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5 common false business beliefsBy Monroe Porter
Motivational speakers have been known to say things like, “You are what you think about.” I am not so sure. If that were totally true, at the age of 18 I probably would have turned into a can of beer or a pretty young girl.
However, there is no question that our lives become an accumulation of what we think and believe. Our beliefs and thoughts are determined by influences, personality, and experiences. Of course, perspective varies from individual to individual.
The internet and politics have created a society of absolute rights and absolute wrongs. I do not believe life and business is so simple. Changing some of your internal beliefs regarding your business may help you adapt to today’s ever changing business environment. Remember, for hundreds of years people thought the earth was flat. Here are some common false business beliefs.
1. “I can’t raise my prices.”I have been a contractor business consultant for over 40 years, and I have never encountered a contractor who at first did not believe his or her prices were among the highest in the market.
The number one reason contractors fail is they do not charge enough. I get calls from contractors who are absolutely convinced they are the most expensive in their market; Yet, I have contractors in their market who are 20-30% higher and have more work than they can get done.
Living in a vacuum can generate beliefs that just are not true. One of the greatest values of our networking groups is to see what other non-competing contractors are charging. Many contractors are amazed that when they too raise their price, they lose very little business.
2. “I can’t afford to pay people that much.”Understand that economics and wage competition drive wage prices, not what you are willing to pay. Most contractors understand that you have to pay more money for good tools. You also have to pay more money to attract and keep good people.
Competition for good employees is fierce and demand for tradespeople will continue to grow. Many Americans just do not want to do blue-collar jobs. We do not see this changing. As fewer and fewer people want to do manual labor, the more competitive the marketplace will become.
3. “If I can just grow, I will make more money.”Maybe, maybe not. Make money to grow, do not try to grow to make money. Growth requires more workers, more cash, more equipment and more overhead. Think of a contractor that went bankrupt. I bet that failing contractor had lots of work.
A funny story my old partner liked to tell was about 2 contractors who sold produce in the winter when their business was slow. They would drive to Florida and pay $1 each for watermelons and sell them for a $1. They could not seem to make any money so they decided to buy a bigger truck that would allow them to buy/sell more watermelons.
Most contractors who fail are busy, not idle. Buying a bigger truck may not be your solution.
4. “If you do good work, your business will grow.”This statement includes lots of assumptions. You are assuming people understand the difference between good and bad work. Remember, when buying contracting services, people are buying a promise of performance, not a product they can touch or feel.
Just because you build a better mouse trap does not mean customers will flock to your door. They may be happy with the mouse trap they already have or fail to see the value of yours. Without a website or other marketing, those customers may not be able to find you.
It takes more than doing good work to grow a business. Remember, quality is in the eye of the beholder. Quality is performance to a set of standards. A snow tire is great in a snowstorm but not so good on a drag strip. My teenage daughter’s definition of doing a “good” job of cleaning her room varied greatly from my definition of a “good” job.
5. “I’m going to sell my business for big bucks and retire.”Really, who are you going to sell it to? And is your business really worth anything without you? Unless you build a business where you are not needed as a daily hands-on owner, I doubt the business is worth very much.
Your employee or employees may be the most likely owner but how are they going to pay for it? Yes, contracting businesses can be saleable but it might not be as valuable as you think. My advice is not to put all your eggs into one basket.
The older I get, the more I realize there is a lot I do not know. Others seemed to think they have it figured out and with age become less open minded. Socrates said, “The only true wisdom is knowing you know nothing.”
Monroe Porter and PROOF Management offer business consulting through industry networking groups and he can be reached at (804) 267-1688.