15 Steps To A Successful Contracting Business

• Demand accurate financial statements (balance sheet and P&L) on your desk by the fifteenth day of each month. Analyze your financial statement using financial ratios and key performance indicators. THIS IS NOT AN OPTION!
• You only sell two things: Labor and inventory. You must price each one in strict relationship to its respective degree of complexity, desirability, and supply.
  • Price service labor at a 25% to 35% net profit.
  • Price service inventory at a 10% to 20% net profit.
  • Price installation labor at a 10% to 20% net profit.
  • Price installation inventory at a 5% to 10% net profit.
• Install a system that will allow you to record the source of every sales and service opportunity. Calculate the cost to produce a successful and profitable sales lead for each category. Pound the most efficient category’s.
• Marketing is NOT a yellow page ad. Clean trucks, truck signage, outstanding uniforms, photo ID badges, grooming, telephone scripts, vocabulary, and most importantly, attitudes are marketing.
• For most small to medium size companies, a budget of 2% to 4% of total sales should be allocated to advertising and marketing expenses.
• For most small to medium size companies, direct mail and newspaper ads are the most effective and efficient means of creating sales opportunities.
• Generally, you should avoid spending more than 40% of your total advertising budget on the yellow pages.
• Establish flat rate pricing in your service AND installation department and train your co-workers on its proper use. THIS IS NOT AN OPTION!
• Create outstanding, highly professional sales proposals, invoices, and “maintenance agreements”.
• Your customer, and their family, are trusting you with their safety, security, comfort, and efficiency. Do not insult yourself or your customer by offering them a “bid”.
  1. Ask open-ended questions and let the customer do 85% of the talking.
  2. Offer them a solution to their problem.
  3. Explain the solution, why it is appropriate, and what it will cost.
  4. Justify their investment with factual data and address any objections.
  5. Create a sense of urgency.
  6. Ask for the order and do it several times. Use the “Assumptive Close” technique.
  7. Follow-up, follow-up, and then follow-up some more.
• Create a comprehensive Co-worker Policy and Procedure Manual.
• Conduct weekly, thirty-minute, company meetings. Topics should include reducing callbacks, filling out paper work, sales techniques, when to repair or replace it, etc. These meetings should not become the “bosses” bitch session.
• Create a Truck Stock List for each department. If you are still on the old “time-and-material” song and dance, this must include retail pricing for each and every item on the truck.
• Establish a comprehensive truck-restocking program. Trucks are restocked after each company meeting.
• Write a budget and update it each month. Use your budget when making highly strategic decisions such as manpower requirements, training programs, marketing and pricing.

©2000-2011 MrHVAC.com, All Rights Reserved. You may duplicate this document provided the copyright notice stays intact and the document is not redistributed or offered for sale.