I’m talking about isn’t something you can suddenly start cramming down people’s throats. It’s a gradual, gentle process. But the first and most important thing is to surround yourself with winners and give them what they need in terms of motivation to win on a consistent basis. It’s not acceptable for someone to reach a particular goal and then slack off or start doing things in a half-butt kind of way. I’m not okay with that at all!    — Dave

Expensive Lesson Learned

Dear Dave,
I work for a civil engineering firm that makes about $1 million annually. Two years ago one of our new clients didn’t pay a $40,000 invoice, even though a promissory note was signed. Our company sued him and won, but his assets can’t settle the bill. Do you think we should continue to pursue this?  – Sarah

Dear Sarah,
You can hit a rock with a hammer, and it will never bleed. In other words, there’s no money to get because he doesn’t have it. Unless you think you’re dealing with a snake, and he’s going to great lengths to try and hide something, I’m just going to use this lesson learned and change my sales procedures and requirements to reflect the experience.

You might want to spend a little effort looking into things a bit deeper. You could even spend something on a private detective to try and search out bank accounts and other assets. Try to find out where the snake laid its eggs. Who knows? You might be able to squeeze a few thousand out of the situation.

Still, I wouldn’t spend a lot more time, effort or money chasing this guy. You let him get too far into you for a new client. If I were in your shoes, I’d probably just go make more money, see how I could learn from the lesson and make the changes necessary so I never had to go back there again!   —Dave

In October’s article, we took a look at how most business owners spend more time planning a vacation than they do planning for the future growth of their company. This month we are going to take a closer look at how to create a written business plan.

The starting point of any family vacation is determining where we want to go and when. Your business plan starts the same way. Where do you want the company to be in one, three or five years? Do you want to double in gross sales, pick up additional products and services, or simply increase the bottom line profit in percentage and/or dollar amount? You can’t create a plan to reach your goal until you know where you want to go. Most families know the destination of their vacation before they start their trip. Your business is no different. Step one is to answer the following question: what do you want your company to look like several years in the future?

Ok, we now know what our five-year goal is. The destination of the family vacation was set months before the trip took place. Why? Because it was going to take some planning. Mom and dad had to plan the route, get the vehicle checked out, purchase games for the kids and make reservations at hotels along the way. This all took place before the trip began. It’s the same principle for your business plan. Once the goal is set, it’s going to take some planning before the game plan moves forward. The end goal might include hiring additional techs and/or support staff. How many will you need and when? Few company owners can hire that perfect employee within 24 hours. The process must begin weeks, and perhaps months, before the employee is hired. What process will be used and when does it need to begin in order for the right people to be on the team, at the right time?

Let’s back up a step. If you are going to need two more techs and one additional staff member in 12 months, wouldn’t it be nice to have work for them to do? If the plan calls for additional employees, that means the company needs to increase its gross sales. Increasing sales won’t just happen. Marketing and advertising plans need to be developed and implemented. Remember, marketing and advertising cost money so keep your budget in the back of your mind.

As the company grows, additional inventory is going to have to be purchased including additional hand tools and vehicles. What will you need when? Go back to the budget because these investments, again, will cost money.

Each stage of growth needs to be planned and each stage involves spending additional dollars, so we need to create, and constantly update, our budget. The budget will include our projected sales and every dollar you expect to spend. Our basic overhead costs (rent, utilities, insurance, gasoline, vehicle maintenance, yellow pages, etc.) will need to be adjusted. We will also need to put in additional dollars for marketing, advertising and those new employees we will hire.

As you can imagine, the cost of doing business a couple years from now looks a lot different than what we are spending today. So our pricing needs to be adjusted as well. Please listen to this next statement. Whenever your cost of doing business changes, your labor rates will, by necessity, also need to change. I strongly suggest you review your labor pricing at least twice a year. Nothing ever stays the same in terms of your costs of doing business.

Growth takes planning, and planning requires a vision of where you want your company to be several years in the future. Reaching your goal will be a work in progress. The work will begin with step one, then step two, and so forth. You have probably heard this little phrase, “Plan your work, then work your plan.” That is what a detailed business plan is all about.

We have just touched the tip of the iceberg in terms of creating a detailed business plan. Below is an outline of a basic business plan to get you started. If you are serious about profitable growth you might want to use this outline as a guide.

1. Executive Summary
a) History of your company
b) General market conditions
c) Status of competition
d) Company goals

2. Financial Plan
a) History of company from a financial standpoint
b) Current financial statements
c) Capital expenditure forecast (what equipment will be needed and when)
d) Month-by-month cash flow budget for the next two years
e) Cash flow projections for the next five years

3. Marketing Plan
a) How will you “market” your company (radio, TV, yellow pages, pay for click, etc.)
b) Show the cost of each and the expected results
c) What will be done when and by whom?
d) What is the “cost” of the plan, your budget?

4. Production Needs
a) Labor needs
b) Material forecast including inventory
c) Assets – what equipment will be needed?

5. Organizational Plan
a) Organizational chart
b) Training – salaried and technical

The following quote from author Lewis Carroll perfectly sums it up: “If you don’t know where you are going, any road will get you there. The only problem is that you will never know when you arrive!” Growth, all by itself, can lead to failure. However, planned growth, via the development of a detailed business plan can lead to profitable growth!

In November, my wife and I arrived in Myrtle Beach, South Carolina for our semi-annual month -long working vacation. We were staying in the same 15th floor condo we had rented for many years. We parked on the third level of the parking garage right in front of the well-lighted elevator, and we unloaded our van. The next morning, we returned to the van to find the back side window smashed and several items stolen. Great way to start a month at the beach!

There is always a silver lining if you look for it. My old GPS is now replaced with a new, large-screen model. My large LCD projector needed to be replaced anyway, so the break-in forced that issue as well. The money … well, that’s just gone. So what’s the good news? The replacement of the window of the van was an outstanding example of great customer service.

My first call was to the police. We answered lots of questions and filled out lots of paperwork. The process was complete, and we never heard from the police again.

The next step, however, was calling my insurance company back in Kentucky, who patched me through to the claims department. The Customer Service Representative was nice and understood that our need was simple, but important. The window of our van was shattered, and we needed it replaced before we could go anywhere. My rep asked who I would like to replace the window. Since I had no knowledge of window replacement companies in Myrtle Beach, she read me a list. When she mentioned SafeLite.com, my ears perked up … their catchy little jingle immediately popped into my head: “SafeLite repair, SafeLite.com!” I had heard it dozens of times on the radio. The provider was selected!

Point #1 – Marketing works, but it needs to be continuous and overlapping. Marketing is NOT a call to action like advertising. Marketing is keeping your name in front of the customer, so when the customer needs a product or service, they think of you.

While I was still on the phone, my insurance company called SafeLite and patched me in. It was a national call center, but the rep was well trained and spoke clearly. He scheduled me for 8:00 – 9:00 a.m. the next morning.

I have taught contractor business training for 27+ years. The number one customer complaint has always been, and still is, the same – contractors seldom show up on time! Well, at 8 a.m. the next morning, I received a call telling me that Barry was on his way and would be there in about 30 minutes.

Point #2 – Integrity in communication and showing up on time instantly raised my expectations. I thought, “They called and will show up on time. This must be a GREAT company. I now expect an outstanding job, done in a timely manner.”

Thirty minutes later Barry called to tell me he was five minutes away. He was the poster child for customer service. He was friendly, in a clean uniform and had joined SafeLite nine months earlier. His initial step was to vacuum the van. However, he didn’t just vacuum the area where the window was broken — he vacuumed the entire van. Wow, that exceeded my expectations!

Barry then gently disassembled the interior of the van around the window area. To him it was like a sunny walk on the beach. To me, it was an impossible task. The van had one or two minor scratches near the window where the robbers apparently used a bar to get in. I mentioned them to Barry, and he instantly shared a trick of the trade to rub them out. He not only told me about it, he took the scratches out before my very eyes.

Point #3 – Barry exceeded my expectations even before the actual window was replaced. Again, my expectations of him doing an outstanding job were rising. If he was willing to vacuum the entire van, and take out the scratches, he must do an outstanding job replacing the window itself.

I was not disappointed. Barry was fast and his work was flawless. Now for the unexpected! The window was motorized to open and close; the thieves had broken the motor. My heart sank thinking the worst. “He won’t be able to finish the job today and will have to re-contact the insurance company for approval of the added part. All this will continue to interrupt our vacation.”

But, Barry handled it all. He called the local Chrysler dealership about the part. He called the insurance company and got approval for the additional cost. He then ordered the part, which was going to take a couple days to get. Next he taped the area around the window since it would not fully close without the motor. He was taking care of everything … without my having to get involved. He told me they would call when the part arrived and would schedule a time to complete the project, around my schedule.

Point #4 – Barry handled the unexpected. He could have had me call the insurance company and could have thrown the part-ordering process in my lap, but he didn’t. I was impressed with Barry and, therefore, the company.

The part arrived a few days later. The local office called to schedule around my timetable and Barry returned to complete the job flawlessly.

Point #5 – The company sent the same tech to complete the job. I had built a relationship with Barry and I was thrilled to have him return to finish the job, as opposed to some other technician.

Now that is what customer service should be like. I thanked Barry for doing a great job and gave him a $10 tip. I also told him I would be writing this article and that I would be sending him a copy.

I am now a raving fan for SafeLite.com but the real star was Barry. From my perspective he “was” the company. I will now tell everyone I meet what a great company they are and will suggest they give SafeLite a call should the need arise. As a matter of fact I just did, to thousands of Grandy & Associates readers!

The starting point of any family vacation is determining where we want to go and when. Your business plan starts the same way. Where do you want the company to be in one, three or five years? Do you want to double in gross sales, pick up additional products and services, or simply increase the bottom line profit in percentage and/or dollar amount? You can’t create a plan to reach your goal until you know where you want to go. Most families know the destination of their vacation before they start their trip. Your business is no different. Step one is to answer the following question: what do you want your company to look like several years in the future?

Ok, we now know what our five-year goal is. The destination of the family vacation was set months before the trip took place. Why? Because it was going to take some planning. Mom and dad had to plan the route, get the vehicle checked out, purchase games for the kids and make reservations at hotels along the way. This all took place before the trip began. It’s the same principle for your business plan. Once the goal is set, it’s going to take some planning before the game plan moves forward. The end goal might include hiring additional techs and/or support staff. How many will you need and when? Few company owners can hire that perfect employee within 24 hours. The process must begin weeks, and perhaps months, before the employee is hired. What process will be used and when does it need to begin in order for the right people to be on the team, at the right time?

Let’s back up a step. If you are going to need two more techs and one additional staff member in 12 months, wouldn’t it be nice to have work for them to do? If the plan calls for additional employees, that means the company needs to increase its gross sales. Increasing sales won’t just happen. Marketing and advertising plans need to be developed and implemented. Remember, marketing and advertising cost money so keep your budget in the back of your mind.

As the company grows, additional inventory is going to have to be purchased including additional hand tools and vehicles. What will you need when? Go back to the budget because these investments, again, will cost money.

Each stage of growth needs to be planned and each stage involves spending additional dollars, so we need to create, and constantly update, our budget. The budget will include our projected sales and every dollar you expect to spend. Our basic overhead costs (rent, utilities, insurance, gasoline, vehicle maintenance, yellow pages, etc.) will need to be adjusted. We will also need to put in additional dollars for marketing, advertising and those new employees we will hire.

As you can imagine, the cost of doing business a couple years from now looks a lot different than what we are spending today. So our pricing needs to be adjusted as well. Please listen to this next statement. Whenever your cost of doing business changes, your labor rates will, by necessity, also need to change. I strongly suggest you review your labor pricing at least twice a year. Nothing ever stays the same in terms of your costs of doing business.

Growth takes planning, and planning requires a vision of where you want your company to be several years in the future. Reaching your goal will be a work in progress. The work will begin with step one, then step two, and so forth. You have probably heard this little phrase, “Plan your work, then work your plan.” That is what a detailed business plan is all about.

We have just touched the tip of the iceberg in terms of creating a detailed business plan. Below is an outline of a basic business plan to get you started. If you are serious about profitable growth you might want to use this outline as a guide.

1. Executive Summary
a) History of your company
b) General market conditions
c) Status of competition
d) Company goals

2. Financial Plan
a) History of company from a financial standpoint
b) Current financial statements
c) Capital expenditure forecast (what equipment will be needed and when)
d) Month-by-month cash flow budget for the next two years
e) Cash flow projections for the next five years

3. Marketing Plan
a) How will you “market” your company (radio, TV, yellow pages, pay for click, etc.)
b) Show the cost of each and the expected results
c) What will be done when and by whom?
d) What is the “cost” of the plan, your budget?

4. Production Needs
a) Labor needs
b) Material forecast including inventory
c) Assets – what equipment will be needed?

5. Organizational Plan
a) Organizational chart
b) Training – salaried and technical

The following quote from author Lewis Carroll perfectly sums it up: “If you don’t know where you are going, any road will get you there. The only problem is that you will never know when you arrive!” Growth, all by itself, can lead to failure. However, planned growth, via the development of a detailed business plan can lead to profitable growth!