THE AIRLINE COCKPIT crew always has a checklist to recite. The checklist really does make flying safer. Consider this CONTRACTOR magazine column as a checklist for you to give to anyone you know who intends to go into the contracting business.
Second, consider it a checklist for you to review to be sure you’re doing the things that will ensure a safe business journey for your company. File this column and share it with someone who needs it.
But first, please read it. There will be some reminders that will be helpful to you in tightening your controls and flying right. Let us review the evolutionary steps I believe to be fundamental to the startup of a successful contracting business.
1) You have learned the skills of the trade well and are not only good at installations, but you know how to prepare a bid or a remodel/retrofit recommendation with a price quote that will make a good profit. Of course, this also means you have some clear-cut idea about what a good profit is. Many contractors, in starting out, are afraid to ask a price that is high enough to make the business fun.
2) You have accumulated the basic business books you need to guide the management and profitability of your business and have not only read them, but you actually understand what they mean! These books are not for mechanics — they are the references you need to plan and run the business (I continue to be critical of contractors who have never read a book about starting or managing anything!)
3) You have managed your personal finances so you have enough money, credit worthiness or both to do the startup or to convince a bank or a rich uncle to lend you part of the money.
4) You and your wife (and, if they are old enough, your children) have discussed this important move and have planned for the financial impact it is about to make on your lives. This includes building a business operating budget and forecast as well as redoing your personal budget to be sure you are going to be able to handle the financial and emotional pinch that is to be expected.
5) You have planned the type of work you will be doing and how you will be getting those jobs as well as how you will be paid. Ideally you have planned, where possible, to operate as a cash business.
One of the marvels of our world is that people are easier to sell if they do not intend to pay. Thus you must be prepared to demand, in writing, that you will be paid during the progress of any work and upon completion. Cash, check or credit card will be fine.
6) You have budgeted your advertising and promotion expense and have determined (by talking to as many potential customers as possible) where customers search when seeking someone to do the kind of work you do. You want to know if people you know are planning any work you can do for them and if they would hire you when you open your shop.
7) You have timed your startup so that you’re able to get your small ad in the current, most popular Yellow Pages, which is about to be issued. This way you won’t need to explain to your family how things are going to get better next year when your ad gets in the phone book — if you can survive that long.
Let me get very dogmatic about this. If you are not in the phone book, you’re on a steep uphill climb. “Word of mouth” may be your most efficient and cost-effective reference tool, but when you have been recommended, and a prospective customer knows your name, she will look in the Yellow Pages for your phone number.
8) Do not think advertising specialties such as refrigerator magnets or ballpoint pens will replace a Yellow Pages listing. A little, flat magnet with your name and phone number on it is nice when stuck on a furnace or water heater, but an attractive stick-on label is less expensive and just as effective.
9) Select a business name that will say something positive about your business. As a last desperate move, pick your own name. Please understand I will not be pleased with your lack of imagination. Names such as Superior, Reliable, Trusty, Clean, Prompt, Better, Comfort and Sanitary are much more descriptive and, believe it or not, make a more positive statement about your company.
If you use your name, at least use your last name, Bubba. You will get some encouragement here from some of your unimaginative predecessors who have already taken the names Walt’s Plumbing, Bob’s Heating, and Joe’s Service and Repairs.
10) Get authorizations to accept as many of the popular credit cards as possible. At a minimum you must have Visa and MasterCard authorizations. Your customers use plastic money for little stuff and hardly ever are prepared to pay cash for those wonderful home improvements or sudden mechanical traumas that will make you rich
Your success is not magic. It is paying attention to the fundamentals. The fundamentals, well executed, will get you there safely and can make you rich.
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