The Power Trio: Sustaining Success in Your Contracting Business
In the swirling vortex of entrepreneurship, the labyrinthine realm of owning and running a contracting business can often feel daunting and overwhelming. As a painting contractor, I am no stranger to these complexities. There are myriad elements to consider, tasks to perform, and lessons to learn. The task list seems to be growing exponentially each day, and at times, it feels like facing a barrage of fire hoses all aiming their relentless streams at you.
Let's take a pause today. Let's simplify. We will delve into the three most critical elements that form the backbone of a successful contracting business. These are the three things to keep your focus laser-sharp if you want to sustain your business in the long haul. After all, we don't want to be the ones who flounder out of business within a year or five or, even worse, stay stuck in the same rut even after a decade.
Let's dissect the core formula that breathes life into your business:
Leads + Sales + 50% Gross Profit = Oxygen (Life)
1. Gathering Leads: Hunting and Farming
The first step towards creating a successful contracting business is generating leads, and this is an everyday job. It doesn't necessarily mean you're working tirelessly every day; instead, it's about setting up automated systems like your website or pre-scheduled emails that work for you.
To make this process easier, let's understand two mindsets here: Hunting and Farming.
Hunting
The hunter, always aware of his surroundings, is looking for opportunities. For example, spotting a dumpster outside a house signifies ongoing interior work, which might require a painting contractor. This is your chance to knock on the door and initiate a conversation, prospecting potential clients in real-time.
Hunting, though, isn't just about seizing an opportunity; it's also about creating them. For instance, noticing a builder's number on a truck can be your gateway to a potential client. A simple conversation initiating line could be, "I just saw one of your trucks, and I see that you build custom homes. I just happen to be a painting contractor that works on homes like that. Would it make sense for us to have a conversation?"
This hunting mindset requires a sense of urgency, not stress or frantic behavior, but the understanding that there's no better time than the present to take action.
Farming
Contrarily, the farming mindset plays the long game. It involves finding fertile ground, sowing seeds, nurturing and growing them. These seeds symbolize relationships with potential clients, creating website content, and networking with influential people like designers, architects, developers, etc. It requires a commitment to investing time, resources, and relationships.
While hunting may yield immediate results, farming ensures a constant flow of leads in the long run. However, keep in mind that farming takes time and patience.
2. Making Sales: Commit to the Process
The second element of our core formula is sales. In business terms, a day without the cash register ringing signifies a less than perfect day.
To ensure regular sales, you need to commit to a sales process and master it. This process should be clear, predictable, and repeatable. Many contractors find themselves entrapped in the client's sales process rather than implementing their own. For example, they might ask you to drop a bid in the mailbox or email it over right away. However, it's essential to steer clear of this trap and take control of your sales process.
Commit each day to taking control of the sales process. If you're unsure of how to develop this process, consider joining a sales academy or a similar program. It's also crucial to keep track of your leads and sales daily. Make sure to review what leads came in, what contracts were signed, and what deposits were received. Keeping this data handy will help you understand your progress and strategize your next moves.
3. Maintaining 50% Gross Profit
The third essential element is to strive for a 50% gross profit margin. This might seem ambitious, but it is an achievable goal when approached correctly. Regularly reviewing your ongoing and completed projects can help maintain this margin. Look at your monthly P&L, analyze your gross profit, and determine if you're hitting the desired target.
If you're not hitting the 50% gross profit, then either your selling price isn't high enough, or you're inefficient in the field, leading to higher than anticipated cost of goods. Remember, profitability is crucial for sustainable growth and success.
Conclusion
Indeed, there are many moving parts to a contracting business. You might need to hire more help, work in the field, handle your own books, and juggle countless other responsibilities. However, without a consistent flow of leads, an effective sales process, and a healthy profit margin, all other efforts can feel futile.
Focus on these three key elements regularly, and you will surely see improvements in your business. Remember, every day, you have a choice to either progress or stagnate. Choose wisely, and let's make success happen in your contracting business, starting today.