EP13: This One Thing Is Costing You Thousands

I don't know. I don't know anyone in Indiana. I know. I mean, not by you. I know a couple of people in Indiana, you know, in our group. But I don't know what you're talking about.

Dude, I hate working for sweet old ladies. I hate it. I know where you're going with this. I hate working for old ladies. Jeez.

Dude, I work for meatballs all the time. You know, the Adam Sandler movie when he does the piano lessons and he gets paid in meatballs. Like that's, that's what I, I think of that every single time I go to a sweet old lady. So if I can hear over the phone over there, it's a sweet old lady's voice. I'm like, I don't even want to go to this job. I don't even, I don't even want to go here. I'm going to lose so much money. So you just started negotiating with yourself and you undercut yourself.

So many times. I've literally negotiated myself out of thousands, tens of thousands, probably in my old age, hundreds of thousands of dollars I've negotiated. I'm negotiating for the client. They're trying to talk me down, but they're not talking me down. I'm just talking myself down. That's so annoying.

It's the worst.

So much money.

If they tell you they haven't, they're bullshit lying to you straight to your teeth.

Well, it also comes without studying, without understanding, you know, simple sales techniques on phone calls and stuff like that. And knowing your numbers. I think what happens is like a lot of contractors, they don't know their numbers. They feel like this is a lot of money because they would never spend $15,000 on a little remodel like that. They wouldn't afford that. So in their mind, they start thinking like they're the buyer. the price should go down when they have no idea, right? And then so they just start taking money off. They don't even really know how it's really affecting their bottom line and just how much profits it's taking from their company and from their family and from their livelihood.

It's horrible.

Well, there's a little twist there because if in fact it's over, then you could potentially start to talk about Scope of Work. Right. So there's the real trick. If if you give them the number, they said, I guess more than I expected. What can we do? We can we can play with the scope of work and maybe not put as many lights in the ceiling or maybe, you know, not put as many lights in the pond or whatever. So now you can have a conversation and then it becomes a negotiation, a little tug of war. Right. The worst thing is when you start like you have. good and evil on your shoulder, right? You know, the good guy, bad guy on your shoulder, the whole thing. Like the bad guy starts negotiating. It's you, but for the client, right? So that's the whole thing about it. So there's the difference is because if you start negotiating, you're going to try and give them the scope of work that they want. And you're thinking like, well, I got some materials left over from my old job. You know, it's kind of already covered. So I'm just going to throw that in there. I won't have to come out of my pocket so I can save a little. But, you know, that should be turned into profits, right? So that's the real twist between that is now we can pull back on scope of work potentially and have a conversation.

Yeah, yeah.

Listen, like if this granny, this sweet granny gets me on the phone, I like, if I'm talking to her, sometimes I literally, literally just want to write her a check for $1,000. Just like what, what's your name? What's your address? I'm going to send you money. I'm going to send you $1,000 check and you can call someone else. That'd be better for me, actually, if instead of me coming to work for you. I mean, that's how I feel about that sometimes. Isn't that funny?

Yeah, I love that one. You told me once. I really, that one. That one etched in my heart right there in a big way. I love that one.

I want to tell you a little then and now story. In the now, but what I would have done back then, but what I did this time, if that makes sense. After I understood the profit sales system and how to communicate with people and really standing firm on, you know, what our company needs to be healthy, profitable, you know. take care of itself and sustainable, right? Long-term, long, long-term sustainable, running my company profitably so I can be charitable, like that mentality. So I go to this home. It was a paid consultation. It was like an inspection to see what's going on with the leaking pond water feature. It was a mess. She's in trouble, right? It's an old lady. It's a sweet old lady. And I'm like, oh my God. So I go to the sweet old lady's place. I literally pull up in the front yard. There's a beater old truck parked on the lawn, like paint peeling off it. I couldn't even see a good vehicle in the place. There's a blue tarp on the rooftop. Like her roof is leaking too. Her pond's leaking. The roof is leaking. And I'm looking at this house like, oh my gosh, you know, like I got a picture before I went. I knew that this was like a big ticket repair. It wasn't something simple, right? She greets me out front, takes me around the side of the house. We start going through the backside of the house. There's all these recycled cans and recycled bottles. Like she's saving her pennies to like go return the recyclables. And I'm just like, oh my, what? Like all these emotions are hitting to me. We head into the backyard. We're looking at the pond. I make a couple of simple repairs real quick. And she's like, I just need this totally fixed. And I'm sitting here going like, what about your roof? What about the, you know, are you going to pay for this with cans? All these thoughts are going through my head. Back in the day, I probably would have lost money. I would have just, I would have done the job. I would have been frustrated. I would have been upset. I would have been mad at myself. I would have been like, I don't have money to pay the bills, right? Because I don't just doing this for free. And I just remember, you know, talking to her. And being very authentic and genuine and like, hey, this is a big deal. This is not as simple as you might think. Anyways, I give her the number and it was a lot of money. It was probably like five grand. And I just told her, you know, this is a $5,000 conversation. And she has this big old heavy sigh. And in the past, if I would have said, here's my number, and they would have given me the heavy sigh, I would have been like. Well, you know, like it's a lot of work. And, you know, if like, well, maybe if I can do it after hours, I can save you a little bit. And, you know, maybe if you pay me a little cash, I can knock some money off. Like I would have just started negotiating right then and there just from the heavy sigh. But I just stood my ground. I just like was compassionate, tactical empathy. And she's like, OK, well, it's got to be done. When can you get it done? When can you do it? You know, she didn't try and talk me down. She wanted it done. It was more important to her than her roof. and getting her, I don't know if she paid for it with cans for all I know she did. But the old Eric would have stolen from my family, would have, you know, it just, it would have been a bad deal for me back then. And I don't know how she's doing, but I know her ponds running really, really cool. And she's really pleased. And I'm pleased because my company is profitable and sustainable.

Yeah, we went and bought, we, um, I got a deal on some horse feed. We bought like four pallets of, of food and we took it to all the horse rescues. My wife's crying and shit. It was amazing. Like I have goosebumps telling you this and I didn't know, I don't, I don't remember telling you that. I think it was a, yeah, I do remember now, but. It was amazing. Like it was like the people are crying at the other end. We're like giving out this food and stuff. Those things are really special. And if I would have couldn't.

And my wife, cheating my wife, cheating the horse rescues, cheating those things that we love. It was a special moment.

Right. It's almost like when you go to the grocery store to Target or whatever like that, and they're like, hey, do you want to donate a dollar to the starving children in Africa? And you're like, what? You know, like, no? Like, they look at you like, oh my God, you're... fucking horrible person, you know, like, well, no. So like that, if you donate that dollar to that grocery store or to Target or the big box store, they get that as a write-off and they take your money and they donate it on their behalf instead of your behalf. I mean, it's almost like doing that. I mean, that's what it crossed my mind when you said just what you said right there. Like, no, I don't want to donate a dollar to starving kids in Africa. I'm going to take the dollar and I'm going to put it where I want it to go. And maybe it will go that way, but not through you. It's going to go through my heart, not your tax write-off.

Yeah, I mean, it's endless. It's endless. What could you have done for your local community? What could you have done? What kind of classes could you have done for your kids? Got them in a private school or taking them to some kind of sporting event? put them in jujitsu classes that you couldn't afford otherwise. But the problem is, the real problem is a lot of the contractors that we're speaking to, they don't have extra money to do those things. And the clients that they're working for typically do. That's why they're doing these, you know, fancy ponds in their backyard and remodeling perfectly fine bathrooms and kitchens and stuff like that. Like these people have expendable money. A lot of the contractors that we deal with, they don't have that kind of expendable money and they're cutting that away from themselves. And there is a way to do it and communicate cleanly with these customers and take this weird mind shit off your mind. Like it's all in your mind. You think there's a problem and there's not.

Right, right.

Without a discount. without a discount. Well, I don't get that many leads, Brad. You know, so this one I really needed, you know, like there's always going to be these excuses, you know, excuses are like assholes. Everyone has one. So for whatever, whatever reason, they're going to come up with one. But see, like the person that says like, well, I probably would have lost that job because that guy's always, you know, the guy that I was bidding against, I know him, he's always cheaper than me. I had to match him. Otherwise I wouldn't have got the job. But the thing is, if you study and you practice and you learn how to communicate with customers, It's amazing by just simply the way you talk to people, the rapport that you build is better. And you stand out and become more desirable than your competition. And people are willing to pay you the higher ticket because you get them, because you listened, because you asked the right questions. And if you don't do any training, you don't do any studying, you're never going to break out of that. You got to break out.

Yeah. I mean, there's like a little bravado, some, you know, like, yeah, I know what you're talking about.

That spins back to the way some of these contractors that have been doing it for so long, they can't afford to do certain things that they would like to do. See what I'm saying? And so it becomes a mindset circle. They just keep going back and back and back. And so it's like they have to break through that to be able to be confident and get the money that they need.

Or even better, I got a better one because this is, this is maybe really the breakthrough. Add 500 onto it and then send it because you, yeah, you were getting ready to take 500 off, you know, grab your balls, add 500, send it. And they're going to go. Let's get it done. When can you start? And then you're going to realize it's like, I was going to take off 500. Eric told me to add 500 and I still got the job. You know, like that's really when you start to break the mindset right there.

Yeah.

I feel like maybe I should hold off on the story, but I think there's some relevance here. It's really, really kind of important. I didn't want it to come off poorly as if I was taking advantage of something. But a client out of state wanted me to come out. I bid the project and I thought. You know, I could be profitable. This is going to cover my hotel rooms, this, that, and the other. I felt like the number was good. I mean, this is like a $60,000 project out of state. My whole crew flies out. This didn't even include plane fare and everything. All that was being covered by the client, you know, separately. They were going to handle it. And I'm looking at these numbers and I'm just like, do I want to be away from my family? Do I want to be away from the ranch? I'm going to be gone for a little bit. You know, this is... I don't know if this makes sense for me right now in my business. I added $10,000 to the job, submitted the bid, got a call immediately. And I was kind of nervous. Like, he's, you know, like, why is this so much? Can't we work something out? And he was like, Eric, the number's perfect. It's exactly what I thought it would be. I'll get your plane tickets all handled. Submit all the names. Like, he just went straight into, like, we're buying. And I was just like, holy cow. Now, so here's the interesting thing is like, one of the reasons I did that is because I was uncomfortable about, you know, doing a job that far away. If there was any warranty work, you know, like just to get on a plane and take a guy or two to go handle some warranties, you know, could have been really put me upside down. So there's a heavy risk involved there. The crazy thing is the client was so thrilled. I mean, the client and I, we still talk, you know, everything's cool. He sends me pictures of bald eagles kicking by his pond. I mean, like it was a really amazing experience. And for me doing the job, I felt so much more comfortable. I know I delivered a better product because I was like, this is more than I thought I, you know, I needed and I got it and I'm just going to deliver like the most kick-ass product ever. And so that was a, it was a really rewarding project, not only from my team and myself, but for my client as well.

Listen, on knowing your numbers, that's really critical because one of the tightest construction companies I know, I've learned a lot of stuff from, they have targets for what they want to make for net profit. Like, you know, good net profit, right? And then they have bare minimum net profit. And then they actually know where. they will not make any money. They know like down to the dollar. So this company has pretty high targets. They know like they want to make a really good gross profit on projects and that's what they target. Now, if they know they're bidding against other contractors and they know like the salesman has to be kind of tricky or they're getting other projects that they know they can go from their super high target gross profit or net profit, I should say, on the job. And then they can. pull it down to like their minimum target that they want. And they can sway the job. So they can literally, the sales, all the salespeople on the team could go, hey, this is a $15,000 job. It's like my perfect net profit for the job. But I know that if I do this job for $13,500, it's still my minimum gross profit that we need for the job, net profit. You know what I mean? So they really have that flexibility. in the way they do their estimating. But the thing is, the only way they can do it that way is by knowing their numbers inside and out, upside down, back and forth.

And you're stealing from the people that you want to be charitable to. You're stealing from that. You know, you're stealing from your own heart is really what you're doing there.

Yeah, I mean, and there does need to be cushions in there. That was the cushion on that big project out of town. I mean, I would have came home. If there was a problem, I would have jumped right back on the plane and gone out there and handled it because I had the cushion. If I didn't have the cushion, I probably would have jumped off a bridge. You know what I mean? Like if there was a problem. Thankfully, there wasn't.

Better than that is like you can do something to help your brand, help your company in marketing and give them a beautiful bottle of wine or send them out to a nice restaurant or send them some apparel or do something, you know, like a gift. That kind of stuff goes a long, long way. I'd rather send a $500 gift. you know, to a client than to give them $500 off because it's better reward. They remember you more. They feel good about it. You feel good about it. Everyone wins, you know,

Listen, I'm going to leave the challenge out there. If it look, I know, I know the reason I know this so well is because I did it for so many years. I lost so much money by this one stupid thing negotiating against yourself. So my challenge to you, if you're still listening right now is the next time you're in that position and you're going to knock a thousand dollars off, I want you to add the thousand instead. That's my challenge to you. If you're caught in this wheel, the only way to break out is to really, really break out. You got to break your mindset.

Thank you so much for catching the podcast with us today. We appreciate your attention. Please do us a favor and rate and review the podcast. This always means a lot to us. Listen, I'm going to go in for a different ask today because I know this hit so hard with us, Brad and I personally, and it really means a lot to us to try and get contractors to break out of this. It's really, really important to us. And we would love it if you would share this with contractor friends with you. Share the Hammergrind podcast. We're doing our best to try and give you value and help you break your mindset. And if you want to learn more and work on some coaching with Brad and I. We would love to invite you into the Profit Club. You can find more about that by jumping on over to hammerandgrind. com and searching around and you'll see the Profit Club. And we'll hope to see you on the inside of our mastermind on Facebook.