Your Price is Too High

Do you have clients tell you “your price is too high”? I have a lot of builders tell me they are getting this feedback even though they know they have cut the quote to the bone.

Do your clients really know one way or the other if your price is too high? “Your price is too high” is a tired old line that your customers have been trained to use to get you, the builder, to pull back on your margins. They have been told by the media, their neighbours, someone at work, their family, whoever, that if they tell you “your price is too high”, you will, in all likelihood, change the quote to some lower number.

I have a friend who does this regularly and says he’s surprised how often people do it, even the major chain stores. I decided to try it recently at a rebel sport store at our local Westfield and they asked me if a $30 discount would be ok? So I know it works and I’d recommend it IF you are the customer.

Lowering the price to win the job is exactly what most “order takers” will do. An educated builder knows better and does not lower their price, unless the client changes the job.

Now you might be saying to yourself, ‘but I know my price was too high because the client told me I came in above the other two quotes!’
“Your price is too high” (and that statement can come in a number of different forms) simply means that you have not done your job as a ‘salesperson’. Plain and simple, you have been lazy and have missed some very important steps in the ‘sales process’.

The number one rule for sales is to ‘qualify’ your prospect. You need to pin down the budget to the point that you know exactly what they want and are willing to spend.

Here are the four essential questions that need to be answered;

1. What do you want to do?
2. When do you want to do it?
3. Who will make the buying decision?
4. What does that person(s) want to spend?

If you get the answer to (at least) those four questions, you will get to a “yes” much quicker. Sticking to and getting the answers to those four questions will help you qualify your prospect and save you a world of pain in wasted time and energy down the track.

Over the years I’ve compiled a list of the most affective qualifying questions a builder can ask. Click here to download them now. Knowing the answer to these questions will take your sales conversion rate from 1 in 6 to 1 in 3 very quickly, without lowering your margins. Learn the technique, ask the questions, get the answers and watch not only your sales increase, but your profits increase as well.

To your ongoing success.

Kurt

MASTER BUSINESS COACH
E: kurt@builderscoach.com
www.builderscoach.com


Attention Builders, what is your system for positive cash-flow?

What is Your System For Positive Cash-Flow?

I recently worked with a builder who a few years ago made the move from working as a sole trader with one labourer doing smallish jobs to building a small team and working on bigger residential renovations and additions.

At first the growth was slow but eventually things started
to snowball as more referral work came in. He soon found
himself with seven or eight jobs on the books and doing more
turnover than he’s ever dreamt of, except he was in financial hell.

Money was going out faster than it was coming in and although he was pricing his work right with a solid 27% margin, there was no money in the bank account. He was either hemorrhaging money somewhere or there were significant
Cash-flow problems. All I wanted was the truth, so the first thing I did was book a time to sit down with his accountant and have a Close look at the numbers. Lets face it the numbers don’t lie and we all know the old adage “The truth will set you free”. I’ve done this on a number of occasions with clients but on this occasion something wasn’t quite right. First of all at the meeting the accountant looked really nervous, not a good sign!

I was struggling to understand the complexity of some of the
Financials and whenever I asked a straight question like what is the
WIP? Or what is the current cash position? Can we look at the
Gross margin on individual jobs and compare? I got a blank stare,
I think “stunned mullet’s” the term.

Long story short, there was a massive “Cash Gap” in the guys business,
things were moving too quickly, accurate financial were non existent and
they were flying blind. The end result almost wasn’t pretty, luckily we were able to make some adjustments and get him back on the right side of the line.

There are two important lessons here, firstly you need accurate numbers
And financial controls otherwise you risk crashing hard, even in good times. Also choose your bookkeeper and accountant wisely. I don’t have time to go into detail on this now but I’ll be sending out something in the coming weeks so watch his space.

Secondly; do you have a solid strategy for ensuring your money comes in before it goes out? That is a system for ensuring positive cash-flow? If you can relate to any of this and would like a free copy of the 21 Cash-flow strategies for your business enter your name and email address on the Builders Coach home page at www.builderscoach.com


What’s it costing you?

A very wealthy Australian was recently heard saying ‘its easy to make money. To make money you just need
to do the things that make money.’ Simple but right on the money!

What is your plan for doing the things that will make you more money this year?

Click link to watch or review the 12 critical areas for making more money in your business in 2013. ()

As fascinating, simple and profound as it is it begs the question, what percentage of your time do you
(or your team) spend on the tasks that make money and how well are you doing them?

I bet you can think of half a dozen things that you (or your team) are NOT doing that you could be doing
to make more money, right? Here’s a small list of questions to prompt you;

1) Could you be more efficient with your time?
2) Could you shop around to increase your margins?
3) Do all your invoices go out on time?
4) Could you qualify your prospects better?
5) Could you do more marketing to generate better quality enquiries, even if its just one more phone call a day?
6) Could you manage your finances better so you build more working capital?

If you stop working on a job what happens? You lose money, right. The same applies to working ‘ON’ your
business and the things that make you money.

If you wanted to make an extra $100,000 profit this year what would it take, one extra job? Maybe two or three
jobs. How many more jobs would you need to price and what would you need to do to price those extra jobs?

Lets say you put in an extra four hours / week focusing on generating that extra $100,000. Thats a total of 192
hours focused on generating more work. If its a focused 192 hours, I’d put money on you making the extra
$100,000. If we divide $100,000 by 192 hours thats $520 / hour. But here’s the clincher, once you’ve set up
the systems you should generate the extra $100,000 for the rest of your career!

The most common objection I hear when I recommend spending 4 or 5 hours working “ON” their business is, “I
don’t have time”. If its worth $520 an hour (conservatively) then its costing you $520 / hr. So could you find the
time?

Click link to watch or review the 12 critical areas for making more money in your business in 2013. ()

Are you doing the things to make more money in your business and if not, whats it costing you?

To your ongoing success

Kurt

MASTER BUSINESS COACH
E: kurt@builderscoach.com
www.builderscoach.com


Do you know your “Break Even” Point?

Have you ever wondered how much work you need to turnover and at what profit margin to exactly cover your “running costs” or “fixed expenses?”. In other words have you ever accurately calculated the Break Even Point for your business?

If you’re even mildly curious about your “business development” you’ve probably at least thought about your break-even point but maybe you never found the time to figure it out or you never had a user friendly calculator to punch your numbers into and get the result, right?
The fact is if you’re in business and you don’t know your break-even point, then how do you know when you’re making a profit?
Before you start feeling frustrated about this often irritating little detail of business the good news is, that’s all about to change. We’ve created a very simple Free, Break Even calculator to help you calculate the break-even point for your business right now. All you need are some accurate financials, then click the link and follow the three easy steps below to calculate your break-even point in two minutes flat;

Start Here >> Breakeven Calculator

Step 1: Get an accurate copy of your Profit & Loss. Note its imperative that your numbers are as accurate as possible otherwise the result won’t mean a thing. So make sure the income and expenses listed in your P & L are up to date and accurate.

Step 2: Also ensure that you’ve separated your “Cost of Sales” from your “Running Costs” or “Fixed Costs”. If you’re unsure about this, make sure you ask your bookkeeper, and if they’re unsure give us a call we’ll walk you through it.

Step 3: Punch your numbers into the Yearly or Quarterly space on the calculator and hit each of the three calculate buttons to get your Gross Margin, Break Even and Net Profit figures.
http://kurthegetschwe.wpengine.com/BreakEvenCalculator/break_even_calculator.php
Now here’s the thing, once you’ve calculated your break-even point, you can play around with the numbers and gauge the result to your bottom line when you shave 2% of your Material costs and/or increase your pricing by 4%. Also use the top part of the calculator to work out your Gross Margin on individual jobs and find your most profitable work. Chances are, 80% of your profit is coming from 20% of your work.
Have fun!


What is your unfair advantage?

The good news I’m told is that the tide is starting to turn, but I’m still hearing complaints from certain quarters about the lack of enquiries, savage under cutting and a drop in sales conversion rates. Fortunately, regardless of who you are none of these issues is insurmountable. In fact the simplest solutions are often the most effective.
“The secret of business, especially these days, is to focus relentlessly on your unfair advantage – the thing you do that others don’t.” – John Rollwagen

Guys, this is so easy to do in the building industry it’s beyond a joke. I’ve been vocal about these three “magical” steps below for years.

1) Return your phone calls. Most builders and contractors don’t return their phone calls at all. The ones that do are often 2 – 3 days later. Phone calls should be returned the same day or by 9 am the next day.
2) Show up for your appointments. On time. Won’t that surprise them! Not showing up for appointments, or showing up late, is one of the major gripes clients have with builders and contractors.
3) Do exactly what you say you will do, and do it when you say you will do it. It’s the little things that count!

So there you have it, just these three actions alone should give you an “unfair advantage” over your competitors. Remember making sales is first and foremost about building trust and confidence in your company and in you. The best way to build trust in any situation is to “demonstrate” it.

Once you’ve established a level of trust you need to set the parameters under which you will work. If you don’t set these parameters, the customer will.

One of the first questions I recommend with any prospective client is, “What is important for you when selecting a builder or contractor?” (In other words what is their selection criteria for choosing a builder or contractor?) Followed immediately by, “When would you be ready to start the job?” These two questions put the prospect on notice that you’re not there to dish out prices.

Let them know you’re serious about doing your work and if they just want a price, you’ll be on your way. Other more detailed qualifying questions coupled with a sprinkle of tact of course are no doubt also required here.

The primary purpose of your questioning is to discover what the owner is thinking. If their primary interest is price, then sorry, It’s time to leave and look for someone willing to pay a fair price for your services.

If you find you’re experiencing too many price sensitive people, it’s important you look at how you’re attracting enquiries. If you are offering “free quotes” or reaching out to people looking for low prices, that’s what you’ll get. And if your competitors are coming in at half your price, and getting the job, you’re aiming for the wrong market.