It is often thought that builders and contractors only lose money after a project has started and in circumstances that they cannot control.
The truth is, money can already be lost even before a project starts.
There are top three mistakes that builders and contractors make at the beginning of a project which can be resolved if they have the knowledge, confidence, and determination to earn money. Take note that it is the determination to earn, not desperation.
1. Failing to Rebut an Objection
Imagine that you are a builder who was presenting his quotation to a prospect. Everything was going well – your quotation was well made, you look professional and the client seemed really interested.
But you were not able to sell it. Why? The prospect said that he would have to ask the missus, or that he knows somebody that would do the build for a lesser price.
What would you have said as a response?
Failing to have an answer for an objection is a huge mistake on a builder or contractor’s part. You should come prepared and this includes having an arsenal of rebuttals.
Before going on to your meeting with a client, list down questions that were asked by previous prospects or the reasons why they did not choose you. Then answer these questions. When you are not pressured, you will come up with better answers, so it’s better to do this before the meeting.
Once you are ready with the questions and their answers, integrate these into your sales process. This way, you would have already answered the objection even before it comes up.
2. Lowering the Price
This is the most common mistake that builders and contractors make that loses them a lot of money – lowering the price, to get the sale.
This is a desperate move where you’re just basically aiming for the survival of your business and not the actual generating of profit.
So what should you do to prevent lowering your prices? Firstly, decide that you will not lower your prices. Surely you’ll think that it’s okay to do it just until income is better. However, doing the same thing repeatedly turns it into a habit, and we all know how hard it is to break a habit. So, it’s better to make a decision now that you will not lower your prices.
The next thing to do is to make a list of all the things that you can do as a builder or contractor. This is a good thing for both you and your prospect. You’ll get to see if you needed more training on certain things or if you’re actually doing services that have more value than what you thought of previously. And your prospects will get to understand what they’re getting from the price you’re asking.
Not lowering your prices might be scary, especially when it seems like you are not getting any sale. But this helps in weeding out D-grade clients. What’s the point of getting a sale but working with someone who’s going to give you hell? So improve your services and aim for the better clients that can afford your price.
3. No Variation Process
How would you react losing lots of money over a necessary change in the build? You can argue with the client all you want, but they’ll just say that it wasn’t in the contract so they shouldn’t pay for it. This is where the importance of having a variation process comes in.
Make it a policy that all additional work shouldn’t be done without a signed authorization from the client. No matter how many time you call out the client for not paying for the additional changes if you have no proof to support it, you lose.
Document every additional change that you do for the project. In your documentation, describe the change that you will do, include the cost and receipts and have the client sign it before you start working on it.
When you already have a variation process set, train everyone in your team on how to deal with a client asking even for a minor change that wasn’t in the scope of work. This might be additional paperwork, but if it helps you get paid more, it wouldn’t be such a bother, right?
Dealing with these three mistakes as soon as possible would help a lot in preventing the loss of money. Don’t wait for it to actually happen to your construction business before you start setting up systems and processes for it. Remember, “Victory loves preparation.”