A reader named Shane Broumand recently commented on my last post, and his comments resonated with me; it's something I want to talk about with my peers: the scare of working for too little money. Everyone reading this post knows two things:
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A reader named Shane Broumand recently commented on my last post, and his comments resonated with me; it's something I want to talk about with my peers: the scare of working for too little money. Everyone reading this post knows two things:
- Business goes up sometimes, and other weeks you have a little less business, particularly in wintertime.
- Every so often a floor has a callback or problem that could be minor issue to a very big issue.
Re-work that is not created by a homeowner or another contractor is your liability, and it does cost you money, even if you do the fix yourself as the owner. Fuel, screens, sandpaper, stain, finish, and applicator costs can add up. A secondary cost is that, as an owner, when you're fixing problems you are not working on filling the pipeline of your business with new work. I have witnessed these two factors working like a cancer to destroy the operating cash flow of businesses in my area and even affect my own business years ago. Fortunately, I learned before it was too late, and I want other readers to know there is a way to use this as both a lesson and as a selling tool for your customers during estimates.
Shane said the following: "The sting of a bad installation outweighs the feeling of a low bid every time." Well stated, and in relation, I've received a number of calls from people to fix problem jobs from other contractors. After we talk for a while, it is apparent that the owed balance on the job isn't enough money to properly fix the problem. I encourage you to explain this scenario if you get into a competitive "bidding" scenario, because it will give people second thoughts before hiring a trunk slammer. I always just say that the cheap guys don't have enough profit to return if there is a problem, and they may not be around if you call them in a year.
Adjust your spending habits and pricing to account for the following and you'll be better off in the long haul:
- Taxes. Don't mess with the government, because they can reach into your bank account without your permission.
- Re-work. Everyone has it occasionally. Just factor it in as an operating expense.
- Slow times. Use the reserve money in off times to strengthen your education, work on marketing materials, or spend time with your family.