Surviving this Economy Step Three Pt 2: Growing through Bidding
Posted by Mark on September 16, 2009
Bid on the Right Jobs with the Right Overhead - This is one of the most important parts of estimating, and by far the greatest subject asked about, misused and misunderstood. Overhead is the life’s blood of your company. If you don’t cover your overhead cost on each project, you will not be able to continue doing business because you’ll have no money to run it.
You would not charge a customer $10.00 per hour and pay your employee $20.00 per hour. Would you? Of course not! Yet it occurs every day when it comes to overhead. The problem is that companies don’t know that they are doing it. Most of the companies we talk with or evaluate state that they charge a flat rate of 10% for overhead or don’t even know what it is. If you are a small shop, overhead is going to be a lot more than just 10% in most cases.
The first step to a profitable job is in the estimate. Each estimate has crucial steps that can make or break your business. First pick the right job - if you are bidding on a job that you have no chance in winning, you’re wasting money. Then completing a thorough, professional and accurate estimate is completely necessary to make sure you can win the project and complete the project on that budget. After that is calculating all of your numbers into the estimate so you can make a profit - but make sure you’re using the right overhead numbers or you’ll lose money and never see where it goes! Finally turn in that bid to everyone who needs it; if the winning GC never sees your number, what good does that do you? And stay on that project to see where you place. All of these pieces are critical parts of a proper estimate, which is critical to the growth of your company.
If you want to survive this economy, if you want to grow your business, you have to change your marketing techniques and you have to change your estimating procedures to bring in more revenue. If you need help with any of these steps, you can always call our experts because we provide every one of these services, many of them are included free for electrical contractors, and information and advice are always complimentary.
Surviving this Economy Step Three Pt 1: Growing through Marketing
Posted by Mark on September 8, 2009
Get past the negative thinking - Now let’s look at option number two, growing your business. Many will agree that if this was possible, then you would have already done it. But to grow, you need more revenue to support that growth. And just like any business out there, it takes a plan to be put in place to boost revenue.
So the first step in the growth process was change. You have to realize that what you are doing right now does not work. If it did then your company would not be looking for survival techniques to make it. The second step was realizing that cutting your labor hours doesn’t solve the problem; it only spikes the per hour cost of overhead.
Now in the third step, we have to make your company recession-proof. And that starts with throwing out every negative thing you have learned about marketing and the costs associated with marketing.
Most contractors undervalue marketing and many completely ignore it as a source of customers. It is one of the first costs that is cut out when times get tougher when what really needs to happen is more marketing.
Marketing is one of the keys to creating growth - even in a downed economy. You have to let customers know who you are and what you offer or else they will not call. The days of getting all of your business from word of mouth is over while the economy is down. People are not spreading the word about you or your business. You have to reach them new ways.
Electrical contractors’ favorite marketing venues historically have been phone book ads and graphics on the sides of company vehicles. These are good marketing venues when the economy is good, and consumers are searching for electricians, but they don’t work as well when people are watching how much they spend. Try proactive marketing. Email marketing and phone marketing are new methods that cost little and have high customer return.
Take another look at your marketing plan to fight this economy. This slow market will only affect your business if you don’t have a plan to grow, and one of the keys to growing your business is more marketing.
