Niches and expansion

A Remodelcrazy.com thread, "How do I market my company?" starts off with this simple but relevant posting:

I need some advice. My busy started out as a Landscape design build company. Now we are venturing into basements and hopefully soon kitchens/bathrooms/other remodeling. My company is called Rusk Enterprises. So my name does not hold me back.

Is it going to confuse people if one week they see an advertising for a backyard, and then the next week for remodeling work? Will this hurt me or help me?

I'm a little confused on how I should proceed with this.

The advice from the marketers is: Stick to your niche. But from other remodelers, the advice is, consider adding the additional services and broadening your scope.

I observe in a posting that you need to focus within your niche, but you can, and should listen to your clients when opportunities to expand and grow the business are provided. We for example, after some ill-fated expansions (including one effort to publish a general business newspaper, a real flop), decided to focus exclusively on regional business-to-business construction newspapers.

This is still our primary business and focus, but last year, a good client suggested I publish a local magazine for renovators. I initially declined because this product would be far out of our niche and expertise, but reconsidered when I realized that the client is a centre of influence at the local Home Builders' Association, and essentially was handing me a ready-made market on a silver platter. I pulled together a joint venture team and Ottawa Renovates has become a true success.

Similarly, while our focus had been in the print media primarily, Tim Klabunde in the Washington DC area suggested last year that we could produce a magazine primarily in online format, and (in conjunction with the Design and Construction Network), we developed the Design and Construction Report.

Client-driven expansion can make a lot of sense, but you should still proceed cautiously, and be satisfied the growth is compatible with your existing niches, values, interests, and of course your existing clients. They are most likely to be your first and most valuable clients for the new service.

(Note you may need to sign into Remodelcrazy.com as a member to read the original thread. The forums are an excellent resource if you are in the remodeling or renovation business -- or are a sub contractor or supplier serving this sector.)

Some numbers to consider

Here are some numbers to consider.

One of this region's largest renovation/remodeling contractors says he has less than 2 per cent of the local market share (he gave a specific number, to the tenth of a percentage point, but I'm not going to share specific competitive information here.)

Fly-by-night underground economy contractors have 52 per cent, he says.

He told me how much he spends on Google Adwords ads. I wish I could share the number but respect it is competitively sensitive information. But to me, it was a mind-blowingly large number. The ads don't work nearly as well as signage, though (and are much more expensive).

He is now working on revamping his website to enhance the organic SEO. Not surprisingly, he was reasonably impressed with this blog's success but he said this validates his awareness that content and information, along with frequent updates, are essential for high search engine rankings. With the money he is spending on Adwords, he certainly could afford a full-time employee to do nothing but build and update site content.

Of course he is in the top tier of his industry, and most of his competitors are much smaller, relying on word-of-mouth and seat-of-your-pants marketing rather than systematic and thoughtful approaches.

Two (new) places on the construction marketing spectrum

I've just posted a couple of worthy permalinks, representing two places on the spectrum in this blog's readership.

In the first, Chicago-based Anne Scarlett of Scarlett Consulting reports in her Scarlett Letter blog on some intriguing and high level AEC Marketing issues. Consider, for example, her recent posting where she offers some thoughts on what professional firms measure in assessing bonuses and achievements.

Earlier this year, I delivered a session to the SMPS Southern Regional Conference. I met a gentleman (Greg) in the audience that works for a large, multi-disciplined engineering firm (XYZ Engineering). I don’t have their exact revenue figures, but they have multiple offices across the U.S. and abroad. We discussed how the firm is structured from a financial accountability standpoint. Apparently–rather than individual offices serving as profit centers, and rather than one big profit center for the whole firm–this firm has opted to group their profit centers according to regions.

We all know there’s no ‘one size fits all’ magic to a firm’s financial and organizational structure. We also know that it largely depends on these factors: client type and location; design and delivery philosophy; shared resource preferences; long-term business goals; etc.

Circling back around to my conversation with Greg at XYZ Engineering. He shared that there are two layers of bonuses offered at their firm on an annual basis. OK, makes sense. I’ve seen firms with up to three layers of bonuses. But this was what surprised me: Greg told me that rather than measure actual profits, these regions consider two things to measure their success: billability and net revenue. Nope, not profit. They figure if the other things are there, the profit will be as well.

Now, I can think of all sorts of reasons why good billability factors and net revenue figures might not lead to a truly profitable business. So I found it curious that this large, highly reputable firm would measure it this way.

Months later, I’m still curious, and am taking this opportunity to reach out to you, dear readers, to hear your own perspectives on this topic. If you are willing to share (anonymous is fine; feel free to send a direct message if you prefer), then I’d love to learn more about how your organization is structured financially, and how that structure is helping–or hindering–your firm in this current economy. Any collection of data will be shared in future blogs for consideration.

I wish I had read Scarlett's blog before contributing my article on Metrics for the upcoming SMPS Marketer issue. I looks like Greg's company, in measuring "billability" and "net revenue" is seeking to establish Key Performance Indicators which may be within the capability of individual employees to influence and change. On the other hand, I 'm wary of complex, two-level bonus structures; how effective are these benefits, really, and how much do they actually influence behaviour rather than become seen as entitlements.

On a different level, Paul Lesieur of Silvertree Remodeling in Minneapolis called me about three weeks ago to tell me he had partnered with Rory Swann of Servicez Unlimited in Washington D.C. to establish a new site/forum for remodelers, Remodelcrazy.com. The site is now in operation; it is early going, but a true grassroots community is developing. Here is Paul's explanation of how the remodelcrazy.com idea developed.

I'm driving around last year thinking "What a crazy business and what a crazy remodel I'm doing for this couple".

Ding, Ding I grab a flat carpenters pencil three inches long and write down Remodel Crazy.

I get back and put the paper away and four months later I'm talking to Ridgewalker from CT (editor: CT is Contractortalk.com) who I don't even know and he tells me to get an open domain name for that was available that would help promote my business.

I get my domain and remember Remodel Crazy and buy and register RC.com.

Months go by and now I'm friends with some nutcase from Washington DC and we start talking and I tell him about Remodel Crazy.com and my dream is to build a great place for all the people in our industry. One thing leads to another and we get Len involved and here it is. It was just a little dream for a guy who feels like the best people in the world, its builders, don't get the proper credit and respect. The painters, carpenters, electricians, designers, and the solid vendors and associates who make it all click. All of us, this is for you. And I mean it.

Its new, and its gonna take some work, but nobody is more ready to tackle this than the Remodel Crazy crew.

So lets kick it!

White collar, blue collar, years of formal education, or the practical experience in the schools of hard knocks and success -- this industry creates opportunities and working relationships for everyone, and the two new hyperlinks here reflect its diversity.

Remodeling Magazine's website has a useful website with a section dedicated to sales and marketing. Worthy of your bookmark (and possibly a permalink here).

Twenty years of success -- and just discovering marketing

Amsted Design/Build founder and president Steve Barkhouse outside his Stittsville, Ontario, office. The stones recognize employees for five years of service -- at the company's annual breakfast before our interview, several received the recognition.

Yesterday, I met with Amsted Design/Build president Steve Barkhouse as we prepared a 20-year anniversary feature about his renovation business for the GOHBA Impact!, the newsletter of the Greater Ottawa Home Builders' Association. Amsted's business longevity closely matches mine and, as we parted company, Barkhouse observed how few businesses reach the 20-year milestone, let alone as successful as his enterprise.

Notably, Amsted to a large extent followed the conventional pattern of successful renovators and contractors. By doing great work, consistently and effectively, repeat and referral clients provide the basis for success and growth. In fact, Barkhouse said only recently has he started marketing.

(I'm not sure if this is entirely accurately, if you define marketing more broadly than conventional advertising. For example, he served as president of the GOHBA about a decade ago; and connected/worked within the community -- all valid marketing activities.)

Barkhouse offered an important explanation of why marketing has become more important to him recently. With 50 plus employees, without marketing to induce new client interest, he would have one other choice in a downturn in the market -- to lay off employees. Sure, he would do this if absolutely necessary, but he says he has built a competent team of qualified people -- and the company's scale of operation with design build, and in-house trades, would not nearly be as effective if it needed to shrink. So marketing allows him to manage the work flow -- and prepare for growth when conditions improve.

Of course, Amsted observes the core techniques of successful businesses including vision and mission statements and core values, which are discussed with employees at monthly meetings (meeting frequency increases if the business is working through a potential crisis):

Vision Statement

We will be the most sought after company in it's industry. To be highly respected for integrity, excellence and success. To provide a work environment that is enjoyable and achieves a balance between work and personal time.

Mission Statement

In order to realize our Vision, our Mission must be to exceed the expectations of our customers, whom we define as clients, partners and fellow employees. We will accomplish this by committing to our shared values and by achieving the highest level of customer satisfaction. In this way we will ensure that our profit, quality and growth goals are met.

Core Values

INTEGRITY -- Integrity is our trademark. We adhere to moral and ethical principles through soundness of moral character and honesty.

EXCELLENCE -- Excellence is the key to our continued success. We continuously strive for excellence in all we do.

TEAMWORK - Teamwork is our strength. Our chosen team works cooperatively, achieving common goals.

RESPECT -- Respect is the basis of all our relationships. We recognize and value both women and men around the world in all their diversity, whether inside or outside the group.

TRUST -- Trust is the foundation of our team. We build relationships and create a climate of trust among us all.

LOYALTY -- Loyalty is our commitment to the future. Loyalty is rewarded and highly regarded.

FULFILLMENT -- Fulfillment is our obligation. We continuously strive to exceed expectations and fulfill dreams.

PROUD -- being proud is our reward. We set high standards for ourselves every day, both as individuals and in our teams, so that we can give our best maximize our performance.

EMPATHY -- Empathy provides our peace of mind. We know the importance of experiencing the feelings, thoughts or attitudes of another in order to succeed.

PROGRESS -- Progress is our movement toward a higher stage. We know how to look ahead, anticipate and educate, in order to develop new solutions that drive progress.

The FW&D marketing and business model: Intelligent building from a local base

Ned Overton of FW&D LLC in Arlington, Virginia near Washington D.C. His trailer is less for equipment and material storage than marketing -- it has a 'take one' box with flyers for people walking or driving by.

Yesterday, Karen Buckley and I met Ned Overton of FW&D LLC in Arlington, Virginia and I discovered how to build a successful contracting business from scratch.

Overton's two keys to success have been his ability to connect to immediate community needs, and really thoughtful (and inexpensive) marketing.

Overton had been a career employee with the Prince William County Fire Department in suburban Washing on, D.C. for 25 years when he retired in 2002 after 25 years of service. His responsibilities before retirement involved the staffing and scheduling of hundreds of firefighters in various stations. This challenge required him to be acutely sensitive to individual personalities to ensure working harmony and safe operations.

As retirement approached, a cycling friend who works at a local building supply dealership suggested he could start a second career by installing replacement windows and doors in his neighbourhood. Overton had been a carpenter before joining the fire department, and his neighbourhood, Fairlington (the "F") in the company abbreviation) has plenty of windows and doors needing replacing.

The neighbourhood's solidly-built townhouses, originally built during World War II to accommodate military families, had last been refurbished in the 1970s, when the neighborhood's residences had been converted to condominiums. Now, more than 30 years later, these windows and doors needed to be replaced.

Overton recalls his first order, from an free online Yellow Pages listing. Then others arrived, from the local community newsletter (where print ads cost less than $100 a month). Soon, referral business started, as Overton gathered all the information he could on various aspects of the business.

He found people needing windows and doors also wanted other services, including roofs, deck, new kitchens and bathrooms, and complete remodeling projects. Rather than turning this business away, he discovered he could do the work effectively and with client satisfaction.

Overton serves communities throughout the Northern Virginia suburbs of Washington D.C. He generally stays clear of the Maryland suburbs unless he receives a referral call -- he is acutely aware of the cost in time and effort to serve communities outside his area. Of course, just the Virginia suburbs give him a large enough market area.

Current business volume is about $1 million a year -- he is hoping to double that to $2 million within the next year. Window and door jobs generally generate about $5,000 in revenue, kitchen and bath renovations of course can be in the tens of thousands of dollars.

Fair enough, but how does he achieve marketing success.

Overton, at 57 years old, indicates he is like a sponge for information, especially from sources like contractortalk.com. He has learned simple techniques, like answering all inbound calls with an initial remark "Thank you for calling", to more thoughtful uses of online resources in explaining his company's services.

"When we receive a call, office co-ordinator Meaghan Hudson often refers the potential client to relevant pages on my blog, website, or our youtube.com videos," Overton says. This allows the potential client to see first-hand the quality of the company's work -- and of course the potential client can also view the FW&D's lengthy list of testimonials.

Other marketing techniques include:

• Company wine. Overton says he has high quality bottled wine with the company label. "The wine has to be really good, because the people around here know good wine," he says. He gives the wine as a 'thank you' for referrals or to clients when a job is completed.

• Use of effective and simple local resources. He ensures his flier in a local "door hanger" service stands out from the crowd by using a thicker stock paper Similarly, he is happy to pay a local leads service whose operator charges a 10 per cent commission when the lead pans out. "We just build the cost into our price, and if a client doesn't respond after we provide an estimate, we pass the information on to the leads service provider -- who often helps to close the sale." Because clients are satisfied with the work, and the leads service operator can make thousands of dollars for a lead, Overton receives many leads.

• The trailer. Overton says his job trailer is too small to be really useful for equipment and work -- but is a great advertising vehicle as it is in front of the home on residential streets. The trailer has a "take one" box for flyers -- and it draws business.

• Rational service extensions. You may call FW&D for a simple window replacement project, a relatively small job for about $5,000 for 10 windows. Then, seeing the work quality, clients order more services -- Overton says he will often do uneconomically small projects to either serve former clients or build relationships for larger work. His wife Alica provides design and co-ordination service for the larger interior renovation projects.

Perhaps the most impressive element of Overton's service, and the reason it is successful, is his ability to connect with the people in his community; his home office reflects his clients' environment and employees and former employees 'connect' as if part of his family.

Can you follow Ned Overton's example? I think so -- and, like other contractors I've met in my journeys around the U.S. and Canada, he will be happy to share his insights and observations with you, just as he acknowledges the ideas and advice he has received from others on contractortalk.com and elsewhere within the online community.

Passion first, marketing second

New GOHBA Renovations Council president Jason Labelle, president of Dalton Corporation, after the monthly council meeting.

Yesterday, I attended the monthly meeting of the Greater Ottawa Home Builders' Association Renovations Council, in two roles -- as a journalist/writer for the association's newsletter, The GOHBA Impact! and to address the second item on the meeting's agenda -- providing a progress report on Ottawa Renovates!, the magazine project our consortium won through a wired bidding opportunity to promote renovation services in the region.

At meeting's end, newly-appointed council chairperson Jason Labelle, president of Dalton Corporation, outlined his business experience and effectively described the qualities that underlie most people who enjoy success in the construction business:

"As far as my company goes, I really believe in doing it right," Labelle said. "It's the artwork -- when we walk way at the end, it's the feeling, 'wow, we created this . . ... we built it.

"I truly believe in the renovation business, I think there's a big artsy side to me, and I get to do it -- to create it, build it, mould it, and share it."

His business, not surprisingly, relies on word of mouth and referrals, but there is some intelligent marketing as well. The annual Christmas greeting creates a 'keep in touch' with former clients, and he follows up six months to a year after each job, to ensure the client is satisfied and any follow-up maintenance is done.

And, like most successful business people, he has built a team of employees and sub-contractors who share the same values and passion for their work. "My foremen won't let me get away with 'just good enough' -- they'll catch me."

"In some places, we'll do a job and then someone across the street will contract with us, then down the block, all by word-of-mouth."

Do these attitudes describe you and your business? Then you've won more than half the battle when it comes to marketing.

Labelle, like other local renovators in Ottawa, has yet to feel the economic pinch of the current recession; despite some major layoffs and business consolidations (including the bankruptcy of former high tech high flier Nortel) this region has so far not felt much pain, in part because it is a government town. Renovators Council members are bracing however for an influx of new business start-ups, some under-the-table, as new home construction contracts and out-of-work tradespeople begin competing for available work.

Labelle says he would like to see the Renovators Council achieve greater recognition. "I would like to market us in such a way that it is a no-brainer -- if you want to renovate, you want to renovate with the professionals."

That's where the Ottawa Renovates! project fits in the picture. A few months ago, after sitting in on a meeting of the Renovators Council, I received word from former Council Chairperson Mike Martin (who now is responsible for the provincial Ontario Home Builders' Association Renovators Council) that he would welcome a proposal from my business for a new renovation publication. After initially hesitating -- we've only handled business-to-business marketing, not business-to-consumer projects -- I decided the best way to handle the situation would be to set up a consortium; and ultimately formed a partnership with designer Gordon Keith and publisher Brian Warren to get the job done. The new magazine is at the printers, to be ready for the annual Ottawa Home Renovations Show this weekend, and a related website will also be live soon, as well.

Does it surprise you that we won this bidding opportunity though our own reputation and relationships, and (underlying these) our passion and enjoyment of our own work?

Our challenge is to help and work with business owners who really care about doing their job well; who deeply enjoy what they do, and in normal conditions have customers eager to share and recommend their services, to adapt some basic marketing and sales techniques to support and enhance their already-successful business brand and reputation.

This is not the world of high-pressure sales; it is not an environment where you need to grind people down to get them to buy your services; rather, you take your existing relationships and reputation, and expand on the basics; building your reputation even further, while preserving your margin. Yes, you advertise, you market, you promote your business, but underneath everything, you will succeed because you love doing your work, and you are able to assemble around you employees and vendors who share the same inner passion. Of course, you are really lucky if you can work with marketing specialists who care about their work as much as you care about yours.

To Boston and beyond

This morning, we fly to Boston, MA and overnight before continuing to Providenciales, Turks and Caicos. for a week's winter vacation.

The Boston area is home for consultant Mark Paskell, publisher of The Contractor Coaching Partnership Blog. Mark phoned me on Christmas Eve, sharing some observations about what works and what doesn't.

Good marketing, it turns out, revolves around some basics. Generally, residential contractors need to spend about five per cent of their annual gross revenues on marketing. This means, if you sell $1 million in services, you should be spending about $50,000 per year. This isn't a hard-and-fast number, of course, but gives you an idea of where you can get started, and where you should be heading.

Of course, the big question is how should you spend this money. Paskell, like me and many others promoting our services to the trades community, finds greatest value within the relevant associations. In his case, he is actively involved in the Boston chapter of the National Association of the Remodeling Industry (NARI). Through his relationships here, he has gotten to know many of the the most successful remodelers in the Northeast.

He shares my belief that, for remodelers, the best source of business indeed is referral and repeat clients (as you would expect) and that systematic initiatives through follow-up service to existing clients provide the best results.

He would like to develop a truly useful leads service. I'm a little skeptical about that idea -- the challenge is that anyone who gets into the leads business ultimately runs into the paradox of 'success'. If your leads are good enough and of great enough value to provide genuine opportunities to your lead clients, you will attract more and more contractor clients for the same number of leads -- perhaps increasing your profitability, but ultimately decreasing the value of the leads you provide.

We both agree that most contractors really are ill-equipped at marketing; and can benefit from coaching and solid advice. Accordingly, I certainly would recommend Mark's services especially if you are int he Boston area and northeastern States.

(My blog entry tomorrow will be delayed, probably. We need to be up extra early to catch a 5 a.m. flight to Charlotte, connecting right on to Providenciales. Once we are settled in, I'll share with you a tale of our honeymoon turned into business trip, built on a rather unusual interview with an offshore tax shelter dodger, who ended up arrested and charged with drug and money laundering offences in Canada -- and a case that made its way to the Canadian Supreme Court.)

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 www.thecontractorcoachingpartnership.com, mark@thecontractorcoachingpartnership.com 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).

How open should you be?

Boise, Idaho remodeling contractor Jim Strite (photo lifted from Remodeling Online), of STRITE Design and Remodel practices open book management.

Sonny Lykos in a comment to a previous posting provided this link to a Remodeling Online article, "Open Up", which suggests that open book management is still a rarity in the construction/remodeling industry -- and the type of open book management practiced is not the extreme version practiced by Jack Stack, tied to employee ownership and equity.

The article touches on two of the most common concerns employers have about opening their books: The issue of salary disclosure (not!), and the threat that the data might find its way into the hands of clients or competititors. Renovators quoted in the article say they handle the latter threat by limiting the amount of paper actually distributed to employees (numbers are posted screens) or giving only the overall financial statements, not explicitly detailed versions.

The cornerstone and rationale behind the open book concept is that it is a necessary supplement to any profit sharing plan -- without an understanding of the books, and how the comany achieves profitability, the profit sharing system would not have any meaning to employees, the article says.

I enjoyed the story but right now am tending to think of Open Book in the bigger picture. In June, I expect I'll be in Springfield, MO with a key employee to learn how the system works -- and in the meantime, will be preparing the implementation with our accountants and business consultants, tied in with the bi-annual planning meetings where, indeed, employees see and participate in the number crunching exercises.

The Lykos Group serves Collier County, Florida. It may be a model for you to emulate in your own area

Sonny Lykos has smarts. The semi-retired contractor sold his business to his sons, but he didn't leave the scene -- he started a 'modest' business serving condo owners for simple jobs in the Naples, Florida area.
He believes in branding. Not branding in the stereotypical big-advertising-budget image; but in the rather simple concept that if your potential consumers in the market perceive your brand has value, they will pay more.
See this posting in a contractortalk.com thread from last spring (he also recently posted a comment in response to my posting on Friday, "So you are looking for that magical, quick answer." In his contractortalk.com posting he rebuts another poster who suggests branding relates to advertising and expensive marketing:

I didn't know that. I'll have to tell my son, Tom. I sold my remodeling business to him and his brother in 1999. About a year or so later he bought out his brother, and his brother started his own remodeling company. I started it shortly after moving to Naples, FL in 1991. My advertising in our newspaper started in Feb, 1991 and I stopped it in May, 1991 and never again had any more ads. In 1999 when I sold the business we did just under $1M in sales. Last year The Lykos Group, Inc. http://lykosgroup.com/ Did about $6M in sales - all from "Branding." Among other awards Tom received the Remodeler of the Year Award for the state of FL.

I guess it's true what they say: Some people succeed at doing something because they didn't know it couldn't be done. And since I'm now semiretired specializing in only very small remodels and a lot of repairs, while most of my so called competitors base their prices on labor rates of
between $35 to $65/hr, mine are between $85 to $125/hr and I and my part-timer still can't handle all of the work. When I started my small new business in 2000, I never advertised. Still don't. What son Tom and I do is the result of "branding", not luck, advertising, or marketing. And by the way, Tom's "net profit" is consistently double to triple the national average. Mine is about 40 per cent. But maybe you're right, and we really can't do what we're doing. So I'll not comment about it again.

I requested (and he graciously provided) some copies of his simple newsletter he uses to promote his condo service business. You can view a copy at this link. In his email to me with the newsletter copies, Sonny notes:

My pleasure, Mark, and if it can help others, go ahead and reference it on your blog. About half of my sales are for condo associations, so the front page is for them and the back page for condo and home owners. They were tremendously effective. Created on my word processor - nothing fancy, just very informative.
Attached in pdf format. I keep hard copy files with articles from various trade magazines. Keep the files by trade. I do the same on my computer with articles from various trade association newsletters and also mfg. web sites. I just hang on to them for future newsletters I would send. I also used what I had up here in my head from my expertise and experience. And by using the same newsletter format, all I had to do was pull up a previous newsletter, erase the text in the particular block and type in the new info. Maybe the most it ever took was one hour, so for that minimum amount of investment, where the heck could we get such positive feed back?
Good luck with your own. Incidentally, one guy I know used to get verbal approval from a past customer to use their name and photos in a newsletter, and show the before and after photos with the owner's name (no address or #) and brief description of what the remodel entailed. People like to see their names in print. Makes them feel like a celebrity.
Anyway, quick, cheap, and very effective. Just remember to keep a couple dozen copies in your truck to give away to any customer's neighbor you meet. I bought a HP color copier and printed them on both sides of the sheet. I think it was cheaper than using the computer printer. And you can use a heavier paper, glossy or other wise. I used a heavier flat paper - no gloss at all. Sonny.

Aha, note some wonderfully simple yet effective things here.

• Sonny has a niche. A defined market segment, which clearly needs his services (and which you may well be able to replicate in your own market area. I would recommend offering to pay Sonny for some consulting advice in this regard -- he is doing it successfully in Naples; why not in virtually any other community in North America.)
• He doesn't waste money; he uses a newsletter to provide simple, valuable information, relevant to his readers, and information which you likely will have on hand in your own format with your own resources.
• This high perceived value -- the nature of a 'brand' is only possible if he actually delivers the service to the level clients expect. A good brand, he notes, allows you to get away with occasional errors (provided you rectify them quickly) and command a price significantly higher than the commodity level. You make more money, with less stress.

Finally, note the wonderful long-range implications of giving without worrying too much about 'return' on your knowledge. You don't need to call or pay Sonny to emulate many things here -- and if you do, you will likely succeed. But if his business matches something you think you can do, offer to pay him for his services. I think your return on investment will be staggering.

Note: Sonny sent me a couple of additional copies of his newsletter, which you can request by email from me at buckshon@constructionnrgroup.com.