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Protect Your Customers From Themselves

 
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Old 10-07-2008, 04:48 PM   #1
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Protect Your Customers From Themselves


With everything going on right now there is no better time then now to help yourself by helping your customers.

Forget for just a moment if you can cutting your prices to sell a job and instead consider helping your customer by charging them what it takes.

Most customers have no idea what the home improvement business is really like. They don't know what we all know which is that most of our peers have no clue how to run a business properly. We are a field full of men and women who are experts at the construction tasks we sell but almost child like in our simplistic methods employed in running our businesses.

A customer lays his money down and he falsely believes that for the most part if he dodges the really obvious con men who just don't smell right and aren't fooling anybody, or the really obvious jack-legs, then he has nothing to fear.

We all know how naive that really is, especially right now. If we pool a large group of us together, by this time next year there will be a lot of missing faces. Customers have no idea of this reality.

There has never been a more opportune time for those of us who are legitimate and committed to what we do for the long run to convey that to potential customers at time of 1st meeting, to educate these customers to the great dangers they face of whom they hire right now and how important it is to hire somebody that will be here to actually start the job.

The papers, internet and air waves have lots of stories of contractors folding over night, swallowing customers deposits, customers material checks and other nightmares. Contractors folding up and traveling to hurricanes to get work, contractors folding up in economically hard hit areas and moving to other parts of the country.

What's bad for us is bad for the consumer, there will be fewer of us standing before this is all over.

Inform your prospects and sell them on who you are and the dangers they face writing that check to just anybody. There has never been a time when a low price for a job is truly a warning light going off.
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Old 10-12-2008, 02:38 AM   #2
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Re: Protect Your Customers From Themselves


Ask yourself this question (not you Mike - but everyone).



Would you invest in your own company right now?



answer that honestly. Take a hard look at that. Would you invest in your company right now?




I think your answer will give you an idea of just where you'll be next year



Customers can sense these kind of things ...

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Old 10-12-2008, 10:18 AM   #3
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Re: Protect Your Customers From Themselves


I just pulled out our Sunday paper and low and behold, an article about all the local business bankruptcies being at a all time high, listed out company after company that has filed for bankruptcy this year. A whole lot of construction companies or trade associated companies such as specialty suppliers going belly up.

I wonder how many customer deposits have been swallowed?

I talked to a few of our trade partners about a recent company that went belly up, stories around the circle of one guy who placed a $9000 deposit for cabinets with them for a customers job, 2 days later they locked the doors. They fully knew they were taking that guys money and new they were locking down and had no intentions of making good. Now he has to go to the customer and try to work this out with them in some way. He can't afford to eat $9000 and I'm sure the customer isn't going to be very happy.

Last edited by Mike Finley; 10-12-2008 at 10:21 AM.
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Old 10-12-2008, 10:31 AM   #4
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Re: Protect Your Customers From Themselves


I have been in business three years and I am teetering on the edge, I have in one hand a job opportunity for 65K + all bennies including vacation, sicktime, truck, gas card and retirement. Also inlcuded long hours and up to three months travel a year. Or the biggest job my one/two/three man shop has take on, only 20K. The last few months have been to slow for my comfort. How forthcoming would you be in my situation?
Although I would never take a customers money and not finish a job. And to answer dirt honestly, Probably not.
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Old 10-12-2008, 10:45 AM   #5
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Re: Protect Your Customers From Themselves


Quote:
Originally Posted by Bkessler View Post
I have been in business three years and I am teetering on the edge, I have in one hand a job opportunity for 65K + all bennies including vacation, sicktime, truck, gas card and retirement. Also inlcuded long hours and up to three months travel a year. Or the biggest job my one/two/three man shop has take on, only 20K. The last few months have been to slow for my comfort. How forthcoming would you be in my situation?
Although I would never take a customers money and not finish a job. And to answer dirt honestly, Probably not.
I'd say if you go into the job with a clear conscious that you have every intention of finishing it as you would any other job then you are doing nothing wrong. If on the other hand you go into it knowing that you're going to walk away from it before completing your contract and leave the customer high and dry then that's wrong.

Not putting you down or singling you out, but this is exactly the conditions that exist in this time we are in, there will be and continue to be a shakeout, the strong will survive and if they know what they are doing come out way ahead when it's over, the weak will go down and it's only a matter of when, where and how much damage they will do to anyone associated with them when they go.

I can remember being scolded, and ridiculed on this forum by a few people a while ago when talking about a potential slow down and how basically I was going into squirrel preparing for winter mode. I'm glad I did it when I did, we have held off on capital expenditures and have been building a cash reserve. It sucks to go into a treading water mode as early as we did instead of trying to keep growing, but it looks like it was the right thing to do.

Bkessler - one thing I would say to you is don't hesitate. The companies that have gotten in the most trouble have been the ones that failed to react, a friend of mine has almost lost everything he owns including his house and wife because he wouldn't layoff anyone in the hopes he could keep it all going. He had to almost hit rock bottom before he finally started making the tough choices. He's now laid off 5 of his guys and is down to just him and his two best guys and he is back in the field working. Hopefully he will make it.
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Old 10-12-2008, 05:47 PM   #6
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Re: Protect Your Customers From Themselves


Quote:
Originally Posted by dirt diggler View Post
Ask yourself this question (not you Mike - but everyone).



Would you invest in your own company right now?



answer that honestly. Take a hard look at that. Would you invest in your company right now?




I think your answer will give you an idea of just where you'll be next year



Customers can sense these kind of things ...

This is a good question. Thought provoking.

Here's the thing though....

In my opinion, we all have to just proceed, right? And maybe stop honing in on the numbers that are based on paper alone.

What's REALLY happening in your micro-economy?

Seriously, as much stress and chaos as there is right now, there seems to also be a lot of stuff continuing on as usual. How about in your neighborhood?

Most folks still have jobs. Most folks still need home repairs.

I guess, what I'm really saying is this:

1. It's easy to freeze up and fail right now.

2. But are you making the extra effort to drum up business? Or are you just watching and waiting?

Listen. I know there are tons of folks out there hurting right now. But there's no risk in effort. There is however, risk involved in paralysis.

Please note, I am saying this for my own benefit as much as anyone. No judgement, just an attempt to add some perspective.

I wish you all the best in this difficult time.

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Inform your prospects and sell them on who you are and the dangers they face writing that check to just anybody. There has never been a time when a low price for a job is truly a warning light going off.
The truth will set you free.
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Old 10-12-2008, 05:53 PM   #7
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Re: Protect Your Customers From Themselves


Quote:
Originally Posted by Mike Finley View Post
I'd say if you go into the job with a clear conscious that you have every intention of finishing it as you would any other job then you are doing nothing wrong. If on the other hand you go into it knowing that you're going to walk away from it before completing your contract and leave the customer high and dry then that's wrong.

Not putting you down or singling you out, but this is exactly the conditions that exist in this time we are in, there will be and continue to be a shakeout, the strong will survive and if they know what they are doing come out way ahead when it's over, the weak will go down and it's only a matter of when, where and how much damage they will do to anyone associated with them when they go.

I can remember being scolded, and ridiculed on this forum by a few people a while ago when talking about a potential slow down and how basically I was going into squirrel preparing for winter mode. I'm glad I did it when I did, we have held off on capital expenditures and have been building a cash reserve. It sucks to go into a treading water mode as early as we did instead of trying to keep growing, but it looks like it was the right thing to do.

Bkessler - one thing I would say to you is don't hesitate. The companies that have gotten in the most trouble have been the ones that failed to react, a friend of mine has almost lost everything he owns including his house and wife because he wouldn't layoff anyone in the hopes he could keep it all going. He had to almost hit rock bottom before he finally started making the tough choices. He's now laid off 5 of his guys and is down to just him and his two best guys and he is back in the field working. Hopefully he will make it.
I posted my current situation because I knew it would be a good example of what your talking about. I would never take any ones money without finishing a job. One other factor to mention my wife and I are about ready to start having kids, initially I started my company to have more time at home. WTF was I thinking.
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Old 10-12-2008, 06:15 PM   #8
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Re: Protect Your Customers From Themselves


Quote:
Originally Posted by SethHoldren View Post
Most folks still have jobs. Most folks still need home repairs.

I know there are so many different types of businesses represented on this forum that no general statements can be made, however, I believe that a majority of people here are not engaged in home repair.

The simple fact of the matter is that most residential remodeling is a luxury, not a necessity.

The residential building market is slow to stagnant depending on what area of the country you hail from.

Commercial construction remains strong for now.

I'm no economic expert but personaly if I owned a commercial construction company I would be trimming overhead in preparation for problems. I'ts fine and dandy to have contracts signed years out until the businesses they're signed with cease to exist or break the contract due to economic hardship.

I started my remodeling company this year. Unfortunately, the majority of my work for the year will still be subcontract work. I just started running a 1.1mil commercial project for another company and I am still doing apartment rehabs for a rental property company.

I am at a point where I must either ramp my advertising up to try to capture residential remodeling work, or take on more subcontract work and cut my advertising to reduce my overhead.

I'm choosing option B. I'm not giving up on my goal to build a great remodeling company, but I'm looking economic reality in the face: Most people, even wealthy people, are going to think twice before they start a remodeling project in the current economic climate.

I plan to be conservative, weather the storm, postpone all major purchases and expenditures, and quietly prepare for the transition into a stable growth economy.
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Old 10-12-2008, 07:38 PM   #9
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Re: Protect Your Customers From Themselves


orson,

good choice! (b)

Be good at keeping things together throughout this and be sure to not go into more debt at this time. You will weather the storm if you concentrate on being stable for the next year or two.
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Old 10-12-2008, 07:47 PM   #10
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Re: Protect Your Customers From Themselves


I remember a time long ago when everybody was scared to purchase anything over the internet using their credit card number. Nowadays people give their pertinent info with no worries at all. Heck, sometimes I gotta give my social security number to a customer support rep just to pay a bill.

I can't understand why people would be scared to work with contractors.

I don't think it's contractors that people are turned-off to work with, it's salespersons.

Just educate the customer on their decision.
Pinpoint a monetary value on how much they are wasting using what they are using now. Then show them how they can save using your products and services. Find their pain, and propose a solution.
Avoid unethical sales gimics (like raising your prices to account for your discounts).
Be an active listener and have a genuine reason to form a professional relationship with your customer.
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Old 10-12-2008, 08:16 PM   #11
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Re: Protect Your Customers From Themselves


Well said Matt!

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