How often have I heard this recently? “I don’t need any leads right now; I have more work than I can do. I tell new leads to call me after the first of the year.”
This is a short-sighted approach to business. There’s no nice way to say it: it’s a mistake. When you tell potential clients that you can’t get to them for four, or five, or six months, they don’t hear that your schedule is booked. What they hear is that they aren’t important to you.
We should all be grateful for the amount of business that is available to most contractors today. I think it’s great that many of you are so busy. But I want you to consider something.
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Are you charging the price you need to cover all your overhead and profit needs? If you’ve subscribed to our newsletters and/or read our books, you know what markup you should be using. You should be regularly checking to make sure that it’s correct. Too many are busy because they are the lowest-price contractor in the area. You don’t want to be that contractor.
If your markup is correct and you’re booked out more than six to eight weeks, it is time to raise your prices 5-10%. Your sales might slow down a little, but it will improve your projected start dates so clients won’t have to wait more than six to eight weeks to get started. Clients don’t like to wait any longer than that. How long would you want to wait for work to be done on your home?
When you bump your prices, you also eliminate the price shoppers. They vanish as fast as Uncle Pete disappears to the restroom when the waiter brings the check for dinner. You also won’t have to deal with the PITA (pain-in-the-a**) people who often accompany low prices.
If you have a backlog of jobs, there are diplomatic ways of working with potential clients that lets them know you care and want to do their job, and also buys you the time you need to finish other jobs first. We have an excerpt from our book Profitable Sales; A Contractor’s Guide posted here on how to handle this situation.
Don’t chase leads away. What about the leads you will need next spring? Next summer? What will you do during those months if the phone isn’t ringing?
Business runs in cycles. Many former contractors are gone today because they had more business than they needed in 2008 and they didn’t think long-term.
Keep your advertising front and center. Make it happen 365 days a year. Be relentless in promoting your company. Make sure your website is tuned up and bringing in leads. If your website is not bringing in three to five leads a week, then it needs work. Check out what Brian Javeline is doing to help contractors generate more leads with their websites.
Let us know if we can help.
The knowledge and experience Michael Stone gained in his 60+ years in construction has helped thousands of contractors improve their businesses and their lives. He is the author of the books Markup & Profit Revisited, Profitable Sales, and Estimating Construction Profitably, and is available for one-on-one consultations.