Episode•June 3, 2024•30 min

EP169: Avoid These 5 Common Contractor Mistakes to Boost Your Profits

Life is full of changes that you can't avoid. Change is always happening around us, whether we like it or not. To do well in a changing world, we need to accept it and adapt. In this episode, Brad talks about: Five common mistakes contractors make that cost them big in their businesses. The importance of aligning their brand with their business goals and vision. Right pricing for services Targeting the right wealth class and how clients perceive pricing. How to invest in top talents Ways to accelerate contractors' business growth and success. Links to Resources: Get the blueprint to create financial freedom & more free time before burnout or bankruptcy happens. A complete Done-With-You Program - Join the Profit Club Join the Free Facebook Group - The Contractor Profit Blueprint Get Paid for Estimates - Free Sales Guide Plan Your Profits - Profit Journal Help us get the word out to other contractors by leaving us a review or sharing our podcast! Hosted on Acast. See acast.com/privacy for more information.

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Transcript

0:08

Contractors journey to self-mastery requires discipline, integrity, and respect. Welcome to Hammer and Grind. Hey, welcome back to the Hammer and Grind podcast. Today we're going to be talking about five things, the five things that I see contractors doing that cost them big. Cost them big time. We're going to go over those. We're going to dive into what those are. And that starts right now. So number one, this is, and most of these things I've talked about on the podcast, I'm putting them together, but we're going to dive into which each, you know, specifically why these things cost big. Number one is something that is, in my opinion, in experience is that it's the least thought through thing that has the greatest impact. in the longevity in the entire business. And that is specifically branding. What brand do you pick with your business? I have a lot of clients in the profit club that come in, they go through the training, they learn about the contractor profit blueprint and how that affects their business. And then they go through a rebranding process because they realize that the current brand that they have does not align with the goals and the vision that they now have with their business. Right. Once they understand new principles and new ideas, they realize like, oh, OK, I've been doing this wrong. This is the way I should be doing it. This is the direction I want to go. I want to niche down. I want to be more specific service based, you know, type of service. And now my brand no longer matches that. Now I need to rebrand. I've had if I don't know what's exact, but I think I've had at least four. At least four different contractors go through a rebranding process. I had a call this morning with a client who is rebranding as we speak. Not necessarily a new name. Some of them are brand new names. Some of them are just rebranding their logo, rebranding their colors, so on and so on. But nonetheless, it fits into rebranding. And this is the most common thing that contractors do, that they don't understand the long-term ramifications of what they're doing. So when I started my construction business, I spent... a month. I spent an entire month just brainstorming and checking business names. I had to check and see if the domain was available. Did it fit the services that we were going to offer? You know, so on and so on. And then I hired a designer to come up with a logo, come up with colors, so on and so on. But it was a month long process. A lot of guys are like, I'm going to start a construction business. It's just going to be my last name construction. No thought whatsoever about the implications of it. The next thing I see with this is contractors that they pick colors that they like, that they think is cool, that they think is badass. And they use that not understanding that specific colors create an emotional reaction. The worst color, and if you're listening to this and you have these colors, I'm just going to apologize in advance. I don't, I mean, I don't care if you're upset. I'm just going to tell you in advance that it might make you upset. The absolute worst colors you can put on a business is a black background with red letters. That is the absolute worst color combination you can do. And I see lots of guys doing this. There's other implications that most of you don't even think about. And that is specific color combinations like red and green. Maybe you do landscaping and so you do red and green. Guess what? I don't know what the total, what the actual percentage is, but a lot of people are colorblind and red green is the most common. So you literally have red and green on your trucks and, you know, people can't see those colors. So they literally can't see your business name. And some of you listeners have never, ever, ever thought about, oh, colorblind people can't see this. This is the first time you've ever thought about it. But this is the minute details that you need to consider when you're branding your business. Colors matter. The name matters. The logo matters. All of these things matter. Yet almost no consideration is done whenever contractors start their own business. So branding can cost you big. I mean, it can cost you to go out of business. It can cost you hundreds of thousands of dollars, if not millions of dollars over the life of your business. You know, things like not doing proper research. You just come up with a name and you get a domain that's not even the same. Maybe your business name is, you know, Better Built Baths, right? And you go to the domain, that domain Better Built Baths is already taken. So you get Better Built Baths LLC. It's available. I'm cool. You know, great. Everything's awesome. And then you go and you start your business. And then a year and a half later, you get a cease and desist letter from Better Built Bass that says, hey, you're actually infringing on a copyrighted name. You're doing illegal things. You have to change your entire business because you didn't do any research to see if someone else already had that name. Right. Things like that. No research whatsoever. It's just going to be Smith Construction. I don't know how many thousands of Smith constructions there are, but there's a lot of them. I'm just telling you right now, it's the most common name, Smith construction. So branding is number one. Number two, I've talked about this endlessly. It's not pricing correctly. Andrew, my intern and I were talking this morning about some videos we're going to be putting out on social media, specifically talking about the differences and how it impacts your business. But most contractors don't price enough. Like just straight up, you aren't charging enough. And obviously, if you're not charging enough, you're not making enough. And so you have tons of opportunity costs, tons of opportunity costs that you lose through that process. So it's costing you big time. Right. Big time to me. Once I figured this out nine years into my business, some rough calculations. It's not exact science, but I figured close to the tune of a million dollars was lost because I did not know how to price correctly. Guys, you have to know how to price correctly. Like that is the most fundamental thing of business is pricing correctly. Now, there is a little bit of a if you want to call this a rite of passage. If you're just starting with no experience in business, you're going to be a little bit cheaper. Your overhead is going to be smaller. You can do things cheaper. But as the time goes by in your business, your prices should also be increasing as well. The problem is when you start your business with very limited knowledge and you have a very low price and then three, four or five years later, you're still at that same price that you started at, you're losing tons of money, right? But there's no reason that says you can't on day one charge the appropriate price for your services and do well. do extremely well right out of the gate. There's no reason it says you can't do that. A lot of people are like, well, I don't have enough experience, Brad. I don't have a reputation yet. Well, what's that got to do with anything? You charge people a lot of money and then you just over deliver. You just go out there and you just deliver, deliver, deliver, deliver. That's it. You don't lower the price to match what you think you can deliver. You charge what you need to charge and then just over deliver until you've reached that value, that price that you charge. That's the difference. So not pricing correctly will cause you a ton of money. All right. Number three, this is also a very big one. And this is something that we were also talking about this morning. It's hard to, I'm very big about visual, like creating complex. you know, logic or psychological things, and then trying to transform them into a visual representation. And so sometimes it can be difficult to do this, but we were talking this morning about selling to the wrong clients, right? A lot of guys are selling to the wrong clients. They're starting and there's a wealth spectrum. At the very top, you have the top 10% or the 1% of the population that has all the wealth. At the bottom, you have like the lower 10%, which are, you know, broke and poor. In between, you have different levels of the middle class. You have upper middle class, middle class, lower middle class. And a lot of you are just selling, just straight up selling to the wrong wealth class. And so the example that I was talking with Andrew about is if I was building a deck, let's just say it's a $10,000 deck. Okay, it doesn't matter. If it's at 50%, whatever, just I'm going to build a deck for $10,000, right? And it's the exact same deck, no matter if I'm selling to the lower 10% of poverty or the upper 10% of the uber rich. It's the exact same deck. There's nothing different. If I go to the lower class people and I say, this deck is $10,000, they're going to say to me, you are a crook. How can you rip people off? How can you rip off this single mom of three kids that works retail for minimum wage? How do you sleep at night? You're a crook. I go to the next, the lower middle class, and I say it's $10,000, and they go, man, that's a lot of money. I don't understand why it's so much. I got a bid from somebody else that was $6,000. Can you lower your price? Can you match that? And then you go to the middle class and it's like, it's $10,000. And it's that conversation usually goes something like, okay, well, it's more than what we thought it was going to be. But we, you know, you have good reviews and we do want it done right. So we're willing to go with you. Right. But then the whole time they're like nitpicking everything you do because it's a lot of money. And then you go to the upper middle class and you say it's $10,000 and they say, yeah, I mean, everything, that sounds great. When can you get started? Right. Are you sure that's enough? Like, is that enough money? Because we had another bid and it was $15,000. Like, you sure that's good enough? They kind of start to question you a little bit. And then you get into the upper percentage of that and they go, $10,000? Like, we don't want this cheap, crappy debt. We're not going to hire you. You're way too cheap. There's no way you can do this for $10,000. Now you tell me how I can take the exact same deck for the exact same price and depending on who I sell it to, whether or not I get called a crook or I'm too cheap. How is that possible? It's possible because there's different spectrums on the wealth, on the wealth scale. And if you're selling to the lower class, the poor people, the lower 10% or the lower middle class, or even some of the middle class, if you're selling to those people consistently, you will always get pushback for being too expensive, even if you're not expensive. So your goal should be to sell to the upper, you know, the middle class and above. Middle class, upper middle class, wealth, wealthy. That should be your goal. And by the way, just as a caveat, that's where there's less competition there. Most of the competition is in the middle and below. The middle class and below is where all of the competition is. So when you go to the lower, class price point and you say, hey, this is a $10,000. They go, how do you live with yourself? I got a bid from somebody else who would do it for $5,000. That's material in a case of beer. And they're happy. You're a crook. And you go, Brad, there's no way I can raise my prices because I'm already getting told all the time that I'm too expensive. It's like, yes, because you're selling to the wrong people, you will always be told you're too expensive if you always sell to the wrong people. And here's the thing. Going back to branding, the upper class, the upper middle class and the wealthy, they expect you to have a fully wrapped vehicle, uniforms, professional. They expect the best and they expect to pay for it. And so when you show up with your rusted out white pickup truck and your t-shirt that has holes in it and your favorite fishing hat, right? You don't have branding in place. So you automatically get discredited. So again, the branding is important. So yes, the number three thing is that you're not selling to the right people. If you sell to the right people, you will have no problem raising your prices and selling jobs. This is a hard concept for a lot of people to understand. And I'm working on doing this in a visual representation to make it make a little bit easier sense. If you're following me on social media stuff, pay attention. We're going to be dropping some videos on that here pretty soon. Contractors are just selling to the wrong people. It's that simple. You cannot find a price that your clients are willing to pay. You have to find clients that are willing to pay your price. It's that simple. But if you're selling to the wrong people, you will always have trouble doing that. So number three is selling to the wrong clients. Number four, as we start to grow our business. And we're like, hey, I want to make more money. I want to get off the tools, blah, blah, blah. The number four thing that contractors get wrong that costs them big is hiring wrong. They usually hire the wrong people. Now, hiring is a very controversial topic. It's a very detailed, advanced topic. I can't cover every aspect of hiring on this podcast. But I want to address a couple things here. A lot of these things piggyback on themselves, by the way, if you guys don't know this. If you don't have the right branding. You can't raise your prices. And if you don't raise your prices and you're selling to the wrong client, you won't be able to make any money anyways. And so if you're not charging appropriately, you can't hire top talent. In other words, you can't afford it. You just simply can't afford to hire top talent. No matter how much you want to pay this guy 40 bucks an hour, you cannot afford it because you're charging below what you need to be charging. So you have no money available to pay for top talent. So if you're not charging enough, you've already screwed yourself going forward with everything else. Hey, just a quick timeout from the show.

14:32

If you're a frustrated contractor who's dealing with low profit margins, stuck working on the tools every day, or doing free estimates for people who are never going to hire you in the first place, I invite you to my private contractor community. the profit club where contractors just like you are adding two to three times more profit each year without producing any more jobs and finally getting completely off the tools to never do another free estimate again. So if you're ready to increase your profits, stop doing free estimates and get off the tools, then all you have to do is click the link in the show notes to learn more about the profit club and see how I can easily two to three times the cash in your pocket. give you a proven sales process that will convert more jobs with ease and get you off the tools once and for all. And the best part is you can do all of this without having to produce more jobs than you currently are. Click the link to learn more. Now let's get back to the show.

15:25

Literally, this is why the profit club is around profit. It's why I say at the end, profit is not a dirty word. It's why I have the contractor profit blueprint. It's why I created the profit sales system. Everything in your business revolves around having, running, and maintaining a profitable business. If you don't have a profitable business, you can't hire top talent. It's just a math problem, right? You can't solve a math problem by goodwill, by complaining. It's a math problem. It's a financial problem. You can't pay someone 40 bucks an hour who deserves it. If you can only afford to pay someone $25 an hour. So the hiring part of it is you simply don't charge enough so that you're already starting right out of the bat with a limited pool. So go back to the wealth. Let's go back to the wealth scale. There's also a pay scale for good people, for hires. The top people in the world get paid the most. The crappiest people in the world get paid the least. And if you are already restricting what you can pay, you're restricting where at on the pay scale and the quality of the person that you can hire. So if you can only pay 25 bucks an hour, but the top guy, the A player who's going to help you elevate your business wants 40 bucks an hour and you can't afford it, you've removed yourself from that pool of potential employees because you simply can't afford it. So the first part of not hiring correctly is they simply can't afford it. They're paying too cheap. The second part of that, it's just the old crusty mindset. It's the crusty mindset of the old timers. Their belief is, well, Brad, I got paid 12 bucks an hour when I started. There's no way in hell I'm going to pay anybody more than that. That's just what it takes. I know what they're worth. Completely subjective. You are, you believe in your mind that you are all things knowing about someone's worth. And you're going to pay them, start them out at $12 an hour. And then if they do really, really good, you'll give them a dollar an hour raise. And maybe in 90 days, if they just make me a crap ton of money, then I might pay them $16 an hour. And after five years, I might get them to $25 an hour. That's the mindset of some people. That's what I did when I grew up, and that's what I'm going to do. Forget. Forget inflation. Like just let's pretend inflation didn't exist. It's just that mindset of this is what I did. So this is what I'm going to do. Right. I mean, four or five years ago, I was starting brand new people at $18 an hour. They had no experience. That was four or five years ago. Today, you know, obviously depending on where you live, if you live in New York or if you live in Louisiana, prices are going to change a little bit. But in the Midwest, you know. $20 an hour to $25 an hour for someone who doesn't know what they're doing is not unheard of. It's not unheard of at all. You're trying to find a lead guy with 10 years experience and pay him $25 an hour. And the dude down the street who's your competition is paying brand new people with no experience $22 an hour. And you can't see that that's a problem. That's just what it takes. If there's fewer people, you have to pay more, which means you have to charge more. But when you hire, you're trying to hire for what you can afford instead of hiring for what you need to fill the gap. Anybody who's worth their weight, anybody who is an A player will make you more than what they cost you. If someone came to me and said, Brad, I'll work for you for a hundred bucks an hour, but here's my track record and here's how much money I can make you. You pay me a hundred bucks an hour and I'll make you $200 an hour profit. I'm like sold, sign me, you know, sign up, let's go. I don't have to talk about it anymore. I don't have to go, well, you know, I only got paid $12 an hour. Or, well, once you prove to me that you're worth it, then I'll pay you that. No. You just ask people what they want. And if they tell you what they want, you pay that. And if they don't produce in the first, you know, two days, the first week, the first 30 days, you get rid of them. Some of you guys are so freaking scared to make a mistake that you just live in complete. paralyzed state 24 seven, because you're too afraid to make a mistake. You can't do that. Guys, when you hire people, you have to hire top talent and you have to pay them what they want. And even that I would pay him over what they want. On a realistic scenario, someone came to me and says, I want 30 bucks an hour, right? And they're an A player. And I believe they're an A player. I'll say, how about this? I'll start you out at 32 an hour. Now, do you think they're going to be upset with me because I gave them an extra $2 an hour? Or are they going to leave the interview and call their wife or whoever and say, you won't believe this. I asked for $30 and they gave me $32. You don't think they're going to be jacked to come work for you and now live up to that dollar amount that you're paying them? That's what A players do. They want to deliver value. Anyone below that, see them below, they just need a job. They're just showing up to get paid. And, you know, you get a D player in there and they don't even give a crap about the quality of the work or anything else. You're lucky if they show up two days a week. A lot of you guys are hiring C players and B players. If you're lucky, most of you have never in your life experienced an A player and what it will do for your business. Most of you have never experienced an A player. You think they're A players. In reality, they're C players. But here's the problem. The reason why you can't hire A players is because A players don't want to go work for B players or B bosses. And a lot of you are B and C bosses. A players only want to work for A players. And so if you want to attract an A player, you have to be an A boss, an A company. You just have to. You have to have all these things in place. And an A player is not going to come work for you if you have no processes in place, if you have no... No branding. If you're just like, hey, you're hired, just show up at this address on Monday morning and we'll get started. No A player will ever work in that environment. They expect some kind of onboarding process. They expect a compensation of some kind. They expect a clear and easy to understand path forward for them. They expect you to have an org chart. They expect you to have a ladder, a pay ladder. Right. Where they can see how they're going to make it to the next level. They expect all this stuff. You guys are out there hiring, you know, B and C and thinking you're hitting the jackpot. No, you're just prolonging the inevitable. They're going to end up quitting anyways, or you're going to have to fire them. So not hiring the right people is a huge, huge cost to businesses because most of you guys are hiring the wrong people. Number five. And you'll say, oh, of course you're going to say this. Well, I'm saying it because it's true. And number five thing that contractors do that costs them an enormous amount of money is they try to figure all of this out on their own. They don't have any mentors. They don't have any communities, any peer groups, no coaching, nothing. They just try and figure all of this out on their own. If I could go back in time, day one, I would start my business. Day two, I would hire a business coach. I'm not just saying that because I'm a business coach. That is true. I've spent a lot of money on business coaches after I started my own coaching business. I don't think there will ever be a time in my life where I don't have a coach or being a mastermind or have a mentor or something. I'm always constantly trying to one-up myself. to better myself. I joined a mastermind earlier this year. It was $20,000. It was $20,000 to join this mastermind. And all it is, is for marketing. It's not for everything in life. It's not for everything in business. It's just a mastermind to help learn more about marketing, how to market my business. That's it. I've joined a coaching program that taught me how to get good on camera, paid several thousand dollars to have. Hollywood actors and screenwriters teach me how to be good on camera. I've hired, I've paid thousands and thousands of dollars to people to teach me how to start a coaching program. When I first started, I've paid thousands and thousands and thousands of dollars to people to help me with my mindset stuff, to have the right mindset. Anytime I have a problem in my life that I need a solution to, I pay money to get that solution. I don't waste my time. to try and figure out that solution. So if I was going to start, let's just say as example, I was going to start a, let's just say I was going to start a pressure washing business tomorrow. I have enough knowledge about business. I could do that and probably do really well. But the first thing I would do is go hire someone who is a business coach or has a program or a course in pressure washing businesses specifically so they can shortcut the learning process for me. I can just go hire someone that says, do this, this, this, and this to have the maximum success in your pressure washing business. I wouldn't just go on YouTube and spend three hours every single night watching every video I could possibly find on pressure washing and then try to figure it out on my own. No, I would hire an expert immediately. I'm in the process of doing some projects. I'm not ready to discuss what those are right now. But I'm doing some projects that are going to be released to you guys in the future. And guess what? I hired professionals to help me do these projects because the amount of time it would take me to learn how to do these things is in the hundreds of hours. And I don't have that time. So I'm willing to pay for it because the quicker I can learn something, the quicker I can apply this to my business, the quicker I make more money, the quicker I have more freedom because money buys freedom. So number five is trying to go out and figure business on their own, trying to figure it all out on their own. Now, I understand if you're just starting and you don't have any money, totally understand that. If you're strapped for cash, I understand that. And, you know, there are definitely times there's different types of pros, you know, programs and coaches and resources available. When you first start out, if you don't have any money. You can go watch YouTube and get as much knowledge as you can quickly until you make a little bit of money and then invest in some kind of program or course that's going to make you a little bit more money and then invest in a coach at that point. But I'm just telling you right now, I don't care what it costs. If I need something and it's going to cost me, say, $50,000 to hire a coach to teach me how to do something, I'll put that on a credit card. I'll go take out a loan. I'll do whatever it takes to get that information. I don't say, well, I'll just save up cash for three years because I don't like going in debt, Brad. I don't do that. There's good debt and there's bad debt. And anytime you're making an investment in yourself to get better, that's an investment. That's not a debt or an expense. I mean, technically it's a debt because you're putting it on a car or whatever, but it's not an expense in the sense of, You're buying a motorcycle, right? That you're just going to have fun with. That's not going to make you more money. If I go invest in the stock market and I put $10,000 in a stock market, I expect to return on that. If I go and invest in a coaching program that costs me $10,000, I expect to return on that, right? It's an investment. Investments are what's going to make you money. So why would you wait to invest in yourself? If you know on the back end, there's a very high probability you're going to make more money. Why would you go six months of trying to save up to join a program when during that six months, if you would have just, you know, taken a little bit of risk and you joined six months prior in that six months that you save the cash, you could have made potentially five times that much cash. Instead of waiting six months to save up 10 grand, you potentially could have by the six month made $50,000 cash. Tell me in what world that makes any sense to say, I don't want to make more money. I'm just going to wait and try to save up. It makes no sense. So you have to start investing in yourself. You have to. It's the only way to shortcut this whole process. So let's recap. Number one, branding is wrong. Big time mistake, long-term realization. Number two, not pricing correctly. Shocker. If you don't charge enough, you can't make enough. Number three, selling to the wrong clients. Sounds pretty simple. A lot of people don't understand this. Number four, hiring the wrong people. You're hiring B players and C players because you don't know how to look for an A player and you can't afford it. And then lastly, trying to figure it all out on your own. You need to pay for the education. It's no different than paying for a four-year degree, right? People leave school with $100,000 in debt and don't know jack crap, and you can invest one-tenth, one-tenth of that amount and know 10 times the amount of information and make 10 times the amount of money. It's a no-brainer. Guys, if you want help in your business, reach out to me, book a call. We'll do an evaluation of your business. See if it's something I can help you with. Maybe I can. I don't know, but I'll tell you and I'll be straight up with you. If you want to do that link in the show notes, you know where to find me on the socials. Just search for Hammer and Grind Podcast. Look for this new content I got coming out and pay attention for some new things that I'm releasing here in the near future. Until next time, guys, remember, profit is not a dirty word.