Coming into the construction business, you were taught, "There's only one way to grow; by getting more contracts, making more money and reinvesting the profits in more or better people, tools, and training." Then, if you are like most contractors, you incurred additional costs for "whatever you thought you needed" under the guise of "investing" to get more business. If you are willing to admit the
truth to yourself, you'll agree that most of the profit spent did not provide a significant return on your "investments", nor did they substantially help the company grow. It's the "normal learning curve" that most entrepreneurs go through. But here's the catch: Running a business that way is exceedingly difficult, stressful and limiting by its design. Allow me to explain the conventional thinking:
You're being told that more satisfied customers, more advertising, better estimators, building a better website, social media and "Search Engine Optimization" are what you need to grow. And maybe that's working for you. But the fact is that all of those ideas are limiting. Here's an analysis of each one:
More Satisfied Customers: Make no bones about it; keeping customers satisfied is an expensive and time consuming endeavor. Get just one thing wrong, a subcontractor gets in an accident and doesn't show up to complete the punch-list just before final inspection, and your "brand" suffers. There's a myriad of challenges and if you remember the game "Whack-a-Mole", you and your team are always left wondering where and what will go wrong next. More Advertising: No question, advertising works. The problem with advertising is that in today's multi-device, multi-media market, "investing wisely" is a constantly moving target. The brochure you print today is obsolete tomorrow and your testimonials get stale fast. Billboards are everywhere, competitors use your advertising against you, everyone has a website and 97.3% of your business cards are tossed within 30 days. The .7% of them that are kept, are either thrown in a drawer or put in a wallet for a few months, then tossed. No one, and I mean "NO ONE", can prove that you are getting a fair return on your invested advertising dollar. Better Estimators: Hiring and maintaining employees is the most costly expense your business will ever have. It's hard to find good people, harder to get them into your way of running the business and nearly impossible to keep the best ones because bigger and financially stronger companies are always trying to hire them away from you and your company. Then consider the increasing costs of insurance, business and payroll taxes, other employee related expenses and their expectation for bonuses. If you're not pulling your hair out this year, just wait to see what the economy and payroll taxes do to your business next year. Building a Better Website: You already know the problem with this one; technology is changing at the speed of light. Whatever you put on a webpage today is going to be compared to what your competitor puts on his website tomorrow. And how much business really comes through the door because of your on-line presence? If you've been tracking it, you know that the return is little or none unless you advertise or spend money with Google AdWords. Those methods used to be effective, but the rapid explosion of iPhones and other Internet connected devices have greatly diluted Internet advertising effectiveness. Nobody is going to look at "your website" on their iPhone. Social Media (SM) and "Search Engine Optimization" (SEO): Both of these are excellent strategies if your product appeals to the greater population such as insurance, soft and hard drinks, appetizing foods, or if you were selling exciting vehicles. If you can figure out how to sell your services through a website and you have the money to team up with Facebook or Amazon, you might have a chance. But you know that construction services won't sell over the Internet. Here's why: When your potential client is on the Internet, all your competitors are just a click away, no matter how much you spend on SM, website development or SEO! REALITY CHECK: YOU ARE GETTING THIS, RIGHT? Because of all that is described above, most contractors are struggling to keep the pipeline full of even marginally profitable contracts. Your competitors are lowering their prices just to keep enough money coming in to cash-flow their businesses. Think back: Construction companies get started every time someone thinks they can take their expertise and sell into a growing market. When you wrote your business plan, the word "Struggling" was not in the equation. But today, "struggling" is the new norm. The problem: Unless you are heavy in the federal sector, your market has shrunk and it will continue to do so with the next wave of economic bad news. Even if you are doing federal construction work, sometimes you're going to be fighting the inexperienced newbies coming into the sector. New contractors have started going after federal work because, in their minds, "The grass is always greener" in the market they haven't learned how to profitably sell to. They often underbid because they don't understand the risks. Either way, they are taking jobs away from you. THE SECOND WAY: Learn Collaborating, Joint Venturing and Teaming -
A little history here: From 1929 to 1933 unemployment increased from 4% to near 25% and the construction industry suffered a near national collapse; it was the "Great Depression". Franklin Roosevelt became President with the promise of "The New Deal"; an ambitious plan to put Americans back to work by deficit spending on "Public Projects". Huge hydroelectric facilities, highways and bridges were designed and put out to bid including the great Hoover Dam outside of Las Vegas, NV. What a lot of people don't know is that no single company was capable of bidding on that near $50 million contract because of the "risk" and bonding requirements. Harry Morrison of Morrison-Knudsen formed a group of six companies into a joint venture creating a new entity named "Six Companies, Inc." The dam was completed in 1935 and the JV went on to build the Parker Dam, Grand Coulee Dam and other large federally funded structures. THAT WAS THEN, THIS IS NOW -
More recently, one of our Workshop graduates, Bill Westell, decided to take a similar approach in going after a $95 million MATOC contract in Hawaii by teaming up with a large island construction company. Now get this: Bill first contacted me in February of last year with an email that said his parts supply business "was dying". Bill had no construction business experience or bonding capacity. Shortly after attending our training, He landed his first federal construction contract. The profit, over $120,000, provided him a cushion and powerful incentive to take his small business to the next level. He then leveraged that into the JV agreement with one of our contacts in Hawaii. He simply told Terry Metcalf, "Here's a MATOC contract that, due to your business size and status, you cannot bid. If you JV with me, we can go after it together and both make some money." Sounds incredible, doesn't it? So why isn't everyone doing it? The biggest obstacle to successful collaboration, joint venturing and teaming is simply this: Where do you find the people and companies that you can trust with a JV arrangement? It's the single biggest issue there is in the business world today - trust. We call it the "trust" factor. When you solve the"trust" factor, you are well on your way to new found success. Here's how we solve the "trust" factor for our members: We do our own due diligence on people before they can join our program and attend our Workshop. So when you join our group of like-minded contractors whose sole purpose is going after highly-profitable federal construction contracts by every means possible and anywhere that it makes sense to go, you don't have to worry about the "trust" factor. That's why we call them the "Federal Construction Experts". And if you qualify, you can become one by attending the live 3-day, Advanced Federal Construction Training Workshop. The best part? You join at "no risk" of losing your investment. Each Workshop ticket for two comes with our exclusive "no questions asked, 100% money-back guarantee". AND NOW, TODAY'S GOLDEN NUGGET:
You've heard the truism, "Nothing happens until someone sells something!" When you stop worrying about all the problems of running a low-margin construction business and start focusing instead on how to get highly profitable contracts either directly or through collaborating, joint venturing or teaming, it won't be long until your construction business is growing and thriving. Here's the secret: Learn the fundamentals of finding and negotiating high-margin contracts and remember these words:
"It's not how long the meeting takes to close a deal. It's all about how long it takes to get to the next meeting if there is a reason you can't close the deal at this meeting." Read it again . . . . Memorize it . . . Live by it . . . Here's how it works. If there is something that is preventing you from closing a deal, then before you leave that meeting, have all the parties agree as to what is preventing a signed contract. Get commitments from everyone as to who is taking responsibility to clear the obstacles, under what time frame, and then get everyone to agree to a schedule for the next meeting so the deal can close and everyone can move forward. Again, it's not how long the meeting takes. It's how long it will take to get to the next meeting. Shorten the time to close your deals and your productivity and business growth will astound you.
