You’ll notice the photo’s on this page have nothing to do with construction, money, blueprints or jobsites.
These photo’s are the life reminders of why you must do everything within your power to get your business performing up to its full potential.
Residential Construction: The Bigger Picture
Let’s face it, completing a big project, seeing the happy faces of the clients, picking up a referral for your efforts, and collecting your construction money is all pretty darn good. As contractors, we live for that.
However, we believe that if professional tradesmen had a couple million dollars of excess construction money in the bank they wouldn’t hesitate a moment to close up shop and do away with all those happy feelings (and headaches).
Business strategy focuses on the bigger picture. It defines the exact steps needed to accomplish your goals. Is your goal to build houses, lay shingles and replace windows, or are you simply doing these things to make money? In other words, making money for your family is the goal … while building homes is just the means to accomplish it.
Business Strategy 101: More Construction Money
Let’s start with … how much money do you need in your savings account? If you had 1 million dollars saved that was earning between 5% – 10% interest, it would provide you with $50,000 – $100,000 each and every year for life.
Having 2 million dollars would give you $100,000 – $200,000 each year for life. Heck, you’d have trouble spending just the interest. You wouldn’t have a mortgage or truck payments. Traveling the countryside sounds a lot better than chasing down leads, materials and construction monies owed.
Strategy: Construction Leads
So let’s assume that you want your business to create a 1,000,000.00 savings account within 5 years. You currently have/anticipate $20,000 of annual business bills and another $50,000 of personal bills.
Simple math tells us that you would need an additional $200,000 ($1 million divided by 5 years) to make this assumption work. So your goal is to earn $270,000 ($20k business bills + $50k personal bills + $200k savings feed) annually the next 5 years.
However, that doesn’t take into account that any construction money saved would be earning 10% interest (compounded monthly) while it’s sitting there growing. With that factored into the equation you then only need $234,000 ($20k business bills + $50k personal bills + $164k savings feed).
Using Marketing Data to Generate Construction Money
This is why it is really important to use our Excel spreadsheets on collecting your marketing data. Let’s use our previous page example of a typical re-roof job earning profits of $2,500 each. This means you need to sign 94 jobs per year ($234,000 divided by $2,500).
We also believe in hedging our bets ten-fold. So we’ll also look at your marketing data on nine other job types. We’ll look at the profits earned on building custom homes, spec homes, a typical siding job, bathroom remodel, kitchen makeover, basement completion, window replacement, exterior wood decks, and additions.
If you don’t have 10 services … get them. You need to have 10 different company divisions each with its own website. Making more construction money means to Think Bigger!
Our strategy isn’t to divide up your 10 services so that each of them provides 1/10 of what is needed. We want to market them so that if they all succeed you’ll have $10,000,000.00. Got It!
Theory meets Reality: Construction Money doesn’t Grow on Tree’s
So now you say: Signing 94 roofing jobs sounds great but we struggle to find 25 jobs. Plus, our 4:1 closing ratio will bring our needed bid opportunities up from 100 (25 jobs * 4:1 ratio) to 376 (94 jobs * 4:1 ratio).
Yep, that’s right. You need better advertising … preferably little to no cost … that would be seen by the largest majority of potential clients … hmmm.
Some contractors do have websites. However, most of these sites do little but look good. Potential customers can’t find it using search engines so they’re only useful if someone knows the exact URL address to type. That has to change, today.
If you call yourself a professional contractor
then having a kick-ass website that advertises your services
that YOU control … is the absolute minimum must have.
Why You Must Control Your Website
The short answer is that it’s too expensive otherwise. Web designers and SEO guys charge thousands of dollars to create 6 optimized pages. Additionally, the website is like plants and flowers. It needs constant love and attention (backlinks, keywords and fresh content). As soon as you stop making your monthly payments the link juice dies away and you have to start over.
This is crazy. Even more so when faced with the reality that having only 6 pages and a couple dozen keywords won’t bring you didly-squat in leads or jobs (as most of you have already found out).
What Your Construction Business Needs
Using the Contractor Reference Guide, our contractor members create multiple websites with each having hundreds of pages. Each site targets thousands of keywords to dominate their market.
Their cost: $15 per year per domain name (sub-domains are free; $7 per month to host the set (3rd party). Some purchase a premium master template theme to redesign for each website which has a one-time cost under $100; although not necessary.
Fact: Having a web designer and SEO guy creating all these websites, pages, keyword research, and SEO would cost you nearly a million dollars. It’s no different than you building 10 custom homes … or asking another contractor to build them for you.
You can’t afford to hire out what needs to be done. So you must learn how to do it yourself. That’s how our Independent Research Facility was founded. That’s the only way to earn more construction money. That’s why the Contractor Reference Guide is so valuable.
More Construction Money Pep Talk
You have the talent to complete many jobs. The process to remodel a bathroom or to put a new roof on is the same whether you have 10, 100 or 1,000 different job locations.
As a business owner, your efforts can’t be continually focused on the tasks (completing those jobs) that you’ve already mastered so well that you can do them in your sleep.
You’re biggest competitive advantage is having the skill to acquire new jobs. Meeting and talking with clients while getting them to sign your contracts is what makes you more money. Completing those jobs once there signed is easy … anyone can do that … that’s what employees and subs are for.
In this poor economic time, your job as an owner is to focus near 100% of your time doing the marketing and advertising to get yourself in front of a lot more potential customers.
Obviously you’re in business to make more money. Whether you like it or not, Google and Bing are your biggest business partners. They control 60% of your potential earnings.
You either can ignore them, complain about their power, refuse to deal with them … or, you can kiss their butt, play their game … and get filthy rich.
Your goal is to only get better than your neighborhood competitors. Most of which, don’t even know there are 750 different search engines wanting to feed them work.
Making money is easier with an open mind
and the willingness to change.
Don’t over-think and make the Internet thing too confusing. It really isn’t. You must have tons of Internet traffic. In this day-and-age you can’t ignore 60% of your market. Think about that.
Assuming too, that if you don’t advertise in the newspaper classified section, or with their display ads, Craigslist, church bulletins, school directories, radio jingles, television commercials, PR campaigns, direct mail postcards, door-to-door flyer’s, etc., etc. … (the remaining 40%) …
Then you are just marketing to a small subset of the remaining 40%. If you only use referrals, the Yellow Pages and a job sign, you’ve reduced your target market down to about 12%. That’s no way to make good construction money.
No business can sustain itself by ignoring 88% of those individuals looking for your services … not even a Fortune-500 Company.
If you’re really in business to earn more money … then consider using the Contractor Reference Guide. It’s Independent Research Facility for Residential Contractors doesn’t sell products or services and only gives out information and opinions that will make your business stronger. Our only interest is in helping you. Our resources were designed for you, the residential contractor.
As an example, even if you are a really great contractor out in the field. Your company will never give you the enough money to gain financial freedom if/when your marketing and advertising is operating at 12% efficiency.
On the other hand, if you normally can make $100,000 per year operating at 12% efficiency … think of the financial rewards in reaching out to another 60% market share. Going from 12% to 72% is like going from $100,000 to $600,000. Guys, this is a no-brainer. Our point is that you have to try.