Our industry is like many. There are different schools of thought on how to attack certain aspects of what we do. One way is not best for all, and as the old adage says, “There are a thousand ways to skin a cat.” The reason I start this way is because this article will contain some contradictory styles. There are two sides to every story, and this is no exception.
So much of the business development information out there today is based on how to get more work, but what about the small guy that is swamped with no desire to grow exponentially? That is where we begin to contradict. What do you do when the calls keep coming, but you really do not need, or want the extra work?
Theory 1: Tell them you are too busy.
I was taught a long time ago that if you are too busy, just tell the potential customer that. The theory was wrapped around the idea that you didn’t want to give out outrageous prices just because you had work. They believed that word would spread around how expensive you were, and it could adversely affect the amount of lead flow in the future.
I get this somewhat. If you are a business that relies solely on word-of-mouth advertising, then the idea of throwing out the “I don’t want to do it price” is scary. People talk. The last thing you would want is one of these potential customers to spread around that you were double a competitor’s bid.
Theory 2: Never stop bidding.
This theory came from another “old timer” that we all looked up to. His theory was to keep bidding no matter what because you never knew when someone would cancel, or the market would sour leaving you sitting on your thumb.
I like this to a degree as well, but he had a flaw. He never raised his prices, he just kept bidding. I have written a couple articles on the idea of rate pushing, and it works. If you want to just keep bidding, at least begin to push your rates up to control the backlog. If not, you could run into more work than you can handle, then leave customers with a bad taste when they get pushed out further than expected.
Theory 3: Don’t respond.
Ok, this is not a good theory at all, but many contractors use this as the default one. They just do not answer the phone, return calls, or respond in general. Obviously, this is another reputation that you do not want out in the word of mouth arena.
The Reality: A well balanced cocktail.
I can see the benefits of two of these theories. The problem is I also see the cons. What we do is blend the two to make sure that we are bidding enough, without overextending. It starts with some baseline questions that we ask every potential customer.
“What type of project would you like us to bid? When do you need the project completed by? Do you have a predetermined budget that you would like to meet?”
After these three questions, we know how to proceed. If they have any answer that does not fit our structure, we are too busy. If a customer doesn’t know what they want, how can we bid it? If they have an unrealistic timeline or budget, why waste our time? It is as simple as that.
Now, if they meet the criteria, we will always bid. The caveat to that is sometimes even after I bid, I want to hear them say no. If we never get a no, our prices are too cheap. This is where a lot of smaller contractors have a self-imposed obstacle to higher profits. They are so scared to hear no, that they leave money on the table just to get the euphoric high of hearing yes.
It feels great to sell a project, but without a no from a potential customer every now and then, we can never really know if we are maximizing the profit for our company.
Don’t be scared to give a price that is higher than your typical rates, and don’t be scared to be told no. We were told as little kids in sports that “you can’t win them all.” In regards to the projects that we decide to bid, I don’t want to.