I started writing in 2019 about the top 10 common traits of contractors who are highly successful, as opposed to the mistakes made by those who are just barely making it, or in some instances, are no longer around. I had wanted to get through the entire list last year, but that was before everyone’s world changed from that pandemic thing, and lots of things got put on hold. It affected everyone differently, but the overriding theme was survival, and then maybe think about improvement.
This next one, number 3 on the list, may surprise you, since there has been a stretch of several years of most contractors having more business than they know what to do with. But many of you may remember back 10 or so years ago, circa 2008, 09 and into 2010 – the Great Recession. Things were pretty bleak.
This pandemic may be pushing us back in that direction, but whether it does or not, business development is important, and the activities required are NOT like a faucet you can turn on and off.
The impact of poor new business processes may be hidden from your view at the moment, but it will be felt. Poor processes will result in missed bids, wasted time and expense on unqualified bids, last minute mistakes, and ultimately, limited new business, requiring lower margins to win enough new business to keep key laborers employed.
The consistently profitable contractors have a business development process in place, one that is not dependent on one individual (typically the business owner) or one or two main customers. What does such a process look like?
For starters, your process should start with basic qualifications of any potential new work. Does that project “fit” your capability to deliver, by whatever criteria has worked for you in the past – size, type, location, timeframe, etc.
Beyond that, do you have a process to review the “pipeline” of potential new business? Much like you regularly review your Work in Process, you should regularly review the pipeline for attributes that help you determine the likelihood of each potential project turning into new business. Things like how strong is the relationship with the decision makers? Do you know the decision criteria and process? Who else is bidding?
An offshoot of putting all that information together is that it can help evaluate your client relationships, and the people responsible for quoting. Over time, you should be able to tell which potential buyers always want a quote but never seem to pick you. And which sales reps or estimators are winning the higher and most profitable jobs.
We’re seeing a growing number of contractors see the value of a CRM system for their business. Just in case you don’t know, CRM stands for Customer Relationship Management and is typically meant to not only help organize and track all new business opportunities but can also be used to give you a 360 degree view of ALL customer interactions. Think of one place where all current jobs, potential new jobs and, if you do service work, all service sites and issues are easily available.
You could get really crazy with it and link in emails, phone call notes and other interactions with clients, prospect and referral sources. Used properly, it can be a dynamite tool for those involved in business development activities. But it also brings a degree of accountability, which some people don’t like.
Putting a consistent system in place that documents each step, provides time for review and for end of job feedback, and takes in account the cost of estimating, will help you get where you want to be with job profitability.
Stayed tuned next edition for numbers 1 and 2 on the list.