My first article as a columnist for REMODELING in 2006 was titled “Frog Soup.” In that article, using the renowned frog soup analogy, I discussed how new employees starting a job at your busy company might jump into the water, find it’s boiling, and immediately want to jump back out.
That was during the housing boom when business was strong but chaotic and good employees were difficult to attract and keep. If they realized your business was cooking soup, they could easily find another where they wouldn’t become part of the food chain.
Well, things have changed. It’s now an employer’s market, and good employees are in competition for jobs. It’s also now a consumer’s market when it comes to remodeling, and remodelers are the ones looking for work to help keep their doors open.
Back to the frog soup: If your business is struggling, your soup is getting cold. And as it’s been cooling, it has become difficult to find work and earn enough gross profit to meet overhead expenses. For most remodelers, the causes of these challenges have more to do with ineffective marketing, inadequate business planning, and/or poor business management than with the economy.
Imagine this time that you’re the frog. You can decide to stay in the soup and let it keep cooking, or you can start a new batch.
If you’re up for a new batch — one much more appealing and nourishing than the last — here is my suggested list of ingredients.
- Your business can’t and shouldn’t serve everyone. Choose a strategic niche to serve.
- Word of mouth and good work aren’t enough anymore. Create a strategic marketing plan with tactics to attract your targeted niche.
- Stop tolerating under-performing and under-skilled staff. Find and attract the best and brightest and use benefits beyond money to keep them.
- Stop guessing at your hourly cost of labor and markup. Create a budget, calculate burdened labor costs, and make sure your niche can afford you.
- Don’t confuse dropping your price with selling. Enroll in a sales training program and become a sales professional who can effectively differentiate your business and sell value to your targeted niche.
- Come up with a realistic exit plan and track your progress. The government says that a majority of you don’t have enough money saved or invested for retirement. If that’s so, do something about it now.
- Stop winging it every day. All of the above should be included and described in a written business plan. Hold yourself accountable.
If you want to be a business owner, stop thinking and acting like a carpenter. If you want to remain a carpenter, that’s perfectly fine. Get a good job with a real business and make money at doing so. Soup’s on — are you in?
—Shawn McCadden founded, operated and sold a successful design/build company. A co-founder of the Residential Design/Build Institute, he speaks at industry events and consults with remodelers. firstname.lastname@example.org
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