Words: Corey Adams
The paradigm has shifted. For as long as I remember, small businesses fought each other to get potential clients to choose them. They often cut prices to a point of starvation just to get customers’ attention. That time is over.
Now, I agree that we have a large portion of the construction industry that still plays these games, but they should not be. For the last few years, demand for our services has raised and the available workforce has diminished. This has led to a huge shortage and backlog in our industry. Instead of seeing this as a problem, I like to look at it as an opportunity, a huge one.
Customers got used to being able to call 4 or 5 contractors and pick whichever one they want. Now, we as contractors should be choosing who we work for. Most of my potential clients say the same thing, “I have called a lot of contractors, and you are the only one that called me back.” They no longer have a choice. We are in the driver’s seat.
For the first time in my 20 plus year career, I know we are turning down more work than we are bidding. We are doing this because we have defined the types of jobs we want, and only attack those projects. Many contractors are willing to take on whatever comes their way without regard. Projects have variables. They vary in access, ease, design, client expectations, etc. The variables could be endless.
Most small companies have specialties. Some are better at the brick, some better and residential driveways, some better at stone, and so on. These are the projects where our experience, labor force, and tool assets fit the best. We know what we are doing and can do it in our sleep. Those are the jobs we are choosing. We have a predictable profit margin, and less time involved when we do what we know.
Plenty of customers are stuck in the old days. They are after multiple bids and feel like the contractors should compete to get their project. This is false. If I turn down 5 jobs today, another 5 leads come in tomorrow. These customers are usually red flag customers that you do not want to work for anyway.
It is up to us, however, to create a brand identity around what we do best. Positioning our company to be the go-to source for our specific niche. As we build our reputation for being the best at one thing, the bid requests we get begin to filter themselves to some degree.
As our company progresses, I try to identify our perfect project and tailor our company to attract and win them. If all we did was residential brick restoration, I would be fine with it. There is plenty of it to do in our area. When someone calls us to brick an entirely new build restaurant, I decline. I know our company is not set up to make the margins necessary on those specific projects. Why try?
The paradigm of customer competition has changed. It is time for us to step back and refocus our time and energy on how to not compete. Most small businesses are happy with their size, profit, etc. This philosophy is for those that want to make more without growing in the labor force. Targeting fewer projects at higher margins is a growth strategy.
Some of the best projects we ever had were ones we did not win. Running a successful small business requires us to balance risk, reward, and opportunity costs. Work for the people you want, do the projects you want and do not be afraid to charge what you want. Supply and demand have created an opportunity to redefine what your company is, and should be.
The most profitable contractors I know choose their customers, not the ones that fight to get customers to choose them.