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Friday, October 31, 2008

Healthy business

Clearly, in business, your clients/customers are the basis of your success -- if they truly enjoy working with you, and pay their bills at profitable levels, you will do well. However, unless you are a sole practitioner/one-person-band, you also need to connect and build a culture of co-operation, initiative, and growth among your employees and key contractors. And this is perhaps the biggest test/challenge for any entrepreneur.

One approach is to regard all employees as owners/clients, and treat them like that. If your selection/hiring practices are solid, you won't be risking much with this policy. This approach to business turns the cliche "empowerment" into a practical reality -- your employees will respond with independence, respect, and treat clients like you would treat your clients if you didn't have any employees.

Of course, you need systems, processes, and rules, or things could get totally out of hand. And you cannot escape responsibility by careless delegation. Regular meetings with structured guidelines help here. In the meeting context, you can usually smell if something isn't quite right, and take measures to remedy the problems.

When things are working really well, you can almost sense you can 'go away' and employees will make the right decisions. You don't really leave, of course, but you don't need to micromanage them. Usually, you are in the enviable position of saying 'yes' to requests or deflecting the questions or concerns to other employees who can help better than you.

Don't doubt it -- your clients can sense this chemistry, and they will want to do business with your company when they do. Your employees don't fake it; they don't suck up, they aren't artificial, and they aren't following canned scripts when they encounter situations where creativity rather than rote processes are necessary.

When all is right, you'll find they contribute far more than you would expect otherwise, and you all can share in the prosperity.

It took me almost 18 years in business -- and a near disaster with the company -- to discover these processes. I have always thought that employee independence and freedom are the best ways to run a business, but needed to learn the structural systems required to manage the process and ensure responsibility, accountability, and shared respect.

These qualities, and this communication, is why we assessed the economy at our planning meeting and then projected significant growth this year. Best of all, I believe that the clients who chose to do business with us will grow as well.

(I give credit in this posting to the late Sonny Lykos for his thoughts, and to Bill Caswell of Caswell Corporate Coaching Company for solid advice. And, of course, to this company's employees.)

Contractor Coaching Partnership Blog

I'm adding Mark Paskell's Contractor Coaching Partnership Blog to the permalink list.

In his most recent entry, he makes the case for effective business planning:

As 2008 comes to a close are you working on your business plan for 2009? Have you assessed the results of 2008?

With the recent downturn in economic activity and the pending election, many contractors are experiencing less work than previous years at this time. Many have never witnessed such a dramatic drop off in business so early in the fall. While the economy works itself out this is the perfect time to develop your strategy and business plan for the coming year.

Many contractors are realizing that their lack of planning and training has left them in a precarious position this fall. Now it is more important than ever to know how to sell your services. Across the board, leads have dried up and backlogs of work are not sufficient to carry companies through the end of the year. Droves of workers are being laid off or let go. Hopefully, this will not mean the end of the road for many contractors, only time will tell.

Meanwhile why not spend this time working on your business? Seek out and invest in best practice education and training to prevent this from happening to you again. Some major reasons for failures in our industry are lack of planning, inadequate marketing and lead generation, not aggressively selling, poor cash flow, lack of or inadequate systems, lack of industry specific and business training and owners wearing too many hats.

The industry is rapidly changing. Homeowners are more knowledgeable, savvy, demanding and discerning on who they will hire to work on their home. The Next Level Consumer is expecting service from The Next Level Contractor. If you are not like the contractor they expect, you will have a difficult time getting work. If you are not like the Next Level Contractor, even if they hire you, they will not pay you the amount necessary to run a legal profitable contracting business.

Most contractors have learned that the best customers are homeowners who are professionally educated. These customers tend to provide professional services in their jobs that are supported by processes and systems. These consumers are expecting the same quality of service from their contractors who work on the home. The Next Level Contractor knows this and has adopted the use of best practices and systems to deliver his service. This way the Next Level Contractor can command the price needed to support a professional contracting company.

The Next Level Contractor is an expert in his field. He will use best practices and systems to deliver an outstanding contracting experience. He is now planning for 2009 to make sure that when the economy turns around he will be ready for The Next Level Consumer. He is working marketing plans, website development, sales training and processes, lead carpenter and employee training, home show planning and more.

The Contractor Coaching Partnership teaches contractors how to align themselves so that they can win the business of this consumer.

Are you ready to start your planning for 2009?

I enjoyed this reference to Mark from the Eastern Massachusetts (Boston) Chapter of the National Association of the Remodeling Industry (NARI) newsletter:
During the May NARI meeting we welcomed a new member company called The Contractor Coaching Partnership. Founder, Mark Paskell came to us and said if there is anything he can do to help us increase the chapter membership that we can always count on him to help. In that same meeting he brought six guests. We learned that he is an expert in building groups through networking, in addition to his profession as a “Contractor Coach”. In August, Mark was nominated by EMNARI President, Bill Farnsworth, to join the board of directors.

Mark has over 22 years experience in our industry and is known as a Design/Build and Exterior Renovation Expert. His industry related experience includes Sales and Marketing Management, Production and Administration System Development, Design/Build and Lead Carpenter System Development, Public Insurance Adjuster, and BNI Networking. He is a Graduate of SandlerSales Institute, Design/Build Institute and a 10 year member of Certified Contractor Network.

In February 2008, he founded The Contractor Coaching Partnership. The company provides coaching and industry specific best practice system development and training for residential contractors and the supporting trades.

He says that he got the idea for coaching contractors when he met Richard Kaller of CCN in 1996. Mark says, Richard taught average contractors that they could succeed if they developed, implemented training systems and best practices. Mark also said that he was inspired to start a coaching career by Tim Bretton of Sandler Sales and Shawn McCadden, Consultant.

“I always believed that choosing the right role model and mentor has a huge impact on long term success. In NARI, I see a great opportunity for new contractors to learn from the professional remodelers and I recommend NARI to all my clients”
Don from Bryan Construction says “The Lead Carpenter and Systems training has been great. I look forward to the Design/Build sales training we are now starting. Working with someone that has direct knowledge of the industry, has made all the difference in the world. Thanks Mark, Don Bryan”

For more information please check Mark’s website and blog at, Cell; 508-847-0162, Off. 978-422-6354.
This posting led me to check out NARI, which may be a valuable resource for remodelers. (I can also recommend participating in your local home builders' association; in Ottawa, the Renovators Council has an important place within the Greater Ottawa Home Builders' Association).

Thursday, October 30, 2008

Check the thermostat$

Yes, it helps to check the thermostat. No, the name on the thermostat is not the name of the contractor who came for last night's inspired service call. Sometimes it makes sense to check the obvious.

Yesterday, just before bedtime, Vivian said: "It seems to be getting cold in the house." I didn't feel anything wrong then, suddenly, noticed, yes, something isn't right. I went downstairs to the furnace and found the fan blowing but no heat. I glanced at the thermostat, and noticed the temperature seemed lower than it should. I then went outside to check the intakes.

"Let's call for service," I said, recalling our 24-hour-service contract with a local HVAC company. (They won't get a plug here, and you will see why in a second.)

Dutifully, the answering service referred me to a technician, who called and showed up. He went with me to inspect the furnace and noticed the same 'problem'. "Let's check the thermostat," he said.

So, we went upstairs and like a flash of "duhhh", I noticed the obvious. The fan had been set to "on" but heat to "off". No wonder we weren't getting any heat.

Without hesitation, I accepted that I would need to pay the $120 for the service call, and got some value from it by having the technician show me how to set the pilot light and start the electronic fireplace -- a task that might have taken me an hour or so of reading and trial and error.

Of course, I am 100 per cent responsible for this error, the type of mistake we can make all too often. Sometimes the solution is so simple it is right under our nose. We assume the worst, and spend time and resources resolving a problem that could be solved with a simple check of a switch. This applies in our business as well as personal lives.

Now why doesn't the HVAC contractor receive a positive mention here? Well, the technician could have asked me to double check these things before showing up (good) or even better, could have worked with a company policy to waive charges when the mistakes are obvious, perhaps inviting a charitable contribution to 'pay' for the error. I am not angry about the HVAC contractor's service and certainly didn't question or fight the service charge -- rules are rules, and I accept responsibility for my obvious loss of awareness. (And I gained some value from the service call, regardless.)

Wednesday, October 29, 2008

The planning meeting

At the chalet (below): From left -- Mark Buckshon, North Carolina publisher Bob Kruhm, (standing) editor Matt Desrosiers and writer Johnathan Monk, (sitting) administrative co-ordinator Amanda Arthurs, Ottawa/Eastern Ontario representative Cindy Pilgrim, senior publisher Chase (from St. Catharines, Ontario)), Northern Ontario publisher Leslie Greenwood (from Sault Ste. Marie), designer Raymond Levielle and accounting co-ordinator Sherri Herriot. In the picture at right are consultants Bill Caswell and Upkar Bikhu of Caswell Corporate Coaching Company.

We've returned from a couple of days of intensive meetings at a remote lakeside chalet in West Quebec. Day 1 (Monday), most of the company's employees and key contractors gathered to review progress and set out the plan for 2009. Day 2 (yesterday) our sales team assembled for a brief but vital meeting where we assessed company practices and priorities, and set into motion several new initiatives.

Perhaps the most impressive quality of the meeting -- outside of the good-will and co-operation among employees -- is that we concluded next year will turn out rather well for the business, despite the scary economic news. (We were insulated on Monday from that day's stock market declines; fortunately mostly recovered by Tuesday).

Our optimism is not carelessly based; undoubtedly a serious contraction will affect the construction industry and its allied architectural and engineering professions. Many major projects are on hold, financing is truly difficult to obtain, and the residential construction industry still needs to absorb all the bad mortgages and housing inventory built when it seemed anyone could sign the contract and 'own' their own home (regardless of credit capacity.)
But we saw a silver lining in all of these problems. Surviving construction businesses will want to maintain and preserve their relationships, and will find value in working with us, because we focus on building connections, links, and respecting these relationships. (Advertisers here are always treated with respect: this blog, started as a client service initiative, for example, has grown to a higher level.)

Of course this business plan is not built on dumb hope -- costs and expenses can closely be monitored to see if they match revenues, and if a course adjustment is needed, we'll make it. We'll stick to our guns in geographical expansion: The issue is less the location than the person who works with us -- the hiring standards will remain high, and careful evaluation is essential before putting anyone to work here.

Impressively, employees suggested a few new revenue sources and some areas where prices could be increased without compromising relationships -- while enhancing service value. And we received mandates to pursue some new projects and initiatives (which I will report on in the weeks ahead).

If you haven't found a way to integrate your employees into the business planning process, or (even more seriously) you don't have a formal planning system and procedures, take a minute to consider the cost of this ad-hockery. No one is suggesting the world will follow exactly according to plan, but with the plan in hand you can see where diversions and distractions are interfering with progress, and define and capture opportunities when they arise. You need to do this, especially in the current challenging business environment.

Tuesday, October 28, 2008

About Public-Private Partnerships

This image is borrowed from the site of William H. Gordon Associates, Inc., based in Chantilly, VA, near Washington. D.C., which has pioneered in introducing PPP initiatives in Virginia. "You have to have a team built on complete trust,” says WGHA's chief operating officer Bob Woodruff. “These teams aren’t necessarily easy to find. You need to be able to work through the different scenarios and have confidence in your partners on all sides.”

Here is the comprehensive story for the SMPS Marketer I wrote about Public Private Partnerships, outlining the opportunities and challenges in this model of construction industry business development.

I wrote this piece before the most recent financial crisis changed some of the dynamics of funding and financing -- it is probably much harder than before to raise private funds to support infrastructure projects. Nevertheless, as governments seek to restore the economy through infrastructure spending, I expect that PPP opportunities will reemerge and become a primary driver for success in the industry.

Notably, especially in U.S. states with liberal PPP legislation (such as Virginia), if you are an enterprising architect, engineer, or contractor, you can take the lead in creating effective PPP initiatives on a regional level -- in essence, create your own opportunities.

Some come, some go, some stay

Since starting this blog a couple of years ago, several others have joined the construction marketing blogging culture. This is great. Several potentially great blogs have started, then seemingly stalled after just a couple of postings.


Probably because blogging is rarely an instant revenue/gratification source. While a few a-level bloggers make a fortune in the business, most achieve longer term objectives, slowly, gradually, and by building up their communities.

You'll know some of my favorites by looking at the special blogs references to the side of the main blog. I'd add Mel Lester, Seth Holdren, and Craig Galati to the collection of blogs I monitor frequently (along with Chase and Bob Kruhm's blogs, from our own organization).
Some people of course see blogging as a route to Search Engine Optimization prominence -- and because this blog has a strong place within the search engines, they angle for backlinks here. Nothing wrong with that -- and one of the easiest routes to backlinks is through comments (though I screen the comments for relevance and if you think you can just plunk in a spammy backlink, you will get nowhere, fast.)

But I think people playing the SEO game are missing an important point. Trying to gain backlinks, trying to gain 'prominence' should be at most a result not a driving force -- if you think about the readers and deliver meaningful content they can use, and do it consistently, you'll ultimately achieve your SEO objectives in a more satisfying way.

Why is this stuff important? More and more people are finding their initial and ongoing relationships on the Web, and the blog is probably the easiest and most effective way to start. But you need patience, and you your blog needs to be valid in its own right, to be successful.

P.S. I wrote this posting, like yesterday's, before heading to the annual planning meeting. You can ensure consistency by designing posts and pre-setting them for when you are otherwise unavailable.

Monday, October 27, 2008

Your best home show marketing solution

PCPlumber, owner of Bestline Plumbing in Los Angeles, has become an outspoken voice on the forum. This is how he thinks your home show booth should look.

Last week, one of this blog's readers asked this question: "We have a home show coming up . . . any tips on maximizing this?"

A simple enough question, but one I thought others would be far more qualified to answer (we've done many business-to-business shows, but not consumer-oriented shows over the years). So I posted the question on the sales and marketing forum, and the resulting postings show the value of heading to relevant Internet forums for advice on critical issues.

If you are hoping for a unified perspective, without any personality, argument, or back-biting, if you are looking for the one-size-fits-all solution, you won't find it in the several postings within the thread. Some advocate a conventional, courteous, and image-building approach, but one poster, pcplumber, owner of Bestline Plumbing in Los Angeles, has stirred up a hornets nest with his strong opinions. (Probably because he speaks his mind so vividly, he rubs others the wrong way, sometimes.)

You can see how he thinks you should present yourself at a consumer show in the above image. His opinion of what works best is a minority opinion, of course, others think the approach tacky. But it works, and he isn't afraid to say so, so what should you do with that information?

Meanwhile, Michael Stone in his blog reports that Qualified Remodeler magazine's survey says that seven per cent of remodelers find their sales leads at home shows. Stone, in advocating aggressive (but well planned) advertising and show participation, observes:

Several of our clients have said they rely on home shows for almost 1/3 of the leads they receive in any given year, far more than 7%.

All of our clients who are busy tell us the same thing and that is they all have at least six different means of advertising in place and working right now. They have all increased their advertising budget and all who have been actively advertising for the last year or more are as busy as they want to be.


So, what should you do here? Listen to the majority opinion, or go with PCplumber's style? I'd suggest your show style, as for everything in your business, should reflect your real personality and values (and ideally these should correlate with your clients) and be consistent with your actual business practices outside the show. If you are comfortable going over to the wild side and letting it all out (and your clients are 'ordinary' people,) Pcplumber may be on to something interesting here. And if you are not doing shows and want to find business for your contracting and renovation company, you should look at Michael Stone's numbers.

Sunday, October 26, 2008

The annual planning meeting

Our planning meeting is at a chalet in Lac Heney, Quebec.

This afternoon, after heading to the airport to pick up Leslie Greenwood (flying in from Sault. Ste. Marie) and Bob Kruhm (from North Carolina), we head on a two or so hour drive to a chalet in a remote, rural West Quebec area. Other employees and key contractors from Ottawa, Petawawa and St. Catharines will also make their way to the meeting, which starts tonight and ends Tuesday afternoon. (We have a soft agenda tonight, a full scale all day planning meeting tomorrow, and salespeople stay on for an additional day to discuss and co-ordinate specific sales objectives relating to the plans devised on Monday.)

The meeting's cost, of course, is not insignificant -- we pay our facilitators Bill Caswell and Upkar Bikhu from Caswell Corporate Coaching Company significant fees, transportation, per-diems and hourly pay for non-salaried employees, food, and accommodations for everyone. Bu the meeting process, and resulting plan, is as important to the business as any expense, and is really important to your organization once you have six to eight or more employees and key contractors.

Why? Structured and co-ordinated planning meetings allow you to combine big picture awareness with practical decision-making; involving all your employees and key contractors in the process results in the power of shared ownership, direction, and creativity. You get your rules to work with, your structure, your vision, and your objectors realigned and reset, and you are then ready to move forward with the year ahead. And you can see where things didn't quite work as planned, and then fix these problems.

Planning meetings cannot predict or solve every problem, of course. The world 'outside' changes -- and this year has been tumultuous in the economy (something we must consider in the plans ahead). And people change. Some leave and others join the business; and their visions differ. Finally, practical opportunities and realities occur -- you learn new things, you discover new market possibilities, and people through the year present thoughts and concepts to you worthy of consideration.

All of these points could lead you to rationalize that planning meetings are a waste of time and money, because the plan can never follow exactly as proposed. But that misses the point. Without a plan, you will just travel rudderless, allowing your emotions, strong-willed people, and individual self-interest to rule and define your decisions. You will get lost in the woods (hopefully we won't, this afternoon, as we find our way to the site.)

At the planning meeting, we'll have limited Internet access -- so there may be a gap in entries for a few days here.

Saturday, October 25, 2008

Discount, nah, "I raised my prices"

Someone started a thread on asking whether it makes sense to offer discounts to draw business during the recession. I really enjoyed this response from "Grumpy", (Thomas Kral, Reliable American, Inc.) in Chicago:

I increased my markups. Smart business dictates when volume goes down markup goes up to achieve the same profit. We are doing less jobs but making twice as much profit per job than we were doing last year, therefore we are doing a lot better financially this year.

Be the black sheep, and do the opposite of what everyone else is doing. There are guys out there pricing like they are going out of business, and that's because they are. I have seen quite a few competitors drop off of various directories, with new low priced competitors to take their place. Sure they are "busy" but are they making money?

What's the point in working for practice?

Do I offer discounts? Sure I run "sales" from time to time. I will sometimes offer $100 if the job site is a high traffic site and I can leave my signs up for 30 days. I am even have coupons on my website, but to be truthful very seldom am I ever taken up on these discounts coupons or offers. Another point that must be made, even in these trying economic times (if you pay attention to the media) very few people are asking me for discounts. Of the last 15 sales I have made not a single person has asked me for a discount.

Why? Because I built the value in my sale. Because I am actually offering more than most of my competitors. Because there are dozens of guys charging more and hundreds charging less, but very few actually doing a better job. Because I take the time to meet with the customer and explain all that in very minute detail if necessary. Because I know more technically than most of my competing salesmen. Because I treat my customers like people not like dollars. Because in most cases people respect me and begin to trust me after they have met me. I started the year with the same fear as everyone else, then I had a tragic death in my company (heart attack unrelated to any work activity). It was bad there for awhile, but when I RAISED my pricing, things started to click.

I discovered that the people who were hiring us weren't hiring us because of our price. I already knew that but forgot it because I was paying too much attention to the media Bull kaka that the sky is falling and we are in the midst of the next great depression... No I realized the people were buying ME not buying my price. I decided that the people would hire ME if I added $500 to the price, and I was right, so I added another $500 to the price and I was still right... and you know what? Our volume didn't go down, not one bit. Our volume has been lower than it was all last year since the start of the year, but our volume has held steady all year even after I raised my prices.

I really believe when you play pricing games you'll get price shoppers. Have you tried raising your prices before you lower them?
Other posters in the thread offer differing perceptions on the issue. Discounting may be part of the 'game' in marketing in some areas of the industry, and may be practical or responsible in others. The question you need to ask yourself is whether you really are increasing your volumes and profits by lowering your prices (honestly) or just playing around with 'discounts' as a gimmick (IE, raising your prices to 'lower' them -- as if the clients don't know the difference.)

In our own business, to get started, I began using a "net" and "gross" pricing policy for advertising. In the early days, before we built up trade credit, we offered the net rate for anyone who prepaid their ads and the gross for anyone who wanted to be billed. The net rate savings is 25 per cent. The system brought in cash.

Today, our discount is available if invoices are settled within 15 days upon publication. Now, our sales team and accounts collection person know not to be forceful or arrogant in enforcing the 'net' discount -- if you pay a little late, you still get the savings. But some people are late, and pay the extra 25 per cent. About a year ago, we analyzed our bad debt levels and discovered that the few advertisers who don't pay at all are almost totally offset by the advertisers who pay the 25 per cent net rate. In other words, because of the net and gross system, we don't have to budget for bad debt. (The Gross rate also solves the problem of advertising agencies requesting commissions. They can have their standard 15 per cent commission if we can bill at Gross.)

Discounts, then, have a place in the picture; just make sure there is a reasonable trade off and value proposition to justify them; not a desperate strategy to bring business in the door. I like Grumpy's attitude and values here.

Bubbles, brawn and brains

Why this recession?

I'll go out on a limb and suggest that the world economy is resolving two bubbles simultaneously. One, a real estate bubble caused by artificially low interest rates during 'good times' coupled with financial derivatives and mortgage gimmicks, coupled with another, in oil/commodity prices which went through the roof. These turned normal supply and demand equations on their heads as speculators and amateurs coupled with the 'pros' to do some truly strange things. And, as is typical during bubbles, the experts and media believe something permanent has changed and there is a new order of things changing the world (peak oil has arrived, for example).

Well, for oil, peak oil -- that is the diminishing availability of supply -- may have arrived, but of course the bubble changed the rules of the game causing (surprise, surprise) both investment in new technologies/exploration and conservation. Duh. Supply and demand. So when things got sort of back to normal, in other words, when people woke up and realized that the shortages were somewhat artificial (outside of refining and supply bottleneck issues), the price, not surprisingly, has started to crash. It will drop more, I think.

Same thing for real estate and construction. A sure sign of a bubble is when amateurs or neophytes become experts; when people begin leveraging and jumping through hoops to get in the game, and see paper wealth rising, and dream that the growth will go on forever. Then, the spigot turns off and everyone realizes it seems we are over housed and overbuilt, and, you get the next stage of the story.

Historically, bubbles end with crashes, but while you can predict these evolutions like night and day, you can't exactly predict how they will last/end/evolve. Anyone with that ability of course writing a blog would have a following of millions -- and the ability to create his own bubbles! (And I am definitely not that higher authority.)

Still, we now need to contend with two bubbles sorting themselves out and the possibility we have a whole lot of excess capacity in the construction industry right now. This suggests that some of the blog's readers will need to take deep cuts to survive, or will either need to leave or become highly innovative, tough, or both.

If you are younger, or relatively new in business, you'll know the advice: Focus on your good customers, keep your financial practices in good order, and observe solid, prudent, and creative responses to the circumstances. You should not bury your head in the sand or pour good money after bad.

And you've read the earlier postings reminding you of the 80/20 rule regarding priorities, and the simple fact that if you are in the top 10 to 20 per cent of your craft (reflecting a combination of passion, brains, and innovation), you will survive even the worst times because things don't stop completely even in the worst crashes/depressions -- some people still have jobs and businesses, and some even make fortunes.

But these answers cannot address your specific circumstances, your immediate needs, and your own priorities. These answers need to come within your own community, through relationships, connections, and your own imagination. (Beware of con artists -- they love hard times. I'm noticing for example a real increase in 'job offer' spam purporting to offer employment opportunities that somehow you (or I, or anyone who can read the email) would be qualified to do. . . sure, if you are ready to have your bank account cleaned out.)

If there is one difference between this bubble/crash experience and previous, it is the evolution of the Internet, with new worldwide communities and information sharing, at costs so low that even the hardest times and tightest budgets don't preclude access. Of course Internet messages are not oil in barrels or land and housing and commercial buildings, and if you are reading this blog, these are the areas of highest relevance to you.

Friday, October 24, 2008

The international problem

Today, I received this email. (I will only disclose the sender's name if I receive permission):

This email comes all the way from New Zealand. Here in the last five years we have had a big building boom with great profits to be made. I was lucky enough to start my business during this time buying small individual sections of land then designing and building residential houses one at a time. I would then sell the finished product buy placing it on the market on completion. This system was successful in the boom time but now I find myself in a recession where the risk is to high to continue doing this. We don't have referrals because generally we don't even meet the people that purchase the houses so my question is quite a broad one. What are some ideas to get client base and to source work from my position. Currently there is not a lot of work available and many builders advertising in the paper and on radio. Have you any unique ideas, from your experience, that I could draw on. Any help would be very much appreciated.
You can see here the problem's scale and international nature. I couldn't offer the writer much of a solution, suggesting if he built great buildings, to find through the records office who owns them and start developing relationships for maintenance, upgrades and referrals. What would you do in this situation?

Thursday, October 23, 2008

Are you delivering the "branded experience"?

This chart from Mel Lester's E-Quip blog suggests that loyal clients occur when their experience is consistent, intentional, differentiated and valuable. How do you get there?

Mel Lester in his E-Quip blog clarifies and elaborates on the challenges and responsibilities of businesses to create a positive "branded experience". He writes:
What is the branded experience? The most helpful definition I've found comes from the Forum Corporation. They describe the branded experience as one characterized by four basic qualities: (1) consistent, (2) intentional, (3) differentiated, and (4) valued. Notice that the first two characteristics are dependent on the provider; the second two are discerned by the customer. The branded experience involves a partnership of a sort between the two parties.
Few AEC firms get this right, Lester suggests, especially in seeking and understanding client feedback. Lester suggests that many people in the business think they are doing things right, but their clients don't agree. I haven't got a great answer yet to the client feedback question, at least for AEC and professional service businesses. Retailers and mass market organizations can use some rather easy-to-co-ordinate and manage online survey tools, which simply don't work (or attract enough natural response) for professional or lower volume/higher sales value businesses. Third party telephone surveys, or client feedback calls, certainly can be used, but these I find are often irritating and forced. But maybe these work, and are necessary regardless. The issue here could be similar to my former attitude regarding regular weekly meetings and annual planning sessions and retreats. I used to think these were a waste of time and money. No more. They are mandatory parts of our business systems, now.

The other shoes are dropping -- tough choices ahead

Ed Hannan's report in the PSMJ Resources Blog states the disturbingly obvious fact that architects in the U.S. are reporting project delays and cancellations and a sharp decline in new orders.

"With all of the anxiety and uncertainty in the credit market, the conditions are likely to get worse before they get better," said AIA Chief Economist Kermit Baker. "Many architects are reporting that clients are delaying or canceling projects as a result of problems with project financing."

That last statement from Baker is worse than the numbers themselves would indicate. When clients delay or cancel projects, that leaves architecture firms who have allocated resources to a project in the unenviable position of having to find something for their architects and project teams to do. Then it's down to the lesser of two evils: either let them go or risk having them sit around the office with nothing to do. Letting employees go is painful, but necessary to maintain a good balance sheet. Keeping them to look like the "good guy" only sets you up for a bigger fall later if things don't turn around.
Now, if you are an architect, you have an immediate problem. And if you are further downstream in the industry, while you have a little time to consider your situation, you can see the train coming through the tunnel. What should you do?

Here, wisdom coupled with experience teaches us a few lessons, but not all the answers. Simply put, each economic bubble and decline in history doesn't exactly mirror the ones previous -- policy makers and individuals 'learn' from previous experiences, adapt, and then (in an ironic sort of way) make the same mistakes, only differently. Your head may be spinning when you read this. But as you do, ask yourself the question, how could the supply and demand of oil be so out of whack that it goes to $147 a barrel and drops to $67 in a year. Surely supply and demand couldn't explain it all. And how can, realistically, some bad mortgages largely in the southern U.S. plunge the world economy into a crisis? Does this really make sense? Your guess is as good as mine.

Nevertheless, most of us behave rationally, despite the circumstances, and so when we start cutting back and saving, and protecting ourselves, then, bam, we make things worse overall, but if we don't do what we need to do, we are the first to go as things start falling apart.

So, yes, if you are an architect and you have surplus employees, you are going to have to make the hard decision to say goodbye to everyone but the core people you need, I'm afraid. And if you are one of these surplus employees, you will need to make the choice about whether you can find some other career to make your life, or you wish to start up your own practice. (And if you are in the latter category, and that good at rainmaking, business development and marketing, hopefully your current bosses will see that, and keep you, and promote you!)

Contractors, tradespeople and others down the construction cycle have a little more time to prepare things in an orderly manner. If your employees have business development/marketing experience or wish to prove themselves in these areas, give them room, a little time, and let them go to it. (You'll want to keep these employees more than anyone else). But you need to do what you need to do. Being an ostrich won't help.

Next,you may be scratching your head -- if business is being deferred, if projects are being cancelled, exactly where do you do your business development and marketing? I reported in my last blog entry Tim Klabunde's recommendation that you focus on your current clients, which indeed is the wisest advice. (Unfortunately, if your current clients are also cutting back, well, you can see how that advice doesn't help you from cutting back yourself.)

Should you spend more money on leads services and head hunters, marketing consultants and advertising? Yes, if you know what you are doing; no if you are desperately clinging at straws.

For example, if you are a retail-focused contractor and have found certain forms of advertising work in a predictable manner, you can safely increase your budget within your parameters to increase our volumes. If you know through references, experience, and good insights that the marketing consultant or business development employee is talented and capable, then go ahead and hire the person (find the money, somehow). But if you don't have systems to measure, to review, and to know what is right, you may be throwing more good money after bad.

One thing you should not cut -- in fact you should increase -- is your resources allocated to professional or trade group membership. If you are a SMPS member, or belong to your local chapter of your specialized or generalist association, don't cancel your memberships to save money; spend more on programs, activities, and the like. And especially (and this is vital) don't cancel -- but increase -- your marketing resources and budgets for the association members of your client markets. These association memberships -- and relationships -- may save your business (and if you are about to lose your job, help you find another.)

How important is this solution? Last posting, I reported on my near death experience caused by an ill-fated expansion out of market scope. But I can also report about one of my business-saving moves. As things declined, I considered cancelling the company's membership in the Greater Ottawa Home Builders' Association (then known as the Ottawa Carleton Home Builders' Association).

The dues seemed high -- hundreds of dollars a hear -- and these were supplemented by monthly dinner meeting fees. "Surely this is not an essential expense," I thought, then corrected myself. "This is my market."

As the early 1990s recession intensified, out of the blue, someone from the association phoned me. "We are starting a newsletter and would like you to bid the job," he said. "Is there any competition," I asked. "No, you are the only qualified member in the category." The association, indeed, practiced its motto: "Be a member -- do business with a member."

We won the contract to publish The Impact!, pricing the work really low.

We still produce the Impact! six times a year, and with the initiative of Chase and good references from the GOHBA, received a contract to produce a similar publication for the Niagara Home Builders' Association, Structures. Both publications are of real value to the associations and certainly our own business viability. (And rationally, we can look to expand to produce similar publications and other materials for other associations -- this is not wild-goose-chase expansion; it is in areas where we are knowledgeable, competent, and experienced.)

To conclude:
  • Be ready for a rough road ahead -- and do what you need to do. Don't act rashly, but don't hold on to staff in the faint hope of better times.
  • Avoid careless and irresponsible marketing expenses. If you are spending money, know what you are doing. There are few magic bullets out there that you don't already know.
  • If you have talented business development or marketing people, keep them. If you know of good consultants, or have had recent success with advertising or leads services, spend more on them. Just be wary of any 'answer' that comes to you out of the blue, with a price tag.
  • Maintain and expand your association involvement, especially at the client level. This is one thing you should not cut, even if you think it a non-essential expense. You are wrong if you do.

Wednesday, October 22, 2008

How to bring in business during a recession

Yesterday, as I prepared to send out the bi-weekly Construction Marketing Ideas newsletter, I noticed Tim Klabunde's blog posting, How to Market in a Recession, and set a one-line last minute link to his site. The Constant Contact survey tracking data shows that almost three dozen people linked forward to his site -- more than double any other topic.

So, clearly, this matter is vitally important to many people. Not surprisingly. If the overall economy is in a slump and your business is affected by the downturn (perhaps even more than the norm, considering how this recession originated), then obviously you need to be aware, and take measures.

Tim's advice of course is solid and responsible:

Focus on your existing clients and services. It is easy to want to expand into new markets during a recession. The problem is that during a recession work is much harder to come by, both in the markets you currently serve as well as in markets that you don’t serve. Expanding into a new market requires both time to enter the market and money: two things that are not readily available during a recession. As a result, a recession is not the time to expand into new markets, but rather it is the time to focus on your existing clients and services.

The goal during a recession is to focus on bringing work in the door immediately. Most marketers will tell you that the fastest, least expensive, and easiest way to bring in new work is to focus on your existing clientele (that is people you have already sold to previously, or others in the same industry that are familiar with your work).

Tim is absolutely right about the dangers of extension/over expansion during recessions. I remember the folly of this practice much earlier in my business life, during the 91-93 recession. With sales slowing down, I decided on two measures, one wise, and one dumb.

Wisely, I decided to see if any of our readers receiving the free local construction news publication would be willing to pay for a subscription to guarantee delivery. Some 200 orders arrived within a couple of weeks. Although subscription revenue continues to be a very small part of our business, the overall revenue from renewed subscriptions over the decades is not insignificant (and the cash really helped short-term).

My dumb mistake was to start another publication in a different topic from Construction. I thought "Food Service and Hospitality News" would work locally, and we designed a really good-looking paper, built a list, found some early advertisers, and sent it out. I even got some news coverage on a local television station. Trouble is, the effort to put this publication out drained cash and resources (scarce) from our existing publications, and pushed the business to the edge. And, perhaps spoiled by the great response to subscription requests for the construction publication, I really was disappointed to receive only six or seven subscription orders for the food service paper.

The crisis and cash crunch that followed nearly put me out of business. I pulled through with support from contractors and clients and (on a personal level) a mortgage holder who took an overextended property off my hands without pushing bankruptcy or messing my credit.

As challenging times return, I remember these points clearly. We've developed tools and tests to reduce market expansion risk (geographically) so should be able to grow, even in challenging conditions, but if you think I am going to carelessly go into the wild blue yonder to seek new clients, I'll remember well that food service publication and near business disaster back in the 1990s.

Remember, if 80 per cent of your business is from repeat or referral clients (and this applies if you are a recessionary start-up; your personal network is probably what will get you going), forays out of your market to dig up new business will likely fail. Tim Klabunde is absolutely correct here. Focus on your existing clients.

Tuesday, October 21, 2008

Casanova's story

I enjoyed this "Help Required" piece by Robin Seiger on Jeffrey Gitomer's site. You will, too.

Simple systems

How much complexity does your business need?

Well, obviously if you are building complex structures, or need to meet detailed specifications, you had better have these things right -- with appropriate fail-safe and verification resources. But if you are looking at marketing and general business management, then indeed keeping it simple makes a lot of sense.
You certainly need systems that transcend individuals, of course. If you are making all our business decisions seat-of-the-pants, or because someone with a strong personality (perhaps yourself) are driving things, then you need to take a step back and determine if your business is operating properly.

Far too many AEC business owners just go with the flow, and don't really look at how their business operates, and catch things when they are wrong. You need to systems and procedures to deal with these things.

I abhor administrative bureaucracy as much as anyone else, but have learned that regular and routine staff meetings are vital, and annual planning processes are essential. You also need a reliable employee evaluation system, clear policies regarding client service and communication, and enough phone lines! (Yes, I received a call a few minutes ago from a client who had been trying to reach us all day yesterday to get only busy signals. Ouch!)

Monday, October 20, 2008

Names, names, names

The Daily Record in Dunn, NC, has the highest market "penetration rate" in the country -- more than the population of the community it serves? How is it so successful: "Names, names, names". Should we follow the lead in our own construction publications serving North Carolina and Canada?

We are considering a major change in the editorial content and style in our publications. "Names, names, names" is the mantra -- and, added to that, pictures of people to go with the names. Pages and pages of this stuff -- not hard news, not serious controversy, just names and pictures, names and pictures?


There's increasing and mounting evidence that publications which focus on names and images succeed when publications that focus on 'important news' fail. Why is this? Basic marketing, I think. By publishing names and pictures, you become the centre of the publication, not the publisher or distant celebrities. You become the celebrity. With your moment of fame and recognition, you tend to want to read the newspaper, and if you have a business, to advertise in it.

The leading proponent of the "names, names, names" is the Daily Record in Dunn, NC.
This excerpt from Made to Stick: Why Some Ideas Survive and Others Die by Chip and Dan Heath, explains why:
Dunn, North Carolina, is a small town about 40 miles south of Raleigh. It has 14,000 residents and its workforce is primarily blue-collar. The local diner is packed in the morning with people eating big breakfasts and drinking coffee. Waitresses call you "hon." All in all, Dunn is a pretty normal place, except for one fact: Almost everyone in Dunn reads the local paper, the Daily Record. As a matter of fact, more than everyone in Dunn reads the paper. The Daily Record's penetration in the Dunn community is 112 percent, which is the highest penetration of any newspaper in the country. What explains this remarkable success?

The Dunn Daily Record was founded in 1950 by Hoover Adams. Throughout his tenure as publisher, Adams has believed newspapers need to be relentlessly local in their coverage. In fact, asked why the Daily Record has been so successful, Adams replies: "It's because of three things: Names, names, and names." In 1978, frustrated by what he felt was an insufficient focus on local issues in the paper, he wrote a memo to his staff, explaining his views. "A local newspaper can never get enough local names. I'd happily hire two more typesetters and add two more pages in every edition if we had the names to fill them up."

Look at how Adams communicates his core message. He says he'd hire more typesetters if the reporters could generate enough names. This is forced prioritization: Local focus is more important than minimizing costs! He also speaks in clear, tangible language. Is there a staffer who won't understand what Adams means by "names"? Adams can't possibly be involved in the vast majority of decisions at the paper. But his employees don't suffer from decision paralysis, because Adams is clear: "names, names, and names." Do we run the inspiring human interest story from the wire service, or the boring city council meeting with public testimony on the roadway bond issue? The boring city council story. It has more names, so it wins.

Two other examples of this type of publishing organization come to mind, one the SNAP Newspaper Group franchise, and the second, a group of excellent and well-established newspapers in Texas. In the SNAP concept, local franchisees contact with photographers to take pictures at community activities and events. These are run, page after page, without any significant 'news' content. Doesn't matter. People want to see themselves in print.

In Texas, meanwhile, Buddy Doebbler has built a vibrant and successful business publishing local construction publications in San Antonio (home base), Austin, Houston and Dallas. If you are looking for controversial or contentious issues, you will have to go elsewhere, if you want to see lots of local business profiles and pictures of construction company employees, you'll surely be satisfied. Doebbler has appreciated that indeed names, names, names, are effective and meaningful in publishing.

So, how will these insights change the way we do business? I'm tangling with this issue -- I've always believed that real journalism has a place in our specialized publications; thoughtful, independently written stories on issues of debate and controversy -- and I can't imagine publishing nothing but pages and pages of pictures of smiling people staring at the camera. Yet, we cannot deny the evidence that "names, names, names" is effective.

Should we seek a change -- publishing perhaps one really solid and well researched story, a news brief page, a sports page, and then, several pages with pictures and names? And if so, how and when do we implement the change? This is a topic for our upcoming planning meeting, but if you have thoughts or opinions on this topic, please feel free to comment -- or email me.

"Names, names, names" -- maybe this is the way to go. And if it is the way to go for us as publishers, how can this influence your approach to promoting and marketing your own business?

Sunday, October 19, 2008

Your unbalanced (marketing) life

This posting describes one of the most frustrating and rewarding challenges of marketing and entrepreneurship. You just can't know, from one day to the next, what to expect. Often business life is a roller coast of emotions and surprises -- you start your day with certain expectations only to find that at the end, you are living a different experience.

This time next week we'll be starting our annual planning meeting. Employees and contractors from North Carolina, and northern and Western Ontario will join local staff at a chalet in West Quebec. The entire process will cost close to $10,000 when all the expenses are added up, and the plan we implement will, within days, be changed in the world of real life experiences.

There is no secret that I previously thought this type of planning meeting reflected a colossal waste of time and money -- shucks, $10K can purchase some pretty cool toys -- and in any case, how can you plan the imponderable; when you think you know where you are going, but you never quite get there . . .

I now know differently -- the business plan is, in fact, the vital counterweight to the essential and real daily instability in business. The plan sets out rules for the chaos -- and guides us back to a safer place when we sometimes are tempted to let things flow with the wind, if only because things seem so chaotic in the first place.

The plan doesn't answer all the inconsistencies, but helps in defining the right choices to take.
For example, here is a question that arises from my visit to Nashville. The business plan makes clear that we can grow if we find the right people who who pass our standards for recruitment and selection -- and it doesn't much matter where they are. The unanswered question is: How do we find these talented individuals?

I have some but not all the answers to that question -- so, I expect, it will be raised at the planning meeting and we'll find an answer, or a way to solve the problem.

One thing is clear, the plan (2008) doesn't have a budget to pay for third-party recruiting support. Maybe it is a good idea, but if it isn't in the plan, how can we pay for it? That is where the plan helps with discipline, thinking and choices -- because otherwise, we might play with seat-of-the-pants responses. We might decide to put this recruiting expense into the budget, of course, for 2009, perhaps with other methods.

Most small businesses don't think planning is important and they make the same mistakes I made for years. Now, with challenging economic conditions, you need more than ever to build the annual planning process into your systems (and ensure you have systems for the important routines of your business). You can't afford to fly by the seat of your pants -- though, no matter what you do, you will find that things never work out the way you plan.

Winning awards

The Greater Ottawa Home Builders' Association has co-ordinated annual design awards for 25 years. In recent years, the awards ceremonies have been at the National Gallery of Canada -- an appropriate high-culture venue for this event. Hundreds of members attend, and with sponsorships and admission tickets, the event raises significant funds for the association. The awards competition also provides members a special opportunity to showcase their best work, and receive positive recognition and publicity.

You could tell who the winners would be in certain categories in the Greater Ottawa Carleton Home Builders Association (GOHBA) Housing Design Awards last night, well before the official ceremonies, and without any inside knowledge or cheating. When one company enters five projects -- and only that company enters -- within the category, the results are, well, somewhat predictable.

Of course, from the company's perspective, this makes absolutely logical marketing sense. They're pretty sure to win the trophy (judged by an independent judging panel) and can take home the publicity value, recognition, and enhanced client relationships which go with winning the awards.

Paradoxically, in other categories, where there are several potential competitors, including the region's largest builders and renovators, you could see surprisingly few entries -- and the largest home builders didn't even enter the competition. Why? They have much to lose and very little to gain -- if they enter, and cannot win the number of awards equal or greater than their size and 'clout', they appear as less-than-stellar in design and public marketing standings. As it is, one well established but not overly large designer and builder/renovator walked away with more awards than I've seen in years. Another renovator, sitting at our table, who had won several awards in previous years but didn't win a single trophy this time, said: "The judges like a certain style, and that style (and designer) will win."

Maybe. Could be, the winning designer's work is simply the best this year.

I'll of course write a comprehensive story and we'll publish many pictures in our local publications describing the winners, the success, and the special recognition (through a custom recognition award ) to the region's largest builder, who didn't enter any designs this year. This blog entry will focus, however, on the marketing process and why these competitions can be useful resources in your marketing tool-kit, with some do's and don'ts.

  • Enter the competition, and put your best efforts forward, if you are a smaller or otherwise unrecognized builder or renovator. The costs of entry are far less than the publicity rewards you will receive if you win, and you have little to lose other than your time and modest entry fees if you lose.
  • If you have a highly specialized niche and the rules allow, 'stack' your entries in categories so that you will almost certainly win the category. Your entry costs are higher, but your odds of success are great enough.
  • Use and exploit all the marketing potential of the competition -- share the news with your clients, employees, and community.
  • Enter if your reputation will suffer by entering and losing. Painfully, this is most likely to apply if you are really big and a generalist -- You could try stacking the categories as described above, but then you would be seen as a big operation bullying the contest and trying to rig it. It is simply best to stay away.
  • Enter half-heartedly, or carelessly. You need to give your best to these competitions, if you don't, you are not helping your reputation (or employee morale) and you are just wasting your employees' energies in the process.
Competitions and awards are probably one of the most effective and creative ways a smaller business or one just arriving on the scene can acquire credibility, reputation, and strength. So, yes, you should enter if you are satisfied you can follow the do's outlined above, and avoid the don'ts.

P.S. These observations apply to legitimate awards, through reputable organizations, where entry fees are modest and support valid industry organizations and causes. Some awards are actually money-grabs for commercial organizations, with truly high marketing fees/costs. I think these awards are dishonest, but acknowledge that many businesses enter them, and use their "winning recognition" in marketing materials effectively. These "awards recognition" businesses, of course, are simply taking advantage of the public perception of the award's validity. If you need to pay tens of thousands of dollars in rights fees and marketing materials to announce your success, however, maybe you could use that money to improve your product/service or value more effectively and wisely.

A special note: You should consider nominating your own business or your suppliers/clients in the Ontario Construction Report's Readers' Choice Awards. There are no entry fees for these awards, and you of course will gain all the publicity and marketing advantages of winning them if you are successful. See the nomination form here.

Saturday, October 18, 2008

Rainmaking, confidence and selling.

Glengarry Glen Ross is a classic example of stereotypical selling practices. Do they work? Sure, sometimes, but as Chase points out in his blog, you really succeed when you reach the point when clients start calling you -- or, more accurately, they are so comfortable doing business with you they don't feel they are being sold anything.

Chase, in his blog posting, "You know you are reaching to success when people start calling you" reports on the moment of success for anyone involved in sales and marketing: When you reach the point where clients call you, rather than you them, when you are invited to do business instead of selling yourself (and your soul).

Of course, we all know this is the way things are supposed to work -- You build your business reputation to the extent that word of mouth and repeat business generate most of your clients. The other conventional marketing resources: Advertising, canvassing and cold calling/telemarketing, and response to public bids/opportunities or use of leads services have their place and presumably can top up your numbers (or help you to get started).

This leads to another paradox; if the most effective selling is achieved without pressure, with people calling you rather than you forcing your way into their space, does your business need salespeople or can you get by with some friendly faces and good technical or trade skills?
Here, we discover another irony -- for most successful contracting and AEC professional businesses, "selling" seems inappropriate and most do not hire or contract with people who define themselves as sales reps. But I don't know of any contracting or professional business that survives for long without "rainmakers"; the very special professionally/technically qualified people with a gift for bringing in the business (sales!)

Of course, at the most fundamental levels, company founder/principals handle these selling responsibilities, but when they engage in the business development work personally, it often doesn't seem or feel like "selling" either to themselves or their clients. This is because as business owners (or senior partners) we are thinking from a perspective of confidence and equality with our peers. Also, we can see the entire picture, hopefully, and thus draw connections and links that others may fail to see. This type of "natural selling" is so subtle that it doesn't feel like it is happening -- but it is wonderful to implement in practice.

Perhaps the weakest and saddest sales reps are the ones who see the owners and "decision makers" as mysterious all-powerful forces with some superior status or position, who then proceed to call rotely to "everyone on the list" hoping someone, anyone, will buy! These individuals just don't get it. Rainmakers are confident -- and competent -- in our speciality. We are experts within our knowledge area, and regardless of our trade/profession, we exude this confidence to our business owner counterparts. They sense this confidence, and do business with us as partners/colleagues, not as "clients" or "decision-makers".

For example, the owner of a company that paves driveways may have barely a high school education and look way out of place in a suit and tie, but when he appears at the doorstep of a senior business executive whose driveway needs paving, he, not the executive, is the expert on paving driveways, and he knows it. And if he has done his work well, he will have served or worked with some of the executives peers, who he can reference naturally. He takes the lead within his area of knowledge and the other -- and I use the word "other" deliberately here -- executive understands this, and defers/delegates to him within his area of expertise/responsibility.

There is one other important thing here, which really complicates and challenges the picture. This seamless, seemingly 'unselling' selling requirement for any business needs to be combined with some thoughtful and absolutely non-bureaucratic planning and goal setting. You need to know and be able to project/interpret your results, and set targets and visions for your success. The seemingly spontaneous success, when people call you to order, or seem just to buy without any selling effort, needs an underlying structure and planning process, or you will fly by the seat of your pants and suddenly crash when market conditions change. You need to know why things work, and how to manage the process, if you are to succeed in the long term.