Choosing Your Customers

I hear more and more customers talking about the number of appointments they needed to have and the number of contractors they had to meet with before finding the right person for the job. Whether I'm the 6th person in a two-month search for drywall work, or the first contractor a customer is meeting with for a flooring project, there is always one consistent aspect to the process – customers and contractor both have a perfect fit. A contractor with multiple employees, multiple vehicles, a warehouse and a materials distribution division will always cost more than an installer working solo to complete the same project. Flooring is a great example of this. It's the most basic idea of strength in numbers due to the tasks involved. If an outfit has three employees and is being run efficiently there will be an installer who assembles the flooring, a cutter who runs the saw, and a runner/assistant.

When I first started in residential remodeling I was installing windows and doors. It was not uncommon for us to have 3 or 4 installers on site, with each taking on a separate task. Our installation rates were higher than small firms but we could offer better prices on materials through a distribution agreement and we were able to accomplish whole-home installations in a week's time (sometimes less). If I were to accomplish the same number of tasks on my own the resulting quality of work would be just as good but the time it would take would be considerably higher. (For more on this please read my article on “Good, Fast and Cheap” by clicking here.)

Because of these ideas it's very beneficial for the customer to think about aspects such as cost, time-line and quality before looking for a contractor. Does your project require intricate tasks and a higher level of craftsmanship than basic installations? Are aspects of your install custom, requiring a higher level of knowledge than the basic install? How much time do you have before you need the job completed? Once you have a basic answer for these questions you can begin to look for the right person for the job. Use previous project photos to find the quality your project requires. Match styles and materials to what you see in a company's portfolio. Is their quality great but the specific style you're wanting isn't represented in their portfolio? You may find that their prices are cheaper than their competition and the quality is matched but there can be a considerable amount of extra time needed.

As contractors, we have to find customers that fit the description of what we're looking for. Not all business is good business. It doesn't benefit us any to commit to a project we will be unable to complete to the customer's expectations. Don't take projects you're not confident in. Don't accept every project that comes across your desk.. some will require more than you can give or some won't pay what your business needs to thrive and grow. This doesn't mean I would suggest being greedy. We should always find ways to offer competitive rates without undercutting ourselves, our competition or our customers. It never works out and always gets worse as the situation progresses. What I would suggest is to find your niche, which I look at not only as the trade or specialty you find the most talent and the best results in, but the trade or specialty that allows you to display your talents in the most competitive, honest and professional way. Consider the time it takes you to complete a task, the going rate for the service you're providing in your area, and the cost for you to complete the job. (Find more on setting prices by clicking HERE). If you're in the same ballpark as the competition, or even under the going rate, you will most likely find success in the industry. There are many ways of finding new leads and growing your customer base. To find out more click here to read our article on finding customers and contractors.

Remodel Nightmares - Episode 1 - The $80,000 Floor

In my industry we are constantly battling the stigmas left by those who are greedy, deceitful or, in some situations, outright criminal. We've all heard of the customer who paid $10,000 up front only to have their “contractor” take months to start the project, show up and do shotty work, or disappear altogether. These episodes, as I like to call them, will describe situations I've heard directly from customers, experiences I've witnessed first hand, or projects I've had to finish due to lack of experience, respect or discipline on the part of the contractor. My hope is that you can get comfortable looking for warning signs when discussing projects with any potential bidder, which will help you avoid the time, cost and emotional drain of finding yourself in a similar situation. For help and suggestions with finding a contractor please CLICK HERE to redirect to my article and contractor sourcing do's and don'ts.

Without further ado, I present

- Episode 1 - The $80,000 flooring project.

My most recent customer was a very nice elderly woman who was, for the most part, confined to her home due to health problems and the need for ADA accessibility to enter and exit her home. While building a deck and ramp for her to use I began, as I usually do, to get to know her better and hear some of her experiences with other companies in the remodeling industry. I was especially shocked when I asked why the seams of her laminate flooring were peeled back and the layers were separating.

“When the installers were done pressing the flooring onto the adhesive the glue came out through the seams and dried over the planks”. I was astounded. Not only did they use adhesive to install a floating floor, they used way too much, allowed it to dry and then attempted to scrape it off once it dried. Every step of the way this “company” showed that it's employees were not only inexperienced but they were uninterested in taking their job, and their customer, seriously.

I became more interested in the story so I had to ask - “How long did it take?”

“6 months” she said.

I stood there, mouth wide open in amazement at the fact that a manufactured home, no larger than 1600 sq ft, could have taken anything close to 6 months. At this point she began to tell me more about the experience. I'll paraphrase the way she explained it to me but the details of the installation process are the aspects I couldn't forget if I tried.

According to her, this company showed up and gave a bid of a few thousand dollars for installation. The initial amount is not relevant, as you'll see, when the final bill was presented. The first mistake the customer made was agreeing to the project based on a time and materials agreement. I say “agreement” because the contractor, if we should call him that, refused to provide any type of contract to the customer. So for those 6 months the contractor had anywhere from 3-5 employees working with him. He was charging $50 per person, per hour. For a group of 5 guys (including the GC) for 8 hours the total labor charge for one day is $2,000. Keep in mind that the flooring was click together laminate. At most, in my personal experience of working by myself in similar installations, the project would have taken me two weeks BY MYSELF. These guys showed up for 6 months. I cannot begin to guess what they were actually doing in that amount of time.
 

The worst part of this is the end. Once the project was completed, which in itself resulted in the flooring being damaged upon repair, the contractor gave my customer a bill for $80,000. It seems shocking but when you begin to do the math of $1,200-$2,000 labor charges per day, and a project in which the contractor would disappear for days, and sometimes weeks on end, in order to milk the clock and justify such extreme charges, the final bill does add up. What doesn't add up is how this person thinks it's acceptable to conduct a business, treat customers, or set his prices that way. In the end my customer let the contractor know that if he wanted to be paid he'd have to get it through her attorney. I was very proud of that, hearing that she drew the line and called him out on his business practices. But she was left with damaged flooring, which was new and should have looked great for years, thanks to this individual.

There are a lot of strategies you can use to avoid phony contractors like this. CLICK HERE to read our article on finding a great contractor and what to expect during the hiring process.