3 Steps to Eliminate Lumberyard Runs Forever

goofing off at home depotRemodelers are always struggling with the cost of an employee leaving the job site to pick up materials.

Simple calculations often reveal that this consistent behavior costs companies about 2-4% of their annual sales volume. Preaching doesn’t change it; threats don’t change it.

So what does?

Daily planning does! Three simple steps will dramatically reduce slippage due to lumberyard runs.

Step 1: Awareness

Have them do the math. Ask these questions and lead them through discovery with the backup data needed.

  • Ask – How many trips to the lumberyard do we make each month? (Have this number already established from book keeping) Typically individuals will only know of their own and the numbers will be low.
  • Give them the real number.
  • Ask – How long does it take to make one trip? Get an answer.
  • Ask – How much does one trip cost us? (Time for each trip x cost per hour) Now multiply by 2 for lost production on the site.
  • Ask – What is the cost per month? (Answer)
  • Ask – What is the cost per year? Answer above x 12

Usually, this is a big number – you can use it as a % of annual volume or just a dollar amount.

Step 2: Time & Plan

The Lead Carpenter sets aside time every day to plan the job for the next 2-3 weeks. This plan includes goals for tomorrow, tasks that will start in two days, three days, one week, and two weeks. This plan can then translate into:

  • What materials do I need to order for each time frame?
  • What subs do I need to call?
  • Who do I need on my site?
  • What questions do I need to ask the client?
  • Is there a detail missing or a question for sales to answer?

This planning time has to set aside time of enough length to get past the immediate, top of mind, issues and force the Lead Carpenter to dig into the future. Done right this can reduce the last minute calls about details and questions.

Step 3: Use an Ordering Cheat Sheet

Most of the items we leave the site for are not the major components but are small items we forgot to order. Another class of pick up items are the ones we are convinced the yard cannot get right. So a checklist that has all the ancillary items on it used while placing an order can help us remember to order things like nails, screws, glue, etc.

For the “they can’t get this right” items, list the make, model number, or store item number on the cheat sheet and order them that way. By doing this, the yard can simply pull it off the shelf and add it to that pile of lumber they are sending out.

Knowing the costs, effective planning, and using reminders can eliminate lumberyard runs … forever!

What about you?

What have you done to help reduce the need for costly runs to the local lumberyard? Please share your stories in the comments below!


The Big Money Mistake You Don’t Know You’re Making

I’ll bet you think you know exactly what your projects cost. But do you really know? Many remodelers I speak with forget to add in one big piece of the job cost pie.  And this oversight means you’re losing profits on every job you do.

In this week’s episode, I’m going to tell you what that missing piece is … and what to do about it.

What do you think?

Share your stories with us in the comments below!


Money mistake you make

Bonus: Here’s the free calculator Victoria Mentions in the video!

Click Here to Download


4 Benefits of Buying Construction Materials in Bulk

Buld Construction Materials

If your construction business is willing to pay upfront for long-term gains, buying in bulk could be a viable strategy—so long as you have a plan. High volume purchases are most advantageous to contractors with multiple ongoing projects that have the same product requirements, says Michael Bellaman, president-CEO of Associated Builders and Contractors Inc. “If you’re committed to those jobs and to getting paid for those jobs, then it makes more sense to buy in bulk,” he says.

For bulk purchases to pay off, it’s also important that contractors have a voice in design. “You need to have an opportunity to influence specifications so that what you’re buying in bulk is actually going to be required across multiple projects,” Bellaman says.

Avoiding bulk purchases of anything unique also helps ensure your inventory won’t go to waste. “Buy the materials that start the job like your concrete, framing materials, siding or drywall because you use a lot of that,” says Michael Hydeck, owner of Hydeck Design Build Inc. in Telford, Pennsylvania, and past president and national chairman of the National Association of the Remodeling Industry.

When contractors do have an influence over design and have nice backlogs, then bulk purchases are a way to save big in the long run. Here are four ways buying in bulk can help your business gain time, save money and set your business apart from the competition.

1. More money in your pocket

Saving the maximum amount of dollars is often top of mind for businesses, and bulk purchases are one way to do it. “Buying in bulk is absolutely a strategy,” Bellaman says. “If you can take advantage of a scale purchase, you could lower your cost of business—as long as you consider the cost of storing inventory.” But even though saving money is a major advantage for any business, the benefits of buying in bulk extend beyond the financial.

2. Waste fewer man-hours

Bulk purchases can also minimize the number of hours workers wait for materials to arrive to the jobsite, Hydeck says. When you don’t have all the necessary materials on site before you start a job, you need to send somebody to the store a few times a week, load the materials up and drive back, which wastes not only the drivers’ time, but also the hours of those waiting back at the jobsite. “If a contractor buys in bulk, he would probably finish the job faster than the guy who doesn’t,” Hydeck says. “He would have more time to work with the material on hand because he’s not sending someone back-and-forth.”

3. Maintain consistency across jobs

For some in the construction business, consistency is key. When it comes to the look and feel of jobs, bulk purchases are one way to guarantee this consistency. “Take natural stone as an example,” Bellaman says. “If you’re buying one bulk purchase of a natural stone and you’re buying it out of a particular quarry, your product is going to be much more consistent than if you bought natural stone from multiple quarries.”

4. Finish jobs on or ahead of schedule

With buying in bulk also comes availability of materials. “You already have the materials so you don’t have a lead time issue,” Bellaman says. “You have the reliability of having inventory there for the work that you have.”

If a client expects you to complete the job within a certain timeframe, it’s important to eliminate factors that could cause a job to run behind schedule, like late deliveries. “If you told the client you were going to be done in [20 days] and now you’re not done by day 30, you’re now getting an aggravated client who’s not going to recommend you,” Hydeck says. On the other hand, when you do complete jobs on or ahead of schedule, it’s more likely that clients will recommend you and return to your business for future jobs.

With a little planning and consideration of your pipeline before you make a purchase, buying in bulk can help you save money in the long run and build a positive reputation for your business.


The Remodeler’s Year End Checklist

End of Year Checklist for RemodelersIt’s that time of year again! Pulling together everything and anything, and getting ready for End of Year!

W2’s; Material Invoices; Payroll Liabilities; Vendor Statements; Reports, reports, reports – Where does it all end?

When I was doing the bookkeeping, I found it very helpful to have checklists to follow, to make sure I wasn’t missing anything important. And End of Year is the most detailed, most important of all!

Thanks to Judith Miller (and QuickBooks Year-End Guide), we’ve put together this End of Year Checklist for your bookkeeper to use. Following this list will make their jobs much easier and more streamlined.

If you have any checklists that you find particularly helpful, please share them in the comments below.

*Members, you can find this checklist and many more in our Resource Library


Image courtesy of iosphere at FreeDigitalPhotos.net




[Video] 5 Contract Tweaks That Will Improve Your Cash Flow

Cash flow can be friend or foe. I’ve seen remodelers totally stressed out by lack of cash. When cash is limited, your focus becomes robbing Peter to pay Paul instead of running an effective business.

But I’m here to tell you that I’ve seen remodelers make striking comebacks by simply tweaking their contracts. In this week’s episode I’ll share the top five tweaks to your contract that can get you in a better cash flow position!

What about you?

Please share your stories in the comment box below! I love hearing from our viewers!

4 Tips to Connecting with Millennials

Millennials will make up 50 percent of the workforce in just five years. Although many are still in school, ComScore estimated in 2012 that they already account for $170 billion in buying power.

The millennials, also known as Generation Y, is the name given to those born from the early 1980’s to 2000. 79 million strong, they are the largest generation ever.

Here are some things you should take into account as your craft your marketing messages for the future.

1. They don’t even see your online ads

Millennials are the first generation to grow up with the internet. They spend a lot of time online. But that doesn’t mean online ads are the best way to reach them. According to a 2013 study by SocialChorus, the opposite is true. Just 6% of those surveyed stated they trust online ads. In fact, many reported that ads have become completely invisible to them.

This doesn’t necessarily mean you completely abandon online advertising. But you may want to rethink how you’re doing it and what percentage of your budget is committed to it.

2. You can’t market to them

You need to market with them. There’s no denying the millennials’ need for engagement. They grew up with social media. They need to be in constant contact with their family and friends.

Successful marketing plans will include a strong social media plan. Remodelers that generate entertaining content that feeds their urge to share with their peers will have the upper hand.

3. Millennials value transparency

Consider the events that have shaped their lives: the Dot Com bubble burst, Y2K scare, Enron bankruptcy, 9/11, the housing/credit bubble burst, bank bailouts, Wall Street vs. Main Street, unemployment.

Millennials are a suspicious generation. They want to trust you, but you need to earn that trust. They are looking for openness and will pay a premium to feel safe.

4. Peace and Love

Millennials feel we all have a social responsibility to improve the world. Hurricane Katrina, school shootings, public smoking bans, same-sex marriage, BP oil spill, immigration; as millennials have come of age, their experiences have made them a socially conscious generation.

They look for companies that share their values. All other things being equal; philanthropic remodeling companies will come out ahead.

Conclusion

I mentioned these are 4 tips you should “take into account.” That’s not to say your target market should be a generation! Use these tendencies as a very general guide to crafting your message. As always, you should focus on the needs and desires of your ideal client. Not on the generation they may represent!

How a Job Autopsy Can Save Future Profits

This week I’ll share some examples of how slippage can destroy your profits. More importantly, you’ll see how performing a thorough job autopsy can prevent future slippage.

So if you’re looking for ways to increase your profits, look no further than this week’s episode of PowerTips TV and learn one very effective technique for eliminating waste and ramping up profits.





What about you?

Do you perform Job Autopsies? How does your slippage look? Anyone enjoying GRIPPAGE?!? I’d love to know! Tell me about it in the comments below!

Say Goodbye to Free Estimates

Free Estimate“Click here for your free estimate.” Is this phrase on your website? Are you one of the thousands of remodelers that use this promotion to generate inquiries?

If you are doing it as a purposeful marketing tactic, then more power to you.

But if you hate driving around giving free estimates and think you don’t have a choice, then this PowerTip is for you.

Your time is far too valuable to waste.

When I suggest remodelers charge for estimates, there’s typically two responses I get:

    1. “If I charged for estimates I’d lose 70% of my leads.”
    2. “All my competitors give free estimates, so I have to, too.”

First, let’s address the “I’d lose leads” concern and take a good look at the numbers.

Now, we both know that providing an accurate price for a project can take hours, depending on the size and scope. But, to prove a point, let’s say you can knock it out in 45 minutes.

So, for ten leads you’ll spend 7 1/2 hours estimating. Of course, you don’t email the price (right??), so let’s add in a 30 minute round trip (you’re lucky, all 10 leads are in your backyard).

Plus there’s the 30 minutes to present the estimate. Again, I’m being very conservative here.

In all, you have just spent 17 1/2 hours of your week on free work!

If you’re a regular PowerTips reader, you know that we expect you to work no more than 48 hours per week. But let’s say you work 60 (after all, you have a lot of free estimates to get out), that means you have just spent 30% of your week on free estimates.

On the flipside, assume you had charged for estimates and, as a result, only 3 of the ten leads stuck with you. Even if you now spend 3 hours (instead of 45 minutes) on the estimates, you would have spent 30% less time, and you generated revenue!

And don’t forget, your close rate should now skyrocket. These three leads have already spent money with you, so the likelihood of them “wasting” that investment and starting over with someone else is very low.

But all my competitors offer free estimates

This is by far the most common argument I hear when remodelers defend their free estimate policy.

So I called your mother this morning and when I told her your reasoning she said “if all your friends jumped off a bridge would you do it too?”

Seriously though, I have two thoughts on this.

First, the core element of any marketing strategy is to differentiate yourself. Doing everything your competitors are doing breaks the single most fundamental law of marketing.

Secondly, charging for estimates when your competitors provide them for free naturally moves the conversation to self-adulation.

Think about it, the prospect calls your office about a project and when you mention the price to come out, s/he will inevitably say:

You want to charge me for an estimate? Your competitors are coming out for free! Why would you charge me?

And there it is. An invitation by the prospect to tell them what makes you great.

Still not buying it?

Although I could list dozens upon dozens of remodelers in the US and Canada that charge for estimates (just off the top of my head), I will always have a handful naysayers. “It’s impossible in my area,” they’ll say.

For the doubters who won’t break, let me offer an alternative: differentiate estimates from proposals. You can keep the free estimate button on your website because you are now charging for proposals.


es·ti·mate verb 

/ˈestəˌmāt/ an approximate calculation or judgment of the value, number, quantity, or extent of something.


The key words in the definition are approximate and judgement. You can and should give an estimate over the phone. It’s a pre-qualification tool.

It’s easy. Once you’ve received the description of the project you say, “Okay Mr. Jones, based on what you’ve told me you can expect the project to come in between $100,000 and $160,000.”

There you go. You’ve just provided a free estimate.

Assuming they are still on the phone and didn’t gasp, scream or pass out, you can now offer to give them a full-blown proposal for $X, which will be “deducted” (optionally) from the project price if they choose you.

What about you?

Do you charge for estimates (or proposals)? If not, do you think you could never do so? Do you think I’m out of my mind? I’d love to hear from you. Please share in the comments below!

How Much Should You Pay Yourself?

Have you ever wondered what other remodelers pay themselves? Are you concerned that you may be underpaid?

You’re not alone.

When most remodelers are just starting out, they pay themselves next-to-nothing “for the good of the company.” But as their business grows, increasing owners compensation becomes a challenging proposition.

I hear questions like, “how much is too much,” and, “am I hurting my company if I take that much,” frequently from our members.

So, in this week’s episode of PowerTips TV, I’ll give you some insight into how much remodelers just like you are compensated.

How about you?

Are you on track to make what you deserve? Do you see the potential in your company? Please share in the comments below!


Want to accelerate your growth?

Let us know what challenges you face and we’ll pair you with the perfect program for your unique situation!

Is Your Gross Profit Where it Should Be?

Last week, I spoke with two different remodeling company owners about various business challenges. In the course of the conversations I asked (as I always do) about their targeted gross profit margin. Their answers were astonishing!

So much so that I’ve dedicated this week’s episode to answering the one question every remodeler should be asking themselves, “Is my gross profit margin where it should be?”


Don’t believe what Victoria had to say?

Well, she offered a free business review with one of our experts, so here it is!

Just fill out the form and schedule yours.

https://www.remodelersadvantage.com/go/complimentary-financial-review/  Sign Up for a Free Business Review!


How about you?

I really want to know what you think! Let’s start a conversation in the comments below!