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I’ve been a wood flooring contractor my entire life—until now. I love sanding floors, but I’ve put in the years of hard work, and now, at age 56, I am done. Although I have my side business of fixing sanding equipment, at this point in my life, I’m able to semi-retire, and that’s because at a critical point in my business, I learned to charge what I’m worth. I still know so many guys who are going to estimates and saying to themselves, “I need this job to make my vehicle payment (or pay my mortgage, or make payroll).” Now I spend a lot of time trying to talk with other wood flooring pros about how they can break that cycle of barely getting by.
My business takes off—and crashes
I started doing hardwood floors in the late ’80s working for my uncle and my grandfather. After working for them and some other companies, I went out on my own in 1994. I had a good understanding of the work on a job site, but I had no idea how to run a business. My grandfather was always known as “the cheap guy.” He had a good reputation and was always busy, but he worked a lot harder than he needed to.
When I knew I was going to start my business, I put an ad in the Yellow Pages, and so by the time I started, I had plenty of work. In my first year I bought three vans and had 10 guys working for me. I was running $50,000 through the business every month, but at the end of the month, I was lucky if I had $100 in the bank. I knew the competition was charging $2 a foot, so that’s what I was charging.
After a couple years, some of my employees quit, others had to be fired, and someone stole all my tools when I had three months of work booked out—it all fell apart on me. I managed to find one good employee, and somehow we did the work. I basically started over, but I still wasn’t making money.
The life-changing talk
Years later, I was back to three or four employees, and I was renting a shop. My landlord was a businessman, which turned out to be life-changing for me because he became a mentor to me. Some months I struggled to make my rent payment to him, so finally he asked me one day: “What are you charging?” When I told him “$3.50 a foot,” he asked, “How did you come up with that number?” I said, “That’s what the going rate is.” He told me that if I wasn’t making any money, I needed to cut overhead or charge more.
He sat me down and taught me how to calculate all my overhead, and then how to figure out what all my costs were for every job. Then he showed me how to add on a healthy percentage for profit and for growth so that if I needed to buy new equipment or a new vehicle, I’d have the cash. We figured out that I needed to be charging $9 a foot! I told him that was crazy and would never work. He said, “Well, then you need to cut overhead. Maybe you don’t need to be renting this shop.”
Making big changes to the business
At that point, I made big changes. I was in Naperville, Ill., and that area had a large population of new homes. Instead of advertising to that entire area and traveling for estimates and driving to work all over the place, I decided to concentrate on one area.
Then I looked at the Yellow Pages ads from the biggest local companies that had huge showrooms and lots of employees (meaning they also had lots of overhead). I realized I could charge as much or more than them but be more profitable because I had so little overhead in comparison.
I also stopped doing new construction. It was just break-even work, and the builders would always rush us in and out of the job as fast as possible. They would dictate my schedule: When we would show up to do the work they were never ready, but then when the house was ready, they expected us to drop everything. It’s a rough business to be in, so I got out of it.
Extraordinary customer service changes everything
I realized I had to really sell myself and my crew and focus on extraordinary customer service for the homeowners. I decided to stick to only two or three employees; that way I could tell the customers that I would literally be at their homes overseeing my employees on every job.
I started getting customers telling me, “Your estimate was higher, but I feel more comfortable going with you.” Once I got more comfortable with that, I started charging more—not over-charging, but focusing on the customer service experience. I no longer felt rushed to get to the next job. And when you are at a bid and you have a comfortable cushion in your business account, you know you don’t have to get every bid, so you have more confidence. In fact, you realize that if you get every job you bid, your price is way too low.
As I improved on that, referrals started skyrocketing. By 2005 I stopped advertising altogether. By that point, I wasn’t working for customers who were getting three bids—instead they were waiting for me to be available. At one point I had a customer wait a year and a half for their wood floors because that’s how far booked out I was.
Learning to prioritize my family
Another big change in my business happened eight or nine years ago. We had always worked every holiday and through a lot of weekends because that’s when customers are out of the house; we’d be trying to squeeze in 15 days of work in a five-day period. Then one year I had a customer who had to cancel at the last minute over Christmas because of a family emergency.
Suddenly I had a week and a half off over Christmas. At first I was going nuts, but then I was able to spend the time with my wife and family during the holidays. I had always thought missing the holidays was the sacrifice you had to make to be self-employed, and that you had to accommodate the customer—but I was wrong. I started saying, “What about my family and my life?”
After that, if I did work on a Saturday, it was just to do a final coat. Prior to that, I would always work seven to eight days straight so the customer could get back in their house as quickly as possible. I realized that they could manage if I had the weekend with my family. Again, once I had enough money in my business account all the time, I looked at everything differently, and the stress went out of my life.
These days I have my equipment repair business, and my wife and I are making plans to travel the country and catch up on all those trips we weren’t taking when I was overworking. I’m interacting with a lot of wood flooring pros since I’m fixing their equipment, and the biggest thing I tell them is this: Value your time and charge what you’re worth. What you’re worth has nothing to do with what the “going rate” of the lowballer competition is charging and everything to do with your business, the quality of work you’re doing and the clients you’re working with.
