I am now 66 years old. It seems like a strange statement to write here. Where did that time go? I have a grown son and my spouse and I are now empty nesters.
You will be leaving your business. It will happen! This is something every business owner will need to address.
In my last blog entry, I wrote about creating company transferable value. Transferable value, for a closely held business is most simply what a business is worth to someone else without its original owner. Transferable value should not be confused with profit.
Everyone will exit their business at some point – it is inevitable! And most contractors, with no exit plan in place will simply close their doors leaving years of client good will, established contractor and supplier relationships,
In my last post, I reviewed how opportunity buyers do not look at a remodeling company as a good investment. Why – because every year we start over! We don’t have clients call us back after a major remodel asking to do another one. Most homeowners won’t do more than 1 major remodeling project in their life. If they do, there will often be a 10-year wait until they call back asking about another project.
In my last column, I spoke about the difficulty that remodeling contractors have selling their remodeling company. Simply, we are subject to the whims of the economy, and are subject to market conditions that we have no control over.
For those of you that have known me for a while, you might remember my participation several years ago in the Remodelers Guild. As a partner in the Guild, we were attempting to show remodeling contractors how to make their company a saleable asset. To make a long story short – we failed.
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- Crooks: Homeowners are afraid they will hire a crook.
Almost every homeowner begins the remodeling process with baggage. If you watch television, read the newspaper, or listen to the radio, you will inevitably read or hear stories about unscrupulous building contractors. In these stories, some unsuspecting homeowner was taken advantage of and it cost them thousands of dollars. Homeowners don’t trust building contractors. They are afraid they will hire a crook, or, they fear that someone working with the contractor will get into their home and “rip them off.”
Do you know where most of your business comes from? For most contractors, it comes from past clients. I have spoken to contractors who generate over 75% of new business comes from past client referrals. If this sounds familiar, I want you to think about putting more attention on these past clients.
Competitive bidding is not good for business. Besides the time spent doing an estimate for a job you may not get, there is an additional element that most homeowners are not aware of. The following quote helps explain this: