Buying or selling: The decision-maker's perspective

Today I spent several hours on telephone conference call meetings.  We were discussing choices regarding the websites for our imminent U.S. market rebuilding.  Much of the time, we focused on a well-crafted and designed proposal from a service contractor who proposed to deliver the new websites, in significantly enhanced format to our current sites, at a price approaching $10,000.

I didn't have a problem with the quote, the price, or the website developer's expertise, talents and relationship with one of the company's key contractors.  But equally I knew that our entire U.S. project depends on keeping costs rock-bottom low.  By the end of the afternoon, I had confirmed that we indeed have the legal right to "clone" existing sites (developed by the same organization seeking the $10,000 contract) for a price tag in the hundreds, rather than thousands, of dollars.

In fairness, we'll go back to the contractor and ask for a re-quote based on the simple "clone" model -- no extras, no goodies, no bells and whistles.  I'll probably be willing to pay more than the rock-bottom copy-cat service price for the work, and I want to allow our contractor to maintain good relationships with the service provider.

Meanwhile, almost coincidentally, I received a strange mass market email proposal from another service provider, who purports to have a list of more than 100,000 names of contractors and others, and who also designs websites and the like.  It turns out that the contractor who works with us closely -- and recommended the $10,000 contractor -- has had some previous business dealings with the other service provider, who I know from earlier communications.  Neither has much love lost for each other.

In this conversation, the competing service provider suggested an elegant and inexpensive solution to our website building process.  We could develop a scalable system with original designs and the like and all the bells and whistles, for a base fee of $1,500 plus $300 per additional website.  The system would be relatively easy to administer.  Much less expensive, of course.

But could I accept his proposal?  I need to live and respect the other people in this story.  The individual closest to me and my business doesn't have fond feelings for the service provider (and the feelings are reciprocated.)  

Of course, I can take this person's suggestion and then prepare a RFQ, and post it publicly on an international service like elance.com.  Or I can use my existing contractor who helped produce clones of the original site for a fee of about $200.00 each.  

Decisions.  Decisions.  Clearly, as well, the choices I'm making here are not shaped entirely by the good will and initiative of the company's employees or contractors, my own experience, and alternative service providers' recommendations.  Price is a factor.  If the original $10,000 proposal had been more like $3,000, I might have said:  "Let's do it -- it is more expensive (perhaps 50 per cent more expensive) than the lowest cost alternative; and may not even be the best choice technologically . . .but we know and respect the supplier and wish for a seamless experience."

But $3,000 is not $10,000 -- and the possibility of achieving a higher quality result, at least in theory, for $2,000 or even $1,500 remains in place if we are prepared to do some research, take some risk of failure or a bad selection decision, and possibly the need to ruffle some feathers.

I share these perspectives because they show the challenge of virtually any marketing or selling initiative.  You can't just "rely on relationships" and you may in fact be setting a fair price for your services (I don't doubt that for many businesses, the $10,000 proposed fee is quite reasonable).  You may be frustrated because you can't talk directly with the decision-maker or, even more frustrated because, when you speak with the decision-maker, he considers the relationships with staff, contractors, and your reputation -- and you can't overcome this baggage.  You may be in a situation where you provide enough information to cause the potential customer to ditch the original proposal, and take your information to achieve lower costs -- with work done by third parties.  (In other words, you've acted as a totally unpaid consultant.)

I don't think I had intentions of behaving unethically or playing people off against each other this afternoon.  In fact I felt quite stressed by the conflicts and would have liked to find a simpler solution.  Nevertheless, when I am spending company money, I want to be sure we are receiving the best value -- and at the end of the day, I felt that "none of the above" applied to the people who were trying to sell me their services.  We'll get the job done, but not the way the marketing script-writers had hoped.

Silence is golden, sometimes

In the last couple of weeks, I've seen a couple of examples of why we should never break the rule: "Never speak ill about your competitors."

In one case, a web designer and Internet marketing expert of undeniable credentials and capacity stepped over the line and had less-than-wonderful words to say about another website design/management service.

In the second, I offered candid, first-hand observations of a publishing competitor.

We were both communicating in the remodelcrazy.com forums; and we both (independently of each other) have earned our place of trust and respect within the forums.

In the context, we are experts within our respective fields and we "should" know what we are talking about.

But did our words of wisdom about our competitors carry any weight? Not unless you consider it a weight against us.

I observed this rather disillusioning result not from my own frame of reference, but when the web publisher spoke his mind. My immediate reaction: "This guy has lost points, who is he to say these things, and isn't that competitor really not so bad, in fact, maybe quite good."

So what are the forum readers thinking when I took a shot at MY competitor?

I'm pretty sure that both the web designer/marketer and I know the rule "Never speak ill about your competitors" by heart, but we felt comfortable (and trusted) enough in the closed forum environment to speak our minds with some candor.

It didn't work. It is too painful to draw attention to the specific responses, but you can read through the relevant forums and will see we didn't win any brownie points for ourselves, or really do any harm to our competition.

This leads to another question, then. You know you have a bad competitor, and you know someone is considering using their services. How do you get them to see the light you know from hard first-hand experience?

Maybe you have a better answer than silence or even sincere praise (rather hard to do, eh). Right now, I don't.

Tarred by others feathers

One of the biggest challenges in business is when your business practices (and brand) are adversely affected by the ill-doings of others, such as your competitors. I noticed this challenge yesterday on the closed list serve from the Society of Marketing Professional Services (SMPS) group for Certified Professional Services Marketers (CPSM).

One member sent an email to the group with this question:

Would like your opinion regarding National Publications offering to publish a feature article on your firm. The caveat is to supply them with a listing of your firm's vendors/suppliers who they will then contact to obtain advertising space.

Although the contact at the publication assured me this is done in a professional manner (no hard sales involved), I'm not sure that I am comfortable with this tactic.

Several members responded, some telling of horror stories of suppliers being badgered, and publishers producing terrible and useless publications. A few took a more even-handed stance, pointing out that if the feature is well written and distributed to the right people, it can truly be effective for the business.

I felt like the lion in a china shop, however, as our business is producing just these types of features -- and I know that the complaints of the angry CPSM members have some validity.

Last summer, for example, one of our own clients reported he had been burned by one of the less-than-ethical players in this business. He had experienced working with us, and so thought the other publisher would conduct business in the same manner.

The challenge of course is we can't dictate the ethical behaviour of our competitors, but their mis-doings affect our brand. We certainly can't name or criticize them. (However, here our client is being helpful; when we hear from other clients about the competitor plying the trade, we refer the potential customers to him a first-hand and wonderfully negative reference.)

The unethical behaviour in our industry is possible because sales can, to some degree, be conducted in a hit-and-run manner, especially if you are publishing a "national" publication and are able trap your business victims in many different locations, at least once.

As I write this note, an industry association with whom we have very good working relationship sent me an email asking about a publisher who appears to be representing a project in co-operation with the association. The association's employee immediately emailed us and two of our competitors to find if the person works for us. I'm sure the dishonorable publisher will be warned off.

I don't have a magic solution to this problem, which might affect your business, especially if you have several less-than-ethical competitors in your market space. Probably our best defence is simply to maintain our own standards. We benefit, like most successful businesses, from long-term repeat and referral clients, and by participating and contributing to industry associations.

The competitive impetus

Yesterday, I received a call from someone who noticed a long -established competitor is responding to his group's initiatives with changes and improvements to the competitive site.

We agreed that this can be seen in a flattering light; if your ideas are good enough that they are being copied, you are on the right track. Nevertheless, the question is, what should you do when you see the competitor sniffing around in your "space" and, seemingly, stealing your ideas.

One solution, not recommended except for those with very deep pockets, is to bring the lawyers out, as has happened recently with Reed and McGraw-Hill Construction. These mega-corporations can afford a few million dollars each on legal fights without worrying about the dollars and cents of litigation (these fights are lawyers dreams for billable hours!)

I decided to engage a competitor in the legal framework only once, about 14 years ago. The competitor was trying to stomp on me AFTER he broke a buy-out agreement, which resulted in the voiding of the non-competition agreements. I won't forget the day the process server arrived at my office, with a writ claiming $1 million in damages. I called friends to recommend a lawyer, and they all recommended the plaintiffs!

Fortunately, my affairs were structured so the other publisher had to sue the local Board of Trade (Chamber of Commerce) as well as my business, making it rather messy for the plaintiffs, also business-to-business publishers. As well, my lawyer confirmed to me that I had actually acted appropriately throughout.

In the end, at an injunction hearing, the judge issued a split ruling: Clearing my business of any liability (and awarding costs), while finding the Board of Trade and its then president had erred.

The story ended with the Board of Trade paying about half of my legal costs and its then-president resigning after he was picked up in a prostitution sting. I had nothing at all to do with that, but it certainly added up to an amazing business year.

So, while lawyers and legal actions can create competitive chaos, are there other, more effective, responses? Here are some other ways to handle competitive challenges:

• Be true to yourself, but don't be afraid to copy good ideas (that aren't patented or protected by trade secrets you've cracked, of course) and implement them in your own business.

• Remember you have a primary niche and market. You are generally wisest to focus on your market and maintain a leadership role. The challenge comes when an extremely well-funded competitor tries to invade your space. You can't generally invade their space in response, so your best approach is simply to be much better than they are at what you do.

• Connect and relate to your current clients better than ever, keep your marketing and product focus high, and constantly improve.

Healthy competition will improve your business and sustainability. In my years in business I've seen "brilliant" competitors come and go, and usually the failure occurs when their ego gets ahead of their business.

(Oops. Is this speaking about me? Yes, last year I felt smug as I watched a competitor crash and burn but beneath the surface I was making many of the same mistakes -- fortunately we caught them in time, but it has been a scary ride.)

Winning Awards: Scale, quality and marketing

My wife and I have attended the Greater Ottawa Home Builders Association Housing Design Awards Gala for 17 years. We have reason to be there, even though we aren't home builders and have never designed one. With my ongoing responsibility to publish the association's internal newsletter, The GOHBA Impact!, I'm there in a journalistic capacity.

However, with a week before our firm publishing deadline, and the fact the awards are extensively covered by the local daily media, I don't need to "work" that hard as a journalist during the evening. We can soak up the atmosphere and, today, I can discuss some general concepts about the awards and award-winning process, without naming individual businesses. (I'll write the appropriate, totally positive story next week.)

In general, awards competitions (if properly and fairly judged as the GOHBA Awards are), are incredible marketing equalizers. You could put the entries into three core groups:

1. Smaller or high-end boutique builders and designers who submit selectively projects they truly believe are really the best in their categories;'
2. "Category stuffers" -- larger niche businesses who enter multiple entries within specific categories where they think they have some chance of winning or which suit their marketing framework/focus.
3. Larger builders who may try to emulate the ideals of (1) above, but simply don't have the oomph, in part because of their size and scope.

I'm not suggesting anyone is wrong here -- the reality is that really great work requires individual creative talent and ability and is hard to replicate and expand on larger scales. Boutique high-end builders and designers are likely to walk away with more awards in the first category simply because they really do amazing work which dazzles the judges (and they probably take as much care in their entries as their original work.)

Category stuffing makes plenty of marketing sense, especially if you have a significant marketing and advertising budget. Entry fees aren't that high, and if you are the only company in the category, with multiple entries, you are sure to win (and you can then compare your work objectively to see why one project succeeded above the others).

Of course, it may be somewhat embarrassing in the room when you are competing against (1), and if you have three entries within the category and the one boutique project wins against your force. But realistically, the people in the room aren't your potential clients, they won't see the competition, and you only need to announce and trumpet your success if you win.

Finally, the third category, large builders and renovators with multiple projects, often fare poorly in these competitions, simply because it is hard for them to convert volume into the dazzling quality that appeals to judges. Of course, the awards organizers (and judges) still found ways to recognize and respect the builders who have contributed significantly to the community and the association's budgets. These builders know they can't really expect to do well at the awards, but are good sports about it.

Can we learn some marketing lessons here?

• I've seen astounding and truly exciting business growth stories from smaller builders who won key awards. One modest builder, who won the "People's Choice" Award a few years ago, saw his business virtually double. There can't be much better return on your marketing investment: An entry fee, and you win the recognition (with the support of the awards major sponsor, the Ottawa Citizen), of greatness with plenty of free publicity.

• Of course if you only enter in one or two categories where you truly think you are great, but win nothing, you end up with nothing (except perhaps a slightly bruised ego.) You have the choice of following the third point.

• Category stuffing, when allowed by the rules, is a wise marketing move. You can broadcast any win you achieve, and ignore the results if they aren't so great. If you are spending thousands of dollars on advertising and marketing, the entry fees are not going to break your budget.

(My views have changed on some of these points in the past year. See last year's posting on the same topic.)

Competitive intelligence, marketing, and confidentiality: The Reed - McGraw-Hill Lawsuit

A story of competitive intelligence with marketing intent has come to earth with the filing of a lawsuit by Reed Construction Data against McGraw-Hill Construction Dodge.

The suit charges that Dodge has unlawfully accessed confidential and trade secret information from RCD since 2002 by using a series of fake companies to pose as RCD customers.

The lawsuit, filed in the U.S. District Court for the Southern District of New York, seeks an unspecified amount in lost profits and punitive damages, trial by jury, and injunctive relief as a result of Dodge’s misuse of RCD’s proprietary construction project information, Reed announced in a news release.

The complaint charges that Dodge hired consultants to subscribe to RCD’s confidential data under the cover of fake names and companies. Dodge then allegedly manipulated the information to create misleading comparisons between Dodge’s and RCD’s products and services in an effort to mislead the marketplace.

The complaint cites eleven counts of misconduct by Dodge, including fraud, misappropriation of trade secrets, misappropriation of confidential information, unfair competition, tortious interference with prospective economic advantage, violation of New York’s general business law, violation of the RICO Act, RICO conspiracy, monopolization, attempted monopolization and unjust enrichment.

“McGraw-Hill Dodge has used our information to deceive and confuse the market about RCD and the data we offer,” said Iain Melville, CEO, Reed Construction Data. “This was an attempt by Dodge to force RCD out of business and obtain a monopoly over the construction data industry.”

The story is described in greater detail in the actual court filing, which can be downloaded from Reed's site here.

Business to Business Magazine reported this response from a McGraw-Hill spokesperson:

“We intend to vigorously defend ourselves against Reed Construction's legal claims. We take these allegations very seriously and are committed to ensuring that all employees comply with our Code of Business Ethics.”

The two competitors have been battling within the construction information marketplace for years. The Reed lawsuit alleges that McGraw-Hill used data obtained from unauthorized users hired by McGraw-Hill to adjust its services and adapt its marketing programs to make it look like it was delivering a more useful service. Reed's contract language includes specific provisions regarding non-disclosure of confidential information.

Life is not fair (and therefore, why you should be aware of construction marketing)

Tonight, I spent the day and evening at the Annual General Meeting of the Ontario General Contractors Association (OGCA).

Partly an expenses-paid break (for those fortunate to have the money for such indulgences), partly an informative event with insights and observations and lessons, I looked a little beneath the surface and remembered an life lesson: "Life isn't fair, and if things are fair, you will wish they aren't."

The issue that brings this concept to life arrived in my email yesterday. A general contractor, interviewed for an unrelated story, told me about his problems with the pubic bidding process at the Ontario Realty Corporation (the crown corporation which administers provincial buildings.)

He said the number of contenders for simple jobs had grown truly outrageous recently. More than 50 prequalified contractors are bidding for some jobs, jamming up site meetings, and making it virtually certain that any regular and well-established business would lose to a low-ball offer from someone barely eking out a living, with no overhead and little sense of what needs to be done to earn a fair profit for the work. (Certainly, the contractors winning this sort of public work would not be able to spend a few thousand dollars to bring their wife to a weekend in Ottawa for the OGCA conference -- in fact, most could not even afford the association's membership dues.)

Trouble is, as the contractor reported to me in a letter he had sent to OGCA President Clive Thurston, the excessive competition resulted from the OGCA's negotiations with the ORC for a transparent and fair bidding process. Previously, general contractors felt they had no chance at the public-sector work as service providers and third-party contracting organizations played games and favorites. How could businesses which played by the rules and really could do the jobs break into the closed circles of qualified bidding lists and restrictive tendering?

Clive Thruston confirmed today the ORC has listened to the association's concerns about transparency. Trouble is, the Crown Corporation is responsible for many smaller projects, which require limited bonding capacity, and which are within the range of many smaller contractors. And, like lemmings, these contractors are chasing after the dream in the open bidding process -- with dozens of bidders competing for each simple job.

Thurston acknowledged the contractor complaining about problems has a point; this excessive competition discourages reputable contractors from bidding, and could result in badly managed jobs with bidders under-pricing their work. He said the optimal number of bidders for a job is six to eight -- this allows for fair competition, but not the craziness when 50 or more are competing.

Solutions might include some system of rotational qualification. As well, Thurston noted, contractors are evaluated on their past performance, so if they mess up once, they won't be back again.

Many small construction businesses can perform the same services. Without marketing or relationships to differentiate themselves from the others, their only option is to compete on price for openly publicized projects.

There is only one escape from this trap: Marketing and sales. If you can differentiate yourself from the others, if you can stack the deck to your favor, if you can win the opportunities that are invisible to others, and discover clients who wish to do business with you because they want to, despite all the competition out there, you can earn a fair price, make a profit, and afford the conference fees which allow hours on the golf course and five course dinners.

Otherwise, prepare to struggle, hoping to "earn" less than you could if you took a job at a fast food restaurant.

Life isn't fair.

The great competitor

Some days, you can smile about your competitors' misfortunes. If you listen carefully, you can learn why they failed, so you don't repeat their errors.

Paradoxically, however, as I gloated on hearing the competitors' bad news, I felt a slight shudder of anxiety -- the very wrong things the competitors had done that lead to their losses, I had done myself, with undoubtedly negative consequences. The only difference is one of degree.

Rome is burning. Let's build a mansion.

A few years ago, as my business's downward spiral accelerated, we took a family vacation/business trip, visiting a community where we had some employees in a once-thriving (but now declining) market. I took a few hours from the vacation to meet with a key employees, remarking (somewhat arrogantly) that, since this is a valid business meeting, I would claim two nights of travel, plus the direct costs of getting to the meeting, as a tax deduction.

Three weeks later, realizing our business had reached the red line, I gave (short) notice to the employee and made an enemy for life.

He's losing his job, and I'm taking vacations -- and claiming tax deductions as well -- why wouldn't he be embittered.

My competitor took things a step further. As his business hit a rough spot, he devoted his time, resources, and cash from his business to build a really nice home for his family. Trouble is, he didn't bother paying his taxes. The tax authorities, I learned today, seized everything he owned. His wife left him.

We have a relationship. Let's just use it to make some money.

Most of our business sales arise from understanding supply chain relationships, and ensuring we provide our services at exactly the right place where these relationships count the most.

This is powerful stuff, but we've pushed things too far, without respect for the underlying consideration that, when all is said and done, we must deliver more than we take. Thankfully, this kind of business-damaging behaviour can be repaired, when you realize that the relationship should always be founded on respect for the needs and values of your clients.

Today, I read some fascinating correspondence from a competitor to a third party who had lost business and respect by pushing, arrogantly, for sales without communicating real value. Most interesting are the desperate emails when, after losing the business, the competitor tried vainly for a second chance.

We thankfully have received second chances, but the damage control and repair took several years. We don't take our relationships for granted and look, always, at how we can give rather than take.

Delegation is great. I'll focus on fun stuff.

A few years ago, I thought we had a thriving, viable business with everyone working well at their tasks. So I spent time on things that were more fun and rewarding for me, including (this seems really dumb now) fiddling with an airline's frequent flier program and fighting an Internet-based ponzi scam. At the time, I could rationalize purportedly good business reasons for these distractions, but failed to see that the priority should have been the business.

My competitor, meanwhile, while building his mansion, failed to show up in the office, leaving his employees to do all the work. Trouble is, he wasn't paying his bills or remitting statutory deductions, and his employees were collecting prepayments from clients for services where (after spending the money on personal needs) he didn't have the ability to deliver the end product.

We're picking up the pieces now, delivering some $10,000 in free services to our competitor's victims, one of which is a three-generation business that has survived good and hard times.

Today, as I think about my competitors' failures, I'm thankful that in making the same mistakes that led to their destruction, I didn't go quite as far or deep down the slippery slope; and caught and learned how to change in time.

You may have the same choices.

The competitive challenge

Las Vegas architect Craig Galati in his The Heart of Business Blog reports how intense competition has become recently in the U.S.

My firm recently responded to a request for qualifications to provide architectural design services for a library addition and renovation project in a small rural town. The project is approximately 10,000 s.f., a small project by most standards. The library district received thirty-five submittals for the project. Thirty-five submittals for this small project!

In my subsequent discussion with District staff, I was told that the District had hoped to receive 5-10 submittals. As if I needed more evidence, this is clear proof of current economic conditions — the competition is heating up.

How do you battle and win in this enviornment: You need to build relationships, he says, and you need to play by the rules. And you need to be creative, different, and be prepared to take some risks.

I have found that during slower economic times, there are always great innovative breakthroughs. Perhaps by looking critically at what your firm is doing, you can find an innovative strategy. Many firms get complacent during good times. Perhaps increased competition will get them to start thinking creatively again and take some risks. A friend of mine told me about a recent interview in which Tom Peters states that most people waste their money coming to see him: that in an audience of 500, “there are (only) four who are on the verge of doing something really interesting, whether inside or outside the company.” What are you doing that would be of interest to your potential clients?

This is solid advice. Still, I'm thankful that my U.S. relationships (and market) are in the Washington, D.C. metro area rather than Las Vegas, these days. If I'm going to go overboard in puns, if I wish to place a bet, it would be on the Government -- at least until the economic cycle rebounds.

Recession pricing

Here are some recession-smart approaches to increasing your marketing effectiveness, while controlling your costs.

Consider co-op advertising support
Many of your suppliers will help you out on your marketing costs if you are using their products/services. They may provide brochures, printed materials, or (even better) subsidize portions of your paid advertising in other media. They have good reason to do this: If you sell more of their products/services, they'll get more business. They may be able to also suggest where they've seen good marketing results in various media; saving you some trial and error costs.

Consider bartering or contra-trade, where appropriate
While cash is always king, and thus I am not really in favour of participating in organized barter exchanges or groups, direct trade makes sense when both parties to the transaction can benefit and the hard costs involved are low. As an example, we frequently trade advertising space for relevant trade show booths -- the trade show obtains valuable publicity, and we gain access to the show without draining our budgets (this is especially useful for our business because the other exhibitors, of course, can be future clients.) Recently, we noticed an advertisement for a local hotel seeking to promote itself as a spot to be used by contractors and construction crews. We have an employee who must visit the city every two weeks and stay in hotel. Not surprisingly, the hotel can see some value in exchanging space in one of its rooms for advertising in our publication; and we are happy to save the cash cost of the hotel rooms.

Encourage competition among your suppliers
Loyalty and respect are fine, but if another business can provide the same service at and quality at lower cost, should you not find the savings? your existing suppliers have choices in this situation: They can sharpen their pencils and reduce their prices, or create enough value-added services that you are ready to pay more (because you are receiving more value).

Raise, don't lower, your prices
This one is counter intuitive but you can often get more money for the same amount of work by ensuring you are delivering great value and service; often, even in the current environment, you may be underpricing some of your products and services. If you can raise your prices while your costs decline, you may be able to offset lower sales volumes with higher margins, and thus retain your profitability.

About criticism

Seth Holdren in his blog posting "Marketing is a People Based Game" reminds readers that you never win by criticising, especially the competition. Almost inevitably, this type of negativity backfires or has unintended adverse consequences.

So what should you do when your competition plays dirty, unfair, or you see something wrong? Point out positive, practical solutions, or suggest a remediation that will truly help your potential client.

(Of course it is fun when potential or former clients come to you slagging the competition and telling you that they really want to do business with you because they know you will get it right. When that happens, you know you are on the right track, in both your business and marketing practices.)

Getting your (initial) marketing signals right

Middle Tennessee isn't Malibu, but it certainly is beautiful. Ironically, and unrelated to this posting/question, I have a sixth sense we will be working in Tennessee ourselves in the not-to-distant future.

Yesterday afternoon, a contractor responded to my Construction Marketing Ideas e-letter offer to provide answers to this question: "What is your number one construction marketing concern?"

I did have a question that you might help with. It may be a little basic, but here it goes. What is the most effective way to distinguish my company from the rest of the competition here locally? I am a builder that has spent 25 years in a very high end residential market (Santa Monica, Beverly Hills, and Malibu, Ca) and moved to an area (Middle Tennessee) that has a lot of “builders” that don’t even build to code (no code enforcement in the counties).

The demographics are thankfully changing with people moving in from parts of the country that are more demanding. How do I then get the message out to potential clients that there is a difference in quality and that the additional costs of building a quality product will result in a net gain for them? Many of these clients hire the “locals” thinking they are getting a good price only to find they were really buying an education in who not to hire. Any ideas that you can offer will be appreciated.

Fair question, so I took my first step in answering any question -- seeking a little insight into the person making the inquiry. I Googled the contractor's name and found a couple of tiny references, including one to what appeared to have been an expired or cancelled free ad posting. No website, and the person who had written me had used a regular personal Internet account.

So how does he expect to find any business? Has he taken even the first step to differentiate himself from the local folk whose marketing probably succeeds even if it is as bad as the now-infamous handwritten scratch note we found at our door in Canada some months ago?

Now, it is important this contractor not rush to put up a crappy website -- this requires thought, effort, and planning (or a worthy consultant who knows how to set up contractor websites!) But I think the stuff you could post here would include testimonials from previous clients (even out of state, if they are willing to stand behind their testimonials), some basic images showing the quality of his work, and if he wishes to get more sophisticated, some other differentiating marketing material. You don't get in the game unless you play on the web these days -- especially if you are looking for clients willing to pay a little more than the bare minimum.

Here is a relevant thread on the Contractortalk.com forums describing: What makes a good company website?

Note, simply having a great website still won't solve the problem here, which is even deeper. Marketing to the high end takes reputational excellence -- word of mouth is going to define success here -- and of course you can't get much word of mouth unless you have some clients in the first place.

So, it seems, he may have the classic chicken-and-egg problem. "I"m good but don't have local experience/reputation. But no one will give me that experience/reputation without my needing to beat my head against the wall on price. So what should I do?" Well, you could go on price, selectively, if you sense your early client(s) would be true centers of influence -- but the danger here is you are setting yourself up for more of the same. The other solution is theoretically really smart marketing differentiation/planning, but I doubt this contractor is anywhere near that level -- at least from what I can see of his non-website. (Unless of course he has this in mind and is actually planning and working on his strategy.)

So, is there anything else I can suggest? One possibility is joining the local Home Builders' Association. Membership fees are likely not that high, and the contractor will gain a network of contacts, the opportunity to tie in with additional resources and, if he really works at it, assume a leadership role.

Finally, the letter writer needs to be realistic. He is in Tennessee, not Malibu. Although marketing principals are consistent everywhere, markets are not. He may be able to differentiate his place in the market by selling to new immigrants to Tennessee wishing the higher level of service/quality from his former West Coast location, but is going to need to communicate to these new arrivals his expertise, professionalism, and that his pricing, while a little above the norm locally, gives a whole lot more in quality. But he needs to dress the part. Where is his website, business phone, well appointed/decorated company van/truck . . . where are the signals to the potential client that he will indeed deliver what he says he will deliver? In the long term, the delivery is always the most important thing, but at the start, you have to have your signals right -- if you don't have a pre-qualified and ready-to-go client base, that is.

Great games -- and the Great Game of Business

Eric (top left) with some of his hockey team mates just before the tournament final. His team came in second out of 15.

Mid-way through Eric's Pembroke hockey tournament, I took a few minutes to read a couple more chapters of Jack Stark's The Great Game of Business. Stark's thinking -- of encouraging employees to think and act like owners (in part because they can actually become owners) of the business -- intrigues me and reflects my values, largely. I certainly know simply handing ownership stakes to employees doesn’t work; ownership, in a tangible rewards sense, is very much a delayed gratification exercise and if the employee doesn't 'get it', the concept really doesn't sink into the mindset. Equally, 'gaming' employees with motivational gimmicks and incentives leads us down a slippery path of expectations.

I like a lot of Stark's suggestions for solutions to these dilemmas, though I’m not sure he has found the magic answer; there are elements of instability and impermanence in his business model, and long-term sustainability is a real question. Even in the apparently 'perfect' employee owned models; if you dig deeper into the actual workings of the businesses, you can see imperfections and flaws -- and these are rooted at the most fundamental, human, level. We aren't all the same, all the time, and even if we have similarities, we change over time.

And we can't win them all. (Don't tell this to the preachers of positive thinking and self-talk of course.)

Take that hockey tournament, for example. We took our boys on a two hour drive north of Ottawa to Pembroke for the team's first out-of-town tournament (in fact, as we are a house league team, this is our first ever overnight tournament experience.) On Saturday, the team won its first two games, and Sunday morning the third, meaning we advanced to the semi-finals. Then after a nail-biting overtime win, the kids won the semi-final match, moving us to the grand finale -- the championship game. Parents and kids found our time in Pembroke extended as we prepared to win.

In the end, our team lost 4 - 3. We were left with the consolation prize; T-shirts with "Finalists" logos and a second-place trophy. But in the competitive spirit in the dressing room, you couldn't find much joy in being second. Competition is like that; when you are fighting to be the best, coming in second doesn't seem that great, even though you had to beat out 14 other teams (out of 15) to do it! (Today, however, Eric still had some pride in wearing the "finalist" T-shirt, and he certainly is fit from all the exercise yesterday.)

Certainly, however, I agree with Stark that games work in bringing out the best (and perhaps in some circumstances, the worst) in people. For the tournament, parents had to pull together resources, time and money -- and make sure their kids didn't forget other essentials, like school and homework. Both parents and kids had to overcome logistical issues and challenges -- hockey is one of the most energy-intensive sports; it is a challenge to play one game in a day; take it to three -- at championship level -- with overtime -- and you are really going to need overdrive. So it may not be surprising that Stark suggests one way companies can build teamwork and ownership among employees is to sponsor company teams for sporting activities, whether it be bass fishing, golf or baseball (or, I suppose, once our business is a little larger, hockey.)