An associate sent me an email a while back that you should find interesting. His name is Jay Freeman. My memory is sketchy but I think he is a bond and insurance agent in California. Here’s what Jay said (and he’s dead on).

Too many contractors chase a growth goal without any thoughts as to whether they have the cash flow, man power/talent to get there. I have seen some grow from a $1,000,000 in sales to $5,000,000 and still make good money. Then they move towards $10,000,000 and the same formulas for success do not necessarily work anymore. They get to $10,000,000 and may not even make as much money as a % of sales but they push on to $15-20, 000,000.

I try to coach them when possible that each firm has a size that it may be able to maximize profits to the owner and stay at that level as it is safer. Not all heed that advice.

Regarding bonding…here is a web site all should see:

http://www.sio.org/

Thanks,

Jay Freeman, CPCU
Alliant Insurance Services
Ontario, California 91764
909-483-5111
jfree36424@aol.com

Food for thought, eh?

It’s a problem every contractor has to deal with sooner or later – theft.

The common targets are :

1. Tools

2. Fuel (especially with gas prices being what they are).

3. Doing side work with company equipment and materials.

The typical response is to implement new policies and make idle threats. Sometimes they work and sometimes they don’t. Unfortunately, when someone is stealing they have given you a reason to not trust yet you must trust in order for your field crews to be efficient.

What’s an owner to do?

The most effective solution is to establish a culture of mutual accountability. Not easy to do, but well worth the trouble once you succeed.

Before I go further, do you understand what I mean by the term “mutual accountability”?

It means that your field workers keep each other on the straight and narrow. They self-police if you will.

How do you create this type of culture? By consistently sending the message that the company is theirs as much as yours. People take care of their own stuff. They are far less committed to other people’s stuff.

By convincing them that they all share in the success of the company, in other words by giving them an emotional attachment to the company’s success, you have a chance of creating a culture that lives by mutual accountability.

Rigid sign-out procedures and micromanagement will detract from the real goal: maximizing net income. Sure they will reduce theft, but they will kill your productivity and increase turnover. That’s winning the battle and losing the war.

Create a culture of mutual accountability. It’s your best weapon against theft.

Theft stinks. I hope you haven’t had to deal with it recently.

So sad but true.

“I paid for new. It should be perfect.”

Bet you’ve heard that one more than once.

The expectation of perfect quality is a plague that’s been thrust upon commercial contractors by design teams. They got away with it for years but lo, the boomerang came back to knock them senseless. And boy are they paying for it financially.

Home owners came to their expectation of perfection all by themselves. They are paying hard earned cash for work around the house and they want to make every dime go as far as it can. They don’t understand how darn near impossible perfection is and few contractors have the backbone to tell them.

I saw this coming back in the early 90s when I was working as a design engineer at an MEP consulting firm. Unfortunately, it has come to pass.

When designers (primarily architects) pitch their services to developers and owners, they try to convince them that if the owner hires their design team, they will create comprehensive construction drawings and specifications that will force the contractor to build the building properly (i.e. perfectly). The ids have been doing this in their never-ending fight against the design-build model.

All that it has achieved is to convince owners that they DESERVE and are paying for perfection.

Naturally, the boomerang that came back to knock design teams out was when the owners starting charging them for the cost of errors and omissions (that’s the exact trend I saw developing and ran away from like someone yelled “FIRE”).

Here’s the message contractors should learn: competing on quality is almost a waste of breath. Perfection is EXPECTED. In this day and age, nobody would hire you if they thought you would deliver anything less.

Sometimes, names are misleading.

Take the term Referral System. When you hear the words “Referral System” what type of system does that bring to mind? Word-of-Mouth, right?

Time to think outside of the box. I invested in a referral system how-to guide that presents and explains 109 different referral systems. 109!

Definitely time to get out of the box.

Referral systems are the most predictable, cost-effective lead generation system out there. Print advertising doesn’t stand a chance against a well designed and executed referral system.

Let me share one example – The Old Fashioned Contest System.

In this system, you offer multiple levels of prises based on the number of referrals received by a specific deadline. Using referral cards (www.sendoutcards.com) or letters, send the referral offer to potential referees (prospects) on behalf of the referrers.

Get the referral names and contact information from the referrer. Do as much of the work for the referrer as possible. Don’t limit your referrer list to your customers. Include your friends, family, and all the 250 or more people who know you (dentist, tax accountant, neighbor, etc).

Always give a small gift to the referrers just for participating. Give bigger gifts (e.g. an IPOD) to the contest winners. By the way, gifts motivate better than money for this type of referral system.

Everybody loves to WIN a contest and for some strange reason places more value on the gift than it is really worth (that’s why cash doesn’t work so well, it’s too obvious what the gift is worth).

Time for an admission. A little truth in advertising if you will. The how-to guide I mentioned earlier is David Frey’s Instant Referral Systems and it is available via my products page (the link at the top of this page).

Do you ever listen to Paul Harvey? Is he still on the radio?

Like many people, I always loved Mr. Harvey’s stories with the surprise endings that he ended with “and now you know the rest of the story” or something along that line. I bring this up because one of my favorite things to do is to go back to original sources and see whether the current lesson learned actually matches up to the original story.

One recent example was reading about a salesman named Joe Girard. Joe was listed in the Guiness Book of World Records for being the world’s most successful salesman. Joe’s habit of sending a hand written greeting card to every former customer EVERY MONTH is legendary (roughly 13,000 cards monthly). It is often cited by management consultants and sales trainers as the best way to build relationship with customers.

What I found to be funny was that all of these consultants, trainers, and coaches implied Joe was writing elaborate, heartfelt messages. Turns out that wasn’t true. The only message Joe wrote inside each and every card was “I like you.”

How about that. Those three simple words produced phenomenal sales volume for Joe. Almost everyone I’ve ever heard or read citing Joe’s greeting card habit got the story wrong.

Another example would be the incredible popularity of the book titled The Secret. The book’s message apparently is that if you want something bad enough, it will come to you.

The Secret is referring to just one of the characteristics that Napoleon Hill found to be consistently present among highly successful people. Mr. Hill wrote about these characteristics in his famous book “Think and Grow Rich.” Mr. Hill’s message was that ALL of the characteristics had to be present. Some were not enough (certainly not just one).  Another well known characteristic Mr. Hill presented was the use of Master Mind groups.

What’s amazing to me is that an author can take an old idea, ignore several important components, dress it up, and sell it to a new generation who have never read the original source…and they buy it hook, line, and sinker.

Where am I going with this?

Well, other than sharing with you something I love doing, which is uncovering the “rest of the story”, I’m trying to share two points.

1. Very little has changed in the business world. Whatever approaches worked back in the early days of the industrial revolution pretty much still works today.

2. If you really want to find out how to run your business better, stick with the fundamentals. Most everything else is just putting lipstick on a pig.