“It’s a drug and we’re hooked!” This is what I said to my brother, Richie, about the fix I felt from doing monster commercial and residential jobs for a lot of dollars that generated little to no profit, no profit or sometimes a loss.
The reason for this was because we weren’t as good at getting paid for change orders as we thought we were. Also, we allowed ourselves to get squeezed on price initially because we wanted to stay busy with jobs that helped pay for the lights in our building and kept our staff working.
It seemed like we had to be making money because we loved how much the total sale was. However, the profit was choked off and we had little chance of adding value because we were famously stuck in the middle of a bidding war.
The middle of a bidding war
Middle of whom you ask? The middle was between the end user [the commercial or residential owner of the property], us and the General Contractor who hired us. It wasn’t that the GC were bad people…not at all. But they only made money by squeezing us on the price because they, in turn, had to win the bid from the other GCs out there who were in a bidding war.
When Richie and I finally sat down and thought about it, what we realized was we had to get more attached to doing install work for money vs. install work for exercise. Once we saw our addiction to the big ticket jobs, we instantly knew install for money meant working for the end user vs. working for the middleman.
We had to build value with the only one who’d be willing to pay for it. The only customers who would pay for our level of expertise and craftsmen that our company could uniquely deliver to those end users. They had a vested interest in the outcome and valued what we did and how we did it as much, if not more, than just the price we did it for.
For us, the most profitable work became apparent with tracking. Those jobs were the install jobs that lasted two weeks or less. We actually became very fond of two-day jobs.
Stay focused
I know there’s fear in letting go of the new construction and bid jobs. I know because we also feared that there would be no work and no money to cover the overhead. But we found that as long as we stayed addicted to the “Big Money Job Drug” then we couldn’t see all the other work we should be pursuing because we were too fixated. Once we withdrew from the fix, magically we got serious about finding and capitalizing on the right type of install job. And the work appeared.
Today, I do a lot of consulting with commercial contractors in the plumbing, heating and cooling industry. This type of work fits with what my company has done for years serving the commercial, industrial and residential markets.
What I’ve seen with large commercial contractors is they too have felt the squeeze when doing “Plan and Spec” work for General Contractors vs. doing “Design and Build” work for the end user.
One client explained the way to understand the difference between doing “Plan and Spec” work [which they don’t want] and doing “Design and Build” [which they do want] as “Plan and Spec” stands for “Pain and Suffering!”
The best of the commercial clients I work for are doing profitable install work today because they, too, have realized that only the people who own the premises care about what they uniquely can do and are willing to pay for it.
Note: If you have a good working relationship with a GC and can get them to allow you to talk to the end user about value added subjects, this, too, can unlock profitability and better serve the customers.
If not, isn’t it time you quit the drug of doing big ticket jobs for the wrong customers?
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