Ask The Expert Q&A

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QI am in the construction business. Like many other businesses in my industry, my company was hit hard by the recent economic downturn. In the past, we never had to do any active sales or marketing, as all of our business came from repeat customers and referrals. Now, due in part to increased competition, I must begin marketing my company’s services. Aside from the standard Yellow Page ad, do you have any suggestions?
ABefore adopting a new marketing strategy or hiring sales representatives, you must change your perspective. In a recent survey, more than 400 construction company owners and various contractors were asked, “What business are you in?” Only one business owner answered the question correctly. The wrong answers went like this: “I’m in the construction business.” The right answer came from a plumbing contractor who said, “I’m in the sales business, and I just happen to be really good at plumbing installation, service and project management.”

Changing your mindset to that of a salesperson can be difficult, as you probably enjoy carpentry, plumbing, roofing, building homes and project management more than sales. However, as you are well aware, these are difficult times for the construction industry. Therefore, only a radical change in perspective will save your company and lift it out of failure or stagnation.

Once you realize you are in the sales business, it simply becomes a matter of mastering the sales process. Then, the contracting, building or project management process can be modified according to what you are selling. These days, waiting for the phone to ring will not suffice. While you are waiting for the phone to ring, your competitors—who knew all along they were in the sales business—have already beaten you to the punch and captured your customers.

During a similar economic slump after 9/11, the most successful business owners were those who understood they were in the sales business and put all their resources into selling and capturing additional market share. For example, one general contractor transformed all his field project managers into salespeople. They blitzed the marketplace and were able to gain more profitable business. Once a sales backlog was established, the project managers returned to their respective field positions, doing what they did best. Today, those companies are repeating what they did then and are again increasing their market share.

You need to change your mindset and choose not to let the economy, the banks or other external factors kill your company without a fight. Then, be in the sales business.

QRecently, I applied for a loan for my roofing business and the bank denied my request. Without this loan, the future of my company looks bleak. I don’t want to reduce my costs, but I feel that is the only thing I can do to keep my head above water. Do you have any suggestions as to how I can improve my business and avoid cost reductions?

AReducing costs is when the death spiral starts. You begin cutting and cutting, while your sales-oriented competitors take more and more of your business. There is no such thing as cutting your way to profitability.

When asked about the root causes of loss of profitability and decline in sales growth, 99 percent of owners blame external factors such as the economy, competitors, banks, etc. Actually, the root cause of stagnation and decline is always your attitude as a business owner. If you consider yourself at the mercy of a dying industry, or of banks refusing to give you a loan, you’ve allowed yourself to become crippled and, in turn, have become a victim. Instead of adopting a “pity me” attitude, say to yourself, “When the going gets tough, the tough get going.” If you have a losing mindset, it will permeate the organization causing everyone to give up.

In Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant, authors W. Chan Kim and Renee Mauborgne explain how innovation can render rivals obsolete and create new demand. In the current marketplace, most people simply see a red ocean filled with numerous competitors, large and small, who fight for the same market share. The challenge is to jump out of the red ocean into the blue one to find a new market with little competition and high profit margins. There is a tsunami of money roaring toward the construction industry from the economic stimulus package. Since much of it will be dedicated to green construction, you should become familiar with the U.S. Green Building Council’s LEED program, which certifies sustainable building projects, as well as with the Green Building Certification Institute’s LEED Professional Accreditation, which certifies contractors who thoroughly understand green building practices and principles.

Now is the time to get certified quickly and step into the ballpark to be ready when the funding arrives. Research the stimulus package for opportunities and follow the money, whether it’s installing solar roofing or green siding. Learn to sell benefits. Appeal to emotions and understand buying motives. That’s how the sales team will create a differential that leads to increased profitability.

Company culture either inhibits or stimulates innovation, and it is always driven by the owner’s mentality. If you consider yourself a victim of the circumstances, you will most likely create a culture in which your employees cannot be innovative either. Everyone who adopts a “poor me” attitude is, in part, responsible for creating a self-fulfilling prophecy.

Reducing costs is when the death spiral starts. You begin
cutting and cutting, while your sales-oriented competitors
take more and more of your business. There is no such
thing as cutting your way to profitability.
About Dan Schneider 3 Articles
Dan Schneider is a consulting services director.

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