2008 was a challenging year for contractors in the residential remodeling industry. With declining home values, tightened credit, lack luster new home construction, smaller remodeling projects and erosion of consumer confidence many contractors are facing uncertain futures. The time and need for change has never been more apparent than now. We need to analyze our businesses and make sure that we are able to deliver outstanding products and services to the Next Level Consumer.
Here are 11 obstacles that if not addressed, may prevent residential contractors from succeeding in the new economy.
1. Writing an accurate and effective business plan based on a defined strategy and goals consistent with best practices in the industry.
2. Developing a marketing plan that generates leads (your target customer) consistently.
3. Defining a sales process and learning how to sell on purpose, solutions to meet the needs of your customer and your company.
4. Learning how to develop and use the right markup to cover all your direct and indirect costs, materials, labor and overhead, and then leave your company a fair profit after all the bills are paid.
5. Learning how to develop and maintain consistent cash flow. Poor cash flow kills businesses.
6. Learning how to define roles and responsibilities and delegate to the appropriate trained employee. Contractors who wear too many hats cannot do it all.
7. Learning how to develop, train and use systems in line with industry best practices. Consumers are expecting educated and trained contractors who are experts in their field.
8. Learning how to manage expectations of the Next Level Consumer.
9. Learning how to attract, hire and compensate the right employees and not accepting high turnover.
10. Developing professional proposals, differentiation and deciding to set up and do business legally (licensing, OSHA compliance, the proper insurance coverages and classifications of employees, W-2 employment).
11. Decision to not accept work from the wrong client and performing work outside core competencies. Trying times can influence the decision to work for the wrong client and take work you are not set up to do.
What other obstacles impact the success of residential contractors?