Chapter 11 – Tips for Successful Contracting

BE HONEST

If you want to be a successful contractor, you will need to be an honest contractor. That’s just the way it is. Every time you do a job for someone, you have a potential repeat customer. Doing new jobs for repeat customers is one of the best ways to build up a successful contracting business. Do you think that you are going to do a second job for anyone with whom you were dishonest the first time around?

TRUST YOUR FEELINGS

Every day you are going to have to make decisions that are going to affect your business in a good way, or a in bad way. Often you will need to make a decision quickly. If you want to do well as a contractor, you had better make a lot more good decisions than bad decisions.

From a logical point of view, if you can gather up all of the facts and if you have enough knowledge and experience, you should be able to make a good decision. In reality, however, there are going to be times when you know you either don’t have all of the facts or you don’t have enough knowledge or experience.

In these cases, when you find yourself unsure of what to do, trust your feelings on the matter. Do you like the people involved in the project? Do you get the idea that there is something that you aren’t being told? Are you concerned that you won’t get paid? Are you afraid that you underbid the job? Do you just not want to do the job even though everything seems fine?

If you get a feeling like this, pay attention! Don’t let “logic” get in the way of your survival as a contractor. It is very important that you TRUST YOUR FEELINGS. You will almost always be glad that you did. If you take a minute to think about it, I’ll bet you can think of a time when you ignored a feeling that you had about something and then it turned out that your feeling was right.

LEARN FROM YOUR MISTAKES

There is a good side and a bad side to making mistakes. The bad thing about mistakes is that, one way or another, something unpleasant has happened. But there is also a good thing about mistakes — you can learn from them. This is not a minor issue. One person makes a mistake, learns from it, and never makes the same mistake again. Another person makes the same mistake over and over again. What is the difference between these two people?

The difference is this — one person makes a mistake and learns from his mistake; the other person makes a mistake and justifies his mistake.

It can be tempting to find an excuse as to why you made a mistake, but the fact is, if you made a mistake, you are responsible for making that mistake, not someone or something else. Only when you realize that you are responsible for making a mistake will you be able to figure out how to not make that same mistake again. Here is an example of this:

A contractor named Joe tells a customer that he can do the job for twelve hundred dollars. The customer tells Joe that two other contractors have already bid the job for one thousand dollars. Joe agrees to lower his price by two hundred dollars and do the job for one thousand dollars.

At the end of the job, Joe realizes that it cost him thirteen hundred dollars to do the job. He has just lost three hundred dollars. Also, Joe discovers that only one other contractor bid the job, and the other contractor’s bid was for much less work than Joe’s bid. It was a mistake for Joe to have done the job for one thousand dollars.

Obviously, Joe made a mistake in doing the job for only one thousand dollars. The question is, how is Joe going to handle it?

Here are three of Joe’s options:

1. BLAME THE CUSTOMER

2. BLAME HIMSELF

3. TAKE RESPONSIBILITY FOR THE ERROR

Let’s take a look at these three ways that Joe can deal with his mistake:

1. BLAME THE CUSTOMER

What the customer did:

The customer lied to Joe. Actually, the customer lied twice. He told Joe that two other contractors had bid the job. He also didn’t tell Joe that the other contractor’s price was for less work.

Joe can decide that it is the customer’s fault that he lost three hundred dollars because the customer lied to Joe and talked him into doing the job for a lower price than Joe originally had bid the job for.

What Joe will learn:

Some customers will lie to you in an attempt to get you to lower your price. Be careful of customers who make you lower your price.

2. BLAME HIMSELF

What Joe did:

Joe let a customer talk him into lowering his price. He also believed a customer who was lying to him.

What Joe will learn:

Some customers will lie to you in an attempt to get you to lower your price. Don’t let them talk you into underbidding the job.

3. TAKE RESPONSIBILITY FOR THE ERROR If Joe didn’t waste his time blaming either the customer or himself for the mistake, he would be in a better position to clearly see what the error actually was. In this case, Joe’s biggest error was not that he let the customer talk him into lowering his price. Nor was Joe’s biggest error that he chose to believe a customer who was lying to him. The biggest and the most significant error of all was that the job was underbid by three hundred dollars.

It doesn’t really matter who was to blame for the fact that Joe lost three hundred dollars. He still has lost the three hundred dollars. The important thing now is for Joe to be able to separate himself out far enough from the job so that he can be in a position to take a good look at the entire situation.

Once Joe realizes that the biggest error was that the job was underbid by three hundred dollars, he will be in a position to analyze why the job was underbid. Let’s say that Joe looks the situation over and realizes that when he had originally bid the job, he had figured fewer hours than were actually needed to do the job.

Joe can now see that his time estimate was way off. He can now use this knowledge to help him arrive at more accurate bids in the future. In other words, by correctly working out what the most significant error was and taking precautions against making that same error again, Joe has found a way to benefit the most from his mistake.

Now, if Joe ever finds himself in a similar situation, he will not agree to lower his price. It won’t matter if the customer is lying or not. It won’t matter how persuasive the customer is. Because he will have learned from his earlier experience, Joe will know that if he lowers his price, he will loose money.

Successful businessmen do not blame themselves or others for mistakes. They take responsibility for them, learn from them, and use that knowledge to further their success in the future. So if you want to succeed as a contractor, don’t justify or blame yourself or others for mistakes; LEARN FROM THEM.

TAKE RESPONSIBILITY FOR EVERYTHING IN YOUR BUSINESS

There is nothing in your business that you are not responsible for. What you do, what your employees do, what your customers do; you must take responsibility for all of it.

By way of example, let’s say that a contractor named John has three employees working for him. Work starts to slow down, and he has to lay off two of his employees. When the employees ask him why he is laying them off, he explains that there is not enough work for them.

From John’s viewpoint, this is what happened: he had a nice little business going and for some unknown reason, his customers stopped calling him as much as they once did. Hopefully, they will start to call again and then he will be able to have more business. And he will hire more employees again.

Another contractor named Fred also has three employees working for him. He notices that work is starting to slow down. He immediately starts a promotional campaign by calling up all of his regular customers and asking them if they would like him to do any work. He gets some work, but not enough, so Fred has some fliers made up and sent out to potential customers. Now Fred has enough work to keep all of his employees working, but he knows that the customers he is getting from the fliers will not last, so he puts a continuous ad in the local paper. At this point Fred is finally satisfied that his company will have enough work for the time being. But if it begins to slow down again, Fred will get right back into more promotion.

The difference between John and Fred is this — John has decided that his customers are responsible for how well his contracting business does, while Fred knows that he is responsible for how well his contracting business does.

John is going to have a very difficult time succeeding as a contractor. He has decided that it is up to other people to let him stay in business. They are cause, he is effect.

Fred, on the other hand, has a very good chance of becoming a successful contractor. He has decided that it is up to him to do whatever is necessary to maintain the volume of work that he wants. Fred is not at the effect of waiting for customers to call him, he takes the actions that are necessary to cause customers to ask him to do work for them.

In every aspect of your business, you must take the cause viewpoint and not the effect viewpoint. If you decide that you are not responsible for a part of your business, you are basically deciding that you have no control over that part of your business. This is not to say that another person cannot be responsible as well as you for some aspect of your business.

For example, lets say you send an employee out to do a job for a customer. You have made an agreement with the customer that someone will arrive within half an hour. On the way over to do the job, your employee stops off at the park and takes a nap. The customer waits for an hour and then calls another contractor to do the work. Your employee finally shows up at the job site, but by this time it is too late — another contractor is already doing the job.

Now, who is responsible for the fact that there was a problem getting someone from your company to show up on time? Well, if you are going to be responsible for everything that happens in your business, then you are. But so is your employee. He made an agreement with you to go to the customer’s job right away, and then he took a nap! Obviously, your employee hasn’t a clue that he is personally responsible for what he does. Whatever his problem is, you had better get him to fix it fast, or get rid of him.

A person who is not willing to be responsible for what he does is a dangerous person to have around.

By the way, in this example, the customer knew that he was responsible for getting the job done. When your employee didn’t show up, rather than be the effect of your company’s not keeping its agreement with him, the customer took charge of the situation and did what was necessary to cause another contractor to do the work.

ALWAYS DEMAND HIGH QUALITY FROM YOURSELF AND OTHERS

Whatever you are doing, do it right. Don’t ever do a half-way job on anything that you are involved in. You will do much better as a contractor if you have a policy of always being sure that whatever you do is done to high standards. If you can’t do something correctly, save yourself and everyone else involved a lot of trouble and don’t do it at all.

If you want repeat customers or word-of-mouth customers, you are going to need to keep them happy with your work. In the long run, the only way to do this is to do good quality work. Whatever they say, any good customer is more interested in the quality of the job than the cost of the job. As a matter of fact, observing how important the quality of a job is to a potential customer can be one of the best ways for you to determine the quality of the customer.

If a customer has a policy of demanding the best from himself and others, it is likely that, as long as you keep all of your agreements with him and provide him with good quality service, he will, in turn, make sure that he keeps all of his agreements with you.

On the other hand, a customer who tells you that he is willing to sacrifice quality in order to get the cheapest price possible is a customer that you should avoid. Obviously, he doesn’t have very much money to pay for the job.

If the slightest thing should go wrong, or even if nothing goes wrong, you may have a hard time collecting from a customer like this. Often, this kind of cheap customer lives a cheap life. He has decided that the world is a hard place to live in and that the easiest way to live in it is to cut corners whenever possible.

There is no reason to involve yourself with customers like this. There are plenty of customers out there who care very much about getting a high quality job done correctly, and they are ready to pay you a fair price to get it.

If you want to get the best customers, you are going to have to do the best work.

DEMANDING GOOD QUALITY FROM YOURSELF AND OTHERS applies to every aspect of your business. You should keep every agreement you make with your customers, employees, subcontractor, and vendors. And you should insist that they keep all of the agreements they made with you.

If you want the best workmen, you are going to have to be the best employer. After all, if they are the best workmen, why shouldn’t they work for the best contractor? The fact is, they should.

In the contracting business, one aspect of your business will often have an effect on many other parts of your company as well.

If you want the most profitable jobs, you will need the best customers. If you want the best customers, you will have to do the best work. If you want to do the best work, you will need the best workmen. If you want to have the best workmen, you will need to pay the best wages. If you want to pay the best wages, you will need to make a high profit for the work that you do. If you want to make a high profit for the work that you do, you will have to work for the best customers….

Do you see how it is all interrelated? So, if you want a high quality contracting business, you will need to have high quality customers, employees, subcontractors, and vendors. And you, yourself must be a high quality person who ALWAYS DEMANDS HIGH QUALITY FROM YOURSELF AND OTHERS.

KEEP YOUR AGREEMENTS WITH OTHERS

This is very important. I would guess that at a minimum, twenty-five percent of my customers have come to my company because another contractor didn’t keep some agreement with them.

Either the other contractor was late to a job, didn’t show up at all, tried to raise his price, did a poor job, didn’t finish the job, didn’t do the job the way he told the customer that he would, or…. The result was that the contractor broke one or more agreements with the customer, and the customer ended his relationship with that contractor.

The very best customers will insist that you keep your agreements with them. They have no time for people who break agreements and because a good customer is generally intelligent and resourceful, he will quickly get rid of a contractor who doesn’t keep his agreements and replace him with a contractor who does keep his agreements. The more a customer values keeping agreements, the more likely he will turn out to be a good customer, while the less he cares about keeping agreements, the less likely he will turn out to be a good customer.

There is a kind of justice in this, since the good customers will end up with the good contractors, and the bad customers will end up with what they deserve — the bad contractors!

INSIST THAT OTHERS KEEP THEIR AGREEMENTS WITH YOU

If someone makes an agreement with you to do something and you make plans that depend on the other person doing what he agreed to do, then you will be in trouble if the other person breaks his agreement. People like this are dangerous to keep around. They can destroy your business and your life. If you want to do really well as a contractor, you will need to surround yourself with people who do keep their agreements, and get rid of the people who don’t keep their agreements. It’s as simple as that. To put it very bluntly, the only way you are going to succeed as a contractor is if you INSIST THAT OTHERS KEEP THEIR AGREEMENTS WITH YOU.

KEEP YOUR AGREEMENTS WITH YOURSELF

If someone told you that he was going to learn how to fly a plane and then he didn’t go ahead and take the lessons, you would think that he wasn’t as reliable as someone who told you that he was going to learn how to fly a plane and then did take the lessons and actually learned how to fly.

If you had a friend who was constantly saying he was going to do things that he never actually got around to doing, you would probably think that he was not a very reliable person. To one degree or another, you would have less respect for him and you would think that he was not as valuable as he would be if he did do the things that he had made plans to do.

In the same way, the promises, plans, and agreements that you make with yourself are not something that you can ignore once you have made them. They are just as important or more important than the promises, plans, and agreements that you make with others. If you promise yourself, for instance, that you are going to finish a particular job that day, then you need to make sure that you do finish it that day. If you allow yourself to constantly break the agreements that you have made with yourself, then you are going to loose respect for yourself.

People who decide that it is O.K. for them to break the agreements that they have made with themselves will be the same people who think that it is O.K. to not keep their agreements with others.

Nobody is perfect. People are allowed to make mistakes, which is a very good thing since so many of us make so many mistakes. If you find that you are unable to accomplish exactly what you had originally set out to do, it is not necessary to blame yourself for not keeping whatever agreement it is that you made with yourself. But it is also important that you don’t justify the fact that you were unable to do what you had originally set out to do.

What you need to do is figure out exactly what happened to your original plan. Without blaming yourself or someone else, without justifying anything, you must look carefully at what happened and find out the exact reason why you were not able to do what you had originally set out to do. Once you know the exact reason why, you will be in a position to learn from any mistakes that you made. In this way you will be more likely to be successful in the future.

DON’T IGNORE UNPLEASANT THINGS — HANDLE THEM!

It is tempting to put off or ignore things that you find unpleasant. This is a very common way in which many people choose to handle their problems. In the contracting business, however, this can be an unsuccessful, or even dangerous, way to handle a problem.

Generally, people have a tendency to avoid problems that they do not have a full understanding of. If you are going to be successful as a contractor, you are going to have to be able to confront, understand, and handle whatever problems come up.

Before you can handle a problem, you must understand it, and before you can understand a problem you must be able to take a good look at it, no matter how unpleasant it is. If you are unable to confront a problem, you will never be able to handle it. If you have a policy of confronting each problem as soon as it comes up, rather than trying to avoid it, you will do much better as a contractor.

BASE DECISIONS ON FACTS, NOT ON OPINIONS

If a customer hasn’t paid you, that is a fact. It may be the customer’s opinion that he will pay you soon, but the fact is that he has not paid you yet.

If an employee has come to work late for three days in a row, that is a fact. It may be the employee’s opinion that there are good reasons for his lateness, and it may be his opinion that he will not be late in the future, but the fact is that he has not been coming to work on time.

You may think that you should work for a customer because he is a nice guy even though he has a bad credit history of paying other contractors. The customer will give you good reasons why he didn’t pay the other contractors in the past and why he will pay you. These are the customer’s opinions. The facts are that the customer didn’t pay contractors in the past. What he will do in the future is opinion. What the customer actually ends up doing is a fact.

It is important that you recognize the difference between fact and opinion. What happened or is happening now is a fact. What you think about it is your opinion.

Your success as a contractor depends in no small part on your ability to make correct decisions. The best way to make decisions is to use correct facts to help you to form a good idea as to what is going on and what to do about it. A poor way to make a decision is to use opinions about something to form other opinions as to what is going on. If you want to maximize the chances of making a correct and accurate decision, base that decision on facts, not opinions.

PUT IMPORTANT AGREEMENTS IN WRITING

You should have a written contract for almost every job that you are involved with. But, there can be other important agreements that should be in writing as well. Whenever you make an important agreement with anyone — your customer, an employee, a subcontractor, a material supply house, etc.– put it in writing.

Ask yourself this question — Would I be in trouble if this agreement were broken? If the answer is yes, then you should make sure that it is in writing.

Often, just the fact that an agreement has been put into writing can be enough to keep someone from breaking it. And if an agreement does get broken, it is usually easier to resolve things if the original agreement is in writing.

THE MORE EFFICIENT YOU ARE, THE MORE PROFIT YOU WILL MAKE

The idea is to spend the least amount of time, money, and effort to produce the most benefit to you or the project that you are working on. This book could be considered a manual on how to run your company efficiently.

When someone invests his money at the bank, he wants to get the maximum rate of return for his money. As a contractor, you are investing your time, money, and effort in the hope that you will get a high return, usually in the form of money. The more efficient your company, the more profit you will make.

One of the most successful things that you can do as a contractor is to constantly look for ways that your company can become more efficient.

NEVER DEPEND ON ANY ONE THING

In the contracting business, the only thing that you can absolutely depend on is that you can not absolutely depend on anything. No matter how reliable someone or something is, sooner or later, something will not go according to plan. Here is an example:

A customer asks you to do a very unusual job. You don’t know how to do it yourself, but one of your employees does, so you make an agreement with the customer that you will do the job. The job will take five days. On the third day, as he is driving to work, your man is struck by a drunk driver and put in the hospital. Since you don’t know how to finish the job yourself, and nobody else in your company does either, and no other contractor you have ever known or any other contractor that you can now find has any idea of how to finish the job, you will be unable to finish the job.

At the very least, you are going to loose money and time, because you are unable to finish the job. Obviously, it would have been better if you had not agreed to do the job.

If you had a policy of never doing any work that you didn’t have at least one other back-up person to finish, you wouldn’t have gotten into trouble.

This is just one example of why you should have at least one back-up for all aspects of your contracting business. If you absolutely depend on any one thing and something goes wrong with that one thing, you will be in trouble. This holds true in the area of your customers, employees, subcontractors, material supply houses, bookkeepers — in short, any person, company, or thing that you need in order to operate your business. If you depend on any one customer for most of your business, what are you going to do if something happens to that customer?

Look around your business and ask yourself this question: WHAT CAN I ABSOLUTELY NOT DO WITHOUT? If you find something that you absolutely can’t do without, you’d better hurry up and get at least one other back-up for whatever it is — the survival of your company may depend on it!

KEEP IT SIMPLE

A. Actually, when one considers the various factors surrounding the contractor in his daily affairs, and when one additionally takes into account all the implications that relate to any action at all that the contractor finds himself involved in, it can often, perhaps nearly always, if not, in fact, always, be advantageous for the prudent contractor to consider maintaining a less complex basis for maintaining actions that result in a greater profitability potential for his company.

B. The simpler a contractor runs his business, the faster the work gets done and the more profit the contractor will make.

Sentence A and sentence B say same the same thing. Which did you like reading more, A or B? Which sentence made more sense to you, A or B?

When I first went into business as a contractor, I had the idea that the more experience I got, the more complicated I would be able to make my business, and the more money I would make. After three years of constant struggle and effort to run a successful contracting business I finally realized that the less complicated I could make my contracting business, the more profit I would make.

When you are scheduling your men, when you are selling a job to a customer, when you are making business decisions, whenever you are doing anything, do yourself and everyone else a big favor — KEEP IT SIMPLE. Your customers, your employees, your subcontractors, and anyone else you do business with will love you for it. And you will not only be rewarded with a business that is easy to run, but a very profitable business as well.

BE PRECISE

If you want to be a successful contractor, it is important that you are precise in what you say and do.

If you were driving a car down the highway and swaying back and forth from one lane to another, you would be considered a poor driver. Anyone who knew anything about driving would try to keep as far away from you as possible.

If you wanted to convince the other drivers that you were a competent driver, you would drive in a precise manner, deciding on which lane you would drive in and then staying within the precise boundaries of that lane.

In the same way, any competent business person appreciates someone who can make an exact agreement and then stay within the boundaries of that agreement. Keep all of your agreements exact and insist that people who make agreements with you do the same. Being precise is a skill that you can develop by practice. You will find that the more you work on being precise in what you say and do, the better you will get at it. And the better you get at being precise, the more successful you will be as a contractor.

IF IT HAPPENS ONCE, IT WILL PROBABLY HAPPEN AGAIN

This is true, true, true. Don’t make the mistake of thinking that whatever happened could never happen again. As a matter of fact, it is likely to happen again! There is an expression that lightning never strikes the same place twice. THIS IS A COMPLETELY FALSE STATEMENT. Lightning does, in fact, often strike the same place twice.

In Yosemite National Park, there is a large rock formation called Half Dome. And if you ever get to the top of Half Dome, you will find signs warning you that if there is even a hint that clouds are going to pass by, you had best get the hell off that rock, because it is almost certain that if any lightning comes out of a nearby cloud, it is going to strike the top of that rock.

Things don’t just happen by themselves. Things happen because of reasons. If something happened that you like, figure out why it happened and make it happen again. If something happened that you don’t like, figure out what caused it to happen and then change the thing that caused the bad thing to happen. Don’t make the mistake of thinking that it was just good luck or bad luck.

If they play a card game such as poker long enough, all people will get the same number of good and bad hands. And yet some people will win more often than other people. So, even in the area of gambling, there is more to success than merely luck.

Successful gamblers and successful people in all areas of business have this in common: they figure out what works for them and make it happen again. They make sure that they understand why something bad happened, and they take the appropriate steps necessary to make sure that it doesn’t happen again.

IF YOU ARE DOING IT — YOU ARE RESPONSIBLE FOR IT

If you are going to really be successful as a contractor, there is something that is very important for you to understand — if you want something to happen, then you must make it happen. You can’t leave it up to someone else to decide your success or failure.

When you are selling a job to a customer, for example, you need to have the viewpoint that what you do or don’t do will cause the customer to decide to give you the job. If you understand that it is what you do that makes something happen or not happen, then you will be in a position to analyze how well or poorly you did. In this way, you will be able to get better and better at the things that you do. Of course, the better you are, the more successful your business will be and the more profit you will make.

Contracting can be a rough business. If you want to be a successful contractor, you are going to have to be a good contractor. Nobody starts out perfect.

Really good contractors, and really bad contractors have both made a lot of mistakes. The difference between them is that the really good contractors took responsibility for their mistakes and learned from them.