Don't Even Think About Going Into Business
So you’re thinking about going into business - the plumbing, or indoor comfort business to be more specific. Well that’s some pretty exciting news. For the next few paragraphs, I’m going to attempt to burst your balloon with some really negative advice.
If I do a good enough job, I’ll talk some of you out of going into business at all. The few left standing will at least have a realistic notion of life in the business world. (Please note: There are several significant reasons for hanging out your own shingle, but I’m not going to delve into them today. That makes it too difficult to sound like Eeyore wrote this month’s column.)
To begin with, look over there on the wall, right there beneath the atomic wall clock. See that certificate? What does it say - Class C Contractor? Master Plumber? But where’s the one that says Marketing Maven? Financial Wizard? Charismatic Recruiter? Visionary Leader?
Odds are you didn’t learn much about these skills while sweating copper or evacuating suction lines. Yet those are the skills that will have more to do with your success than your impressive technical skills.
The more technical prowess you have, the tougher your challenge to grow your business. Why? Because the more you have invested in the technical side of your craft, the harder it will be for you to turn loose and focus on managing the business itself.
You’re going to end up being frustrated because business success requires skills that you may not be comfortable with. Even worse, the “business chores” will constantly get in the way of the “fun stuff,” such as solving technical problems with your artistry and finesse. You’ll find yourself wondering, like many who have gone before you, “Why can’t I just hire someone to run the office so I can focus on the areas I’m already good at?”
When you first launch your enterprise, you probably won’t have enough cash flow to hire an office manager, marketing manager, field supervisor, inventory manager, warehouse driver, janitor or receptionist. Some or all of these hats will be on your hat rack.
Add to that fact this one: The stress of business will strain your marriage because you don’t get an opportunity to unwind at the end of the day. Your kids will wish you had a “real job” so you could be on the soccer team booster club.
That’s right. After a day of wrestling 150 feet of sewer cable in a greasy restaurant drain you get to come “home” to a desk of accounts payable, billing, bookkeeping, truck maintenance and marketing. You may be able to coax (indenture) your spouse to handle some of these chores, but you’re still going to find plenty to keep you occupied.
Oh, and don’t think that you’ll be able to make a hard and fast rule like “Every Thursday is date night.” Remember that boiler you coaxed back to life at the nursing home? Yeah, that’s the one. It’s out. It’s 18 degrees. It’s Thursday night. Note: Be sure to cover the pizza with a paper towel when you reheat it in the microwave.
You’re Different: But you know you’ll be successful because of all the Horatio Alger success stories you’ve heard. Your boss used to talk about how he and his wife would work until late at night, wiping tub traps and closet bends so they could get a whole house roughed in the next day. Yes, those were the days. And finally, after years of climbing up his own running rope, he finally achieved the pinnacle of success - a company that still offered no future to its best employee (you).
Now don’t get me wrong - I’m only taking this cynical stance because you already have plenty of cheerleaders telling you what a great future you have. All you need now is a full-page ad in the phone book and a money-counting machine.
Here’s some more cynicism for you: Once you launch out on your own, you’ll quickly find out that people are crazy. Nearly every single one of them.
Here’s how to prove it: When you launch your business you’re going to offer the most professional, personable and economical service in town. In fact, your service will be so good that people will be glad they had a problem just so they could watch you fix it. Anybody would be crazy to use someone besides you. Right?
Therefore, most of the people in town must be just plain crazy because here you sit, with a quiet phone and you just know someone is getting their boiler fixed right this very minute.
But your phone won’t be silent for long. Soon enough - and this is a universal truth - you’ll get a call from a property manager or general contractor with one of the following dilemmas: “The plumber that I’ve been using (pick one or more of the following) a) has retired; b) has been very unreliable lately and I’m tired of dealing with all the problems; c) isn’t big enough to handle all the work I’m about to offer; or d) must have gone out of business because s/he just doesn’t return my calls anymore.”
Since a high percentage of your potential clientele are crazy (because they use someone else), you’re going to be tempted to snap up this huge chunk of business. Suddenly, you’re working all day, every day. Within a week or so, your new client is calling your cell phone instead of the office number and the money rolls in. What fun!
After a while, maybe just a matter of months, you start to decode the standard phrases mentioned above. “Retired” really means, “couldn’t make enough money so he went out of business and now wears an orange apron at the Home Box Store.” “Unreliable” really means “wouldn’t take care of warranty work unless I paid him for all invoices that are more than 120 days old.” “Isn’t big enough” really means “give me a break on this little project and you’ll be my first choice on everything else - that is, if I can’t find a hungrier contractor.” Finally, “doesn’t return my calls” really means “I made the mistake of finally paying off my past due invoices and now I don’t have any leverage to get him out to my slum project in the middle of the night.”
I’m sure there are a few other “standards” out there but these cover the basics. Now, before you start thinking I’m being overly cynical, I must admit that I do know of some contractors who have built pretty good businesses on low margin, high volume work for larger customers. I also know of several instances where penny slots paid out million dollar wins in Reno.
It’s obvious that I’m beginning to enjoy this exercise in negativity, so let me lighten up with a few items that every new business person should treat with high priority.
- Read (or re-read) Michael Gerber’s “E-Myth Revisited” or “E-Myth Contractor.”
- Start delegating from the beginning. Hire people to get the work done so you can focus on the business.
- Before setting your price, figure out what your costs are.
- Each morning recite the following: “This business is for my family, not in spite of them.”
- Know your costs BEFORE setting your price.
- Don’t let the business keep you from dating your spouse (reschedule date night but don’t cancel it).
- Never stop marketing - you’ll always need new customers.
- You can’t figure a profit if you don’t know your costs.
- Don’t let any customer represent more business than you can afford to lose. (You never know when that hungrier contractor will come along.)
- Never let the other guys set your prices. Figure out your costs, then create a profitable selling price and stick to it.
Now, if you don’t mind, I’m going to go catch a happy flick like “Requiem For A Dream” or “The Deer Hunter.” By the way, did I mention that you should know your costs before setting your selling price?