Take small bites to make your business more palatable.

This month, we’re having a little taste test but it includes a homework assignment. I want to do a future column highlighting contractors who are making a mark in their community and in their employees’ lives while impressing their customers and earning a profit. Whether you have a large or small company, I would love for you to share your success story. You’ll provide encouragement to others who are afraid to try new ideas.

 Now to the taste test. Whenever my kids didn’t want to try something new and exciting for dinner, such as boiled crawfish or spaghetti squash, I would simply remind them that at some point they had to try their first bite of pistachio almond fudge ice cream. Could they imagine going through life without the joys of ice cream tickling their taste buds? If they hadn’t taken that first bite, where would they be now?

Unfortunately, in business, instant gratification rarely occurs in the same way we get that taste of ice cream or chicken-fried beef liver. Many times, “tasting” requires a decision, followed by an investment, then implementation and, finally, results measurement. Beginning with some tiny nibbles, let’s see if we can explore ways to make our businesses a little more palatable.

The Proper Pricing Course

Here’s a zesty little idea just for contractors who charge by the hour. Because you’re  time and materials, I know you probably don’t have much time for reading so my hope is that your spouse, son or daughter will pass this along. I’m reasonably confident that you would like to figure out ways to improve your income. Rather than do something drastic, like raising your rates, let’s try something a little easier. For example, do you have a minimum trip charge? Something like $XX for the first hour, $XX per hour thereafter. For the next week, try raising that initial charge by $10.

For this taste test, keep up with two, and only two, statistics. First, how many customers turned you down and sent you packing because of the minor change in your rate structure? Second, after a week, tally up the extra revenue generated by the rate tweak. One truck doing four calls a day should generate somewhere around $200. Occasionally, you may have a customer turn you down but, in most cases, you will stay busy and collect the extra fees, too. If you like the taste, keep your new policy in place.

Ready for something a little meatier? Try just a sliver of up-front pricing. Contractors who consider up-front pricing usually get bogged down when trying to figure out their costs. For most, it’s good that they stop at this point because once they see what their costs really are, they go into denial and start mumbling about how people will never pay that kind of money in their area. Then they set their rates too low and find themselves paying to work.

For the next taste test, let’s just skip that “know your cost” part and go straight for the meat - think of it like eating king crab without having to crack the exoskeleton. All you need to do is double the hourly rate you currently charge and use that as the basis for establishing your selling price.

This next part is going to sound like self-promotion, and I suppose it is, but it’s the simplest way I know to help you get a taste of up-front pricing. Go to www.upfrontprice.com, click on the “custom price book for free” button and follow the instructions (as a Plumbing & Mechanical subscriber, you’ll get it at half price).        

Once you’ve downloaded and printed a price book, look over the instructions and use it for the next 10 new customers who call. Don’t scare yourself by trying it for existing customers, just use it for new ones who don’t know that you are accustomed to paying to do their plumbing work. After 10 customers, tally these statistics: How many sent you away? How much more did you earn by quoting prices from the book when compared to working by the hour? I could tell you what most of my clients experience but I don’t want to spoil the savory surprise.

A good chef wants to pleasantly arouse the taste buds before progressing to the main course. In our case, I’ve been very intentional to present pricing as the first course. Without proper pricing, it’s just not feasible to move on to the main course.

What? Did you think that pricing is the main course? Far from it. Proper pricing is simply a way to cover the tab for building a flourishing business. If you struggle to keep the supply house paid, then you won’t taste the benefits of training, better equipment, stable employment and all the other trappings of a flourishing business. As you begin to see the importance of proper pricing, a real banquet becomes possible.

The Training Tray

If you already have your pricing in order, you may already have a few employees, so let’s sample a treat from the training tray. My recommendation for most companies would be to start with a succulent slice of sales training because it will yield the quickest results. Sales training programs come in many varieties but most are some form of communications training. Your sales training doesn’t have to be “trade-specific” but good trade sales coaches will produce better results.

In my experience, sales training produces results almost instantly. Your results may vary but if your techs are motivated and interested, you should see quick results. Besides tickling your palate with the sweet taste of sales, better communication produces happier customers.

The Delegation Buffet

Sales are delicious but when you’re ready for a hearty main course, try the delegation buffet. If you are a perfectionist, you may have to acquire a taste for delegation (sort of like getting past that first oyster on the half shell). But if you can overcome your fear of an employee doing something a little differently than you would, you’ll have a veritable smorgasbord of opportunities.

Delegation requires that you dish out responsibility along with empowerment. Delegation without empowerment is worse than peanut butter without jelly. This is a big bite, so don’t expect instant gratification. You may even choke a little the first time. But keep nibbling away by setting up opportunities for your employees to achieve the desired goal.

Be sure to set an objective for employees to accomplish, provide the means to accomplish it, then allow your employees to decide how it gets done. They will make mistakes but so will you. The difference is when you make a mistake, you only have to answer to you. Keep that in mind whenever you have to sort through a problem.

Your dessert comes when you’re able to delegate enough authority to get away from the office long enough to finally enjoy a nice meal with friends and family, in a far away place, whenever you want to. Hungry yet?