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Aug 06
2012

A Swamp Experience

Posted by Steve Marr in Untagged 

I received a request for help from a drywall subcontractor. He made a reasonable living over the past several years, but business has fallen off.  For the past three years, he has been walking into a swamp, getting in deeper every day.  He does not know what made him profitable and what changed.  He has key issues to face, especially because he is in an extremely price competitive business. While he has a good skill level and delivers quality work on schedule, so do other competitors. 

He believes he needs a marketing effort, and he is correct. Currently he has none. He has no web site, a poor Yellow Pages® advertisement and no other advertising.  He has no idea of his unique sales proposition (USP).  Fortunately for him, most of his competition is ignorant of basic marketing, too.

His goal was to get me, in a few hours, to transform his business into a profitable one.  He also wanted to grow his business from two part-time helpers to developing three full-time crews he would manage. I explained the necessary process.

First, I needed to work with him to develop his USP (my earlier article is here: www.bit.ly/kCQ1N7 ). He wanted to know why he couldn’t write a few ads to get more business. I explained that he didn’t understand why customers called him.  He thought it was because he did good work.  I reminded him that two dozen others do good work as well.

Until a business owner is clear about their USP, the owner cannot develop a good marketing plan. Your USP shows you what customers to target and how to get those customers to buy. There is no shortcut to this process. The USP must come first before you can develop any marketing approach.  He needed to differentiate himself from other drywall contractors.

The initial step he needed to take to improve marketing was to go back to past customers for testimonies and referrals.  I told him to ask his customers, “Why did you hire me?” Ideally, their answers would give him a picture of his competitive advantage.  He has a bigger problem if no pattern surfaces.

Second, there was the issue of pricing.  He asked if dropping his prices 5% would help. He was already in a very competitively priced business in which others were charging much less. A small cut in price would not gain more customers.

Third, I explained what was next after he had his USP focus and an increased market brought more customers.  He would need three crews and that would require him to change everything about the way he managed his business. He could no longer be a one-man show.  He would need to become a manager with employees. This change would affect everything: his advertising, bid system, hiring process, billing system, and how bills were processed and paid.

He still had unrealistic expectations.  He hoped that I could set up his entire marketing plan, implement that plan, write advertising copy, and reset his business model to include a three crew organization—all in a few hours.

I reminded him of Proverbs 21, 5:  “Steady plodding brings prosperity, hasty speculation brings poverty.” (TLB)  There are no short cuts. He faced a choice.  He could embrace the changes that would lead to his dream of developing a multi crew drywall business, or continue on his current path that was leading him deeper into the swamp every week.

Again, I reminded him of scripture: "But don't begin until you count the cost. For who would begin construction of a building without first getting estimates and then checking to see if there is enough money to pay the bills? Otherwise, you might complete only the foundation before running out of funds. And then how everyone would laugh at you! They would say, 'There's the person who started that building and ran out of money before it was finished!'”  (Luke 14:28-31, TLB)

All of us in business need to count the cost. No matter what we build, money and manpower are only part of the equation. The builder needs to make sure that the desired materials are available, that he can hire skilled workers, and that he can manage the team effectively.  Having money without the ability to manage the crew who would do the work would mean failure.

Unfortunately, the drywall subcontractor wanted a quick fix for too many problems, something I could not do. I wished him well and stepped back.

 





















Sep 28
2011

Wrong Sized Windows- A case study

Posted by Steve Marr in Untagged 

I was working with a client that made replacement windows. During our first meeting, I noticed $140,000.00 in inventory carried on the balance sheet. Knowing most windows were made to order and installed shortly after manufacturing, I asked how could they be carrying this much inventory.

Jul 02
2011

Delivery Problem Demonstrates Lack of Customer Perspective

Posted by Steve Marr in Untagged 

Every day businesses make millions of deliveries to customers ranging from a pizza to $50,000.00+ items. In many ways, effective, on time deliveries are a hallmark of service.

One delivery issue, a small issue in the scheme of commerce, highlights how a business can fall short, and not understand the impact on customers.

A customer ordered 5 trees from a local nursery, and paid cash at time of purchase. The nursery agreed to deliver and plant the trees the following Wednesday morning. When the trees failed to show up, the customer called at 11:00 AM to follow up, and was told, “”We needed to have the crew that delivers the trees do other tasks at the nursery, we will be out in the afternoon.” No call was made to the customer explaining the delay earlier. One problem was, the customer kept the morning free, but had commitments in the afternoon and was unable to supervise the planting, asking the crew to plant as indicated by stakes.

Feb 26
2011

Case Study In Buying Cheep

Posted by Steve Marr in Untagged 

Mark was looking at starting a well service business, drilling and servicing a large area in western Iowa. He believed the demand was great because the response time on repair calls was four to six days, and there was a waiting list of 90 days for new well drilling.

Mark determined that equipment would cost $225,000 and that he would need an additional $40,000 in operating funds before the business started generating cash. His wife, Martha, was uncomfortable because they only had $140,000 in savings and she didn’t want to go into debt.

Mark was unable to obtain a loan at the bank for the needed capital. Though he had an excellent reputation in the drilling business and he possessed the needed organizational skills to succeed, Martha was willing and able to conduct the bookkeeping and appointment scheduling, and there was an evident need in the market, he had key issues that he needed to address before moving forward:

Jan 31
2011

Case Study Auto Repair

Posted by Steve Marr in Untagged 

Herb specialized in rebuilding high-performance engines. He decided he wanted to be in business for himself, so he fired his boss and jumped into business ownership.

His first step, he decided, was to advertise wildly, but his money and effort did little to attract customers. He invested $65,000 for tools and equipment but only had 60 days of operating funds. Most of the work that came in was from customers with older cars that had blown engines and needed repair work to get back on the road. Unfortunately, most of these customers were looking for the cheapest price and weren’t willing to pay for Herb’s expertise. Business was slow and the margins were poor.