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Mike's Columns by Topic  •  Nick Drummer, builder/remodeler

In his book; "The Lexus and the Olive Tree", Thomas Friedman paints a startling vista of how our world began to change in recent years. He quotes an electrical distributor who says; “Our customers changed their attitudes, becoming much more demanding; guys who used to give us commitments on jobs in an instant wouldn’t give commitments; clients who used to negotiate with us alone suddenly started demanding bids from everybody and anybody.

My contractor clients and students were saying; ‘We can’t get orders, things have gotten much more competitive, and when we do get orders, we can’t make a profit.’ Mr Freidman quoted a business owner who reported that he ‘started looking around at the business and realized that what we were missing most was information.’ The solution for this businessperson was to develop a software system that allowed each salesperson and estimator to understand the details of each job and then draw up proposals and quotations more quickly and efficiently by ‘just filling in a set of blanks that we knew were the critical variables.’

 

This sounds to me a lot like what we might call a ‘unit cost’ system of estimating. This business owner goes on; ‘Even more important, the whole system operates as a continuum, so the original quotations automatically convert into delivery information and billing invoices.’

Aha! A estimating system that can write the specifications along with the entire customer agreement, and provide a material list and man-hour report, and in the end it links with a job-cost accounting system to provide percentage of completion details at a glance and check the accuracy of the estimated costs after the job is completed.

The outcome for in the business cited by Mr. Friedman; “In the first six months… our sales and profits rose by thirty-three percent, with the same number of people. When you increase your business by one-third with the same people, it means that if you add more people you can really increase your business. And in this winner-take all environment, you have to get bigger, smarter, faster than your competition, or get out of the way. I don’t know if it’s sustainable, but I know that it has given me an opportunity for survival into the next phrase—until somebody becomes more efficient. To be honest, I know less of what is going on… but it doesn’t bother me. I have delegated my people to make more decisions with more information…They can decide on their own what jobs they have a better chance of closing, which ones will yield the greatest gross profits, and which ones will be easiest to service. And what’s more important, with the new software, they now have time to think. And that is incredibly important, instead of just banging away all day on calculators. They can run the business now instead of the business running them.”

So here’s the formula; streamline the process to make it easier for the client to buy from us, while at the same time making it easier to deliver a proposal by computerizing the process. Everyone in the delivery chain gets more efficient and therefore can produce more with less effort.

 

Among his contractor clients, those who are able to attain the level of expertise required, perform at the upper levels of the industry and report increased efficiency and profitability.


RemodelMAX and ClearEstimates


RemodelMAX is a 'Unit Cost' System of Estimating.

One of the most frequent questions I hear from contractors is; 'How can I use an estimating system when every job I estimate is different?' My answer; 'There is no activity in remodeling or building that can't be broken down into a unit of measurement like; lineal foot (lf), square foot (sf), cubic foot (cf), per pair, (ea) each, etc.' Whether you are tuck-pointing a 100 year old stone wall or installing crown molding, the concept is the same.

For example, lineal feet (lf) is often used to measure trim. The lf would be the measurement around the room where the trim is to be installed, or the perimeter. The measurement square feet (sf) is often used with wall covering like drywall and paneling. For example, hanging one 4 x 8 sheet of drywall would be 32 sf.

When you don't have a system for creating estimates, each job looks unique, one of a kind. When you begin to look at estimating as various combinations of 'units of measurement' you begin to realize how much of what you do is repetitive. Of course your cost of installing that drywall on a sf basis needs to include waste. We pay for the materials in the dumpster too.

Will you find a ready-made unit of measurement for every activity that exists in remodeling? No. Will you find yourself continuously adding to your unit of measurement database once you begin to think in those terms? Yes. Are there ready-made, off the shelf programs to help you get started? Yes, but be careful.

The costs for all building vary regionally—so stay away from national or average costs and look for costs that are localized to your city or county. Also, the costs for remodeling are usually higher than the costs for building a new house, for example. With few exceptions it will cost more per square foot to lay a block foundation for an average size room addition in your client's back yard than it would to lay a block foundation for an average size home. The difference is even more striking when you compare the cost of block for that room addition foundation with the cost of the block for larger commercial or industrial building. Stay away from estimating systems that aren't specifically for remodeling, if that's what you're doing.

Is it possible to figure out in advance if the unit cost system will work for your company? Absolutely. Dig a job out of your files that you have finished in the last couple of months and estimate that job using the new system you might be considering. This is a job for which you know the exact cost. See how close the new estimating system is to your actual costs. Many contractors are amazed by the accuracy. Some computerized estimating systems make this easy by allowing you to test drive the product for 30 days or so with a money-back policy if you are not pleased.

Hundreds of contractors who I have converted into 'unit cost' estimators over the years will tell me that changing to an estimating system made a dramatic change for the better in their business. Usually they tell me this in private, off to the side. These are the people who will linger after the seminar, taking longer to pack up their papers and jackets—looking busy while everyone else leaves. Because they don't want their competition to know what works, they usually won't volunteer an endorsement in public. But in private they thank me.

The RemodelMAX database (image shown in book form on this page) is a great tool for creating a unit cost based estimate. Some contractors use it to determine prices to plug into their proposals. Some of these contractors will still spend hours creating their proposals. Don't fall into this trap! True you have a better way to come up with accurate pricing, but you can still do better is you have the desire!

Once you have mastered RemodelMAX, move forward to ClearEstimates and see how quickly you can prepare an estimate that turns into a proposal. Later this proposal turns into a contract. Some contractors stop here. They are light years ahead of their competition at this point.

Other contractors see the finish lines is still down the road and more on to linking the ClearEstimates system with QuickBooks. Now the job-cost accounting is done automatically every time you write a check. They realize their time is creating new work or managing existing work than it is laboring over the details that are usually on the contractors least favorite list - accounting for the dollars!

Is this an overnight process? No. For most of us this is a long-term project that we see as the ultimate goal.

Mike's Book on Sales

 

If I SELL You I Have a Job
   If I SERVE You I Create a Career!

A linear sales process which covers:
1. answering the phone
2. screening the leads
3. setting the appointment
4. educating the prospect
5. establishing distinction
6. making the presentation
7. justifying a higher price
8. making the sale
9. collecting the money
10. assuring repeats and referrals

Written specifically for remodelers and small volume homebuilders.

What Others Say About Mike's Book:

"Hey Mike, purchased your book last year. It has transformed my operation. I am unable to attend any of your seminars due to my schedule. I am writing to know if the content of your seminars may be available in tape or book form?
Thanks so much. Ronnie Rogers, Little Rock, Arkansas

"Hi Mike, just a note to thank you for the information given at the Baltimore seminar. I
have made $30,000 in commissions in the two months since I started creating the preliminary design right there in the customer's kitchen. My son Jim is doing the same. Also, the information on treating the home as a "system" is the frosting on the cake. Joe C., Bel Air, MD.

"Hi Mike, this is Jim C. from Bel Air, MD. I would like to know when you plan to be up this way again, as I'm bringing most of my office with me next time. I have added exponentially to my income by designing the additions (for a $650.00 fee) and then turning around and selling the addition for good money (100% mark-up) using your approach.

"Mike, business is great. I have opened my eyes to a whole new world with your information. Thank you for staying in touch with me and sending all those e-mails. At the end of last year, I put $37,000 (first time ever) in the bank thanks to your approach. Skip, Miami, FL.

"Hi Mike! I am about ½ way through your sales book and look forward to reading more every day. What an enormous help it is to us… Laurie J., Mechanicsburg, PA.

"Mike, Sandy and I want to thank you for your material. We're ready to massage our sales techniques. Please keep us on your list. Sincerely, Steve S.

"I highly recommend anyone interested in developing a professional system of marketing and sales for their contracting business to contact Mike Gorman. With kind regards, I am O.W. "Woody" D., Winter Park, FL.

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Mike's Reports


The Overhead Calculator
Established Remodelers identify and categorize Overhead by simply studying the history of their company, as written in the checkbook. Every check that is written in the business is typically charged to either Job Cost or Overhead. The established Remodeler reviews his check book for the previous period, monthly, quarterly, semi-annually, or annually and assigns each check which is not a Job Cost item to one of the several Overhead categories, such as rent or lease, advertising, communication, transportation, etc. Surplus funds that cannot be allocated to any of these categories might belong to that elusive category known as profit.

The Remodeler who is just starting out projects a realistic number for the appropriate categories.

In either application, the Overhead Projection is a living document that is updated and reviewed periodically to determine if the performance of the business is with-in the projected ranges established.


Prospect Capture Form for Building Performance
Prospect Capture Form for Remodelers/Home Builders
Three ingredients are always present when you make a sale. Knowing how to recognize and measure these ingredients in advance provides powerful insider information on the likelihood of a sale. The Prospect Capture Form is a script of carefully crafted, open- ended questions designed to help recognize the profile of the prospect most likely to buy the product at the asking price based on the three ingredients always present when a sale is made. There are important diffences between the approach for a remodeler/home builder vs. building performance, thus there are two distinct reports.


Results-Oriented Job Descriptions
What is needed in all employment situations is a set of Performance Standards, a statement of a condition that will exist when a job is satisfactorily performed. Today's management experts say that to insure success you must; "tell your employees what you expect, and inspect what you expect." A correctly written job description provides the tools to do both.

The Results Oriented Job Description explains the expected performance for each position in the company by describing the performance objective as well as why the performance objective is desired. In other words, the descriptions include the what as well as the why. The job description is called the KEY RESULTS AREA is a collection of MEASUREABLE PERFORMANCE OBJECTIVES. At periodic performance reviews each activity will be performed and measured with individual assessments in each category using the numerical values.

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Tool Box Order Form


Ordering your tools is very easy following sections 1 through 4 below. If you have comments or questions, see #5 below;



1. Make a Selection


 MIKE'S BOOK; this will get you where you need to be.
            If I SELL You I Have a Job,
                  If I SERVE You I Have a Career!
Complete sales system for Remodelers. Includes steps for qualifying the lead, educating the prospect and much more, 250 pages in all, 8 1/2" x 11". Think of this as the light to get you through the tunnel.

 

If I SELL You I Have a Job,
                  If I SERVE You I Have a Career!
Sales Training for In-home Sales People
 $35.00 includes shipping
 

THE OVERHEAD CALCULATOR: There are only two ways to get money out of your business; by writing checks that fit into either the Overhead category or the Job Cost category. Let us help you identify and monitor your overhead with this self-guided course and simple spreadsheet.

 

The Overhead Calculator
 $15.00 includes shipping

PROSPECT CAPTURE FORM - REMODELERS/HOME BUILDERS: Three ingredients are always present when you make a sale. Knowing how to recognize and measure these ingredients in advance provides powerful insider information on the likelihood of a sale.

 

Prospect Capture Form -
Remodelers/Home Builders

 $15.00 includes shipping

PROSPECT CAPTURE FORM - BUILDING PERFORMANCE: Three ingredients are always present when you make a sale. Knowing how to recognize and measure these ingredients in advance provides powerful insider information on the likelihood of a sale.

 

Prospect Capture Form -
Building Performance

 $15.00 includes shipping

RESULTS-ORIENTED JOB DESCRIPTIONS written for every position in your company. Defines successful performance for every person in your organization, an integral part of your periodic performance reviews as well.

 

Results-Oriented Job Descriptions
 $15.00 includes shipping
 

REMODELMAX DATABASE for REMODELERS

 

RemodelMax Database for Remodelers
 $69.50 includes shipping
 

REMODELMAX DATABASE for THE HANDYMAN

 

RemodelMax Database for the Handyman
(Printed Book)

 $39.50 include shipping
 

RemodelMax Database for the Handyman
(PDF File download)

 $19.50
 

CLEAR ESTIMATES ESTIMATING SYSTEM with link to QuickBooks and
                     Quarterly Updates of RemodelMAX database included.

 

ClearEstimates Software -
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- you will be re-directed to a landing
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Enter Coupon Code: "Gorman25" once
you are re-directed, to get your first month
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Mike's Columns by Topic;



Position

The Three Most Important Systems

Marketing, sales and estimating are the three most important systems in our business for maintaining cash flow, yet they are typically the three most overlooked. When these three systems perform well, we may need more systems to handle the growth created by a steady flow of profitable business. When these systems don't perform well, we may get stuck with jobs that suck all of our energy away and leave us with no time and no money.

Without marketing a terrible thing happens; no sales. The words marketing and sales are not synonymous, marketing is what gets the phone to ring, sales are what happen next. The contractor who finds himself with too few leads may become desperate, perhaps taking work at prices lower than necessary to support his business or following some other path inconsistent with developing a sustainable company.

Marketing should be an ongoing system, continuously putting our name in front of the prospect. A marketing system doesn't function well when tied to an on-off switch. Like a heating or air-conditioning system that can maintain comfort when the thermostat is not being fiddled with continuously (but has problems reaching the comfort level when the system has been shut down for some time) the marketing system typically doesn't have a rapid or predictable response time. The systems that seem to deliver the biggest bang for the buck (in approximate order of difficulty) include:

1. Post Job signs and Truck Signs and more signs. Job signs should be on white background with a solid border stripe surrounding the message. In residential areas the signs should be placed parallel to and near the street. If you work in neighborhoods where yard signs are prohibited, leave your job trailer on the job during the duration of the job, painted of course with all the right info. Truck signs should be on the doors and tailgate. Consider the roof if you work in areas with high rise buildings. Taking this a step further could include advertising on the bus benches near the neighborhoods you frequently work or on the commuting route of your prospective clients.

2. Ask for referrals. Word of mouth is among the best source of leads since the level of trust is usually high when someone gets your name from a trusted source. Trust is often contagious. Many contractors offer coupons with incentives ranging from pizza delivery to $100 for a lead than converts to a job over a certain dollar threshold. These coupons are offered to past customers, employees, sub-contractors and others who may have influence.

3. Mine past customer lists. Repeat customers inherently bring a higher level or trust when they return for more work. If you collected the correct contact info when you worked for them originally, you can send faxes and emails very inexpensively to announce seasonal specials. Be specific in your offer. It works better to name a specific product or service when you contact them. For example; a fall special on basement finishing.

4. Include a service contract. More successful contractors include a two-year service contract with every contract they sign. Include an inspection of all mechanical equipment, filters and pumps, charging for any parts or service needed. Clean gutters and disconnect garden hoses as a courtesy. During this process, keep in contact regarding the customers 'wish list' of the products they couldn't afford to install initially. The advantage; the service contract is easy to schedule allowing you to fill in those slow days in the off season while keeping your name in front of the prospect. Add high profit items to your list of products that could be used for a quick repeat sale. A roofing contractor I met recently promised the client a 6 month inspection following completion. As part of the inspection he would clean out the gutters (again, since he had done this when the roof was installed.) He would show the homeowner what was in the gutter after just 6 months and sell them gutter protection.

5. Sign you work. Leave your name and contact info on everything you install in the home. Contact your local printer to get decals made. Include of course you name and contact info, as well as space for the installer's initials and the date.

6. Write letters. Write to contractors, home inspectors, realtors, and others who deal with homeowner's and let them know that you can make them look like a 'super star' if they ever run into conditions that puzzle or concern them in a home. Write only as many letters as you can follow up on within a couple of days. If you are brave, include some tiny pieces of mylar confetti in the letter. The confetti all over the recipient's desk after they open your letter tends to make it all more memorable, they may even be anxious to talk to you…

7. Place handbills explaining what you are doing in the neighborhood on the doors of 10 houses across the street from every job and five doors on each side of the job. The handbills could be the "pardon our dust" kind of notice. Be sure to explain what services and products you offer along with lots of ways to contact you. Check local laws and customs.

8. Fliers. Place fliers under the windshield wipers of cars in parking lots. Choose parking lots frequented by homeowners. Hire the local Boy Scout troop after checking local laws and customs. Insert the same flier in every piece of mail that leaves your office. Most everyone who opens your mail at the insurance agency, for example, is a homeowner. Check local laws and customs.

9. Press Releases and Social Media. Jay Exline, a contractor in Arizona, writes a press release every time he sneezes, it seems. He always includes a 'head shot' with those press releases explaining everything from training he has taken, new hires, new equipment he has purchased. Jay's clients perceive his company much larger than it is. Press releases cost nothing other than a little time and effort to type and mail. The same information goes out via social media to your entire email list.

10. Broadcast you own Radio Show. It seems like a leap, but you might be surprised at how affordable it may be to buy an hour on your local radio station on Saturday morning. You and a partner could simply talk about the fascinating things you saw in the homes you were in last week. That formula seems to spawn phone calls both to the show and to the answering machine at the office.

Got too many leads right now? That's like having too many tickets to this week's lottery drawing. Don't slow down your marketing system, enjoy the situation while you implement a system to screen the leads. Not all leads are created equal. If you sell too much work, "ration your services" by raising your prices.

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Price

How to Determine a Fair Price - Laying the Groundwork

Before presenting a proposal to a prospective client, it's customary to determine job cost, including; labor, materials, subcontractor costs, plans, permits, cleanup, rental equipment, and so on. Any of a variety of methods can be used to estimate job cost, each more or less accurate depending on the estimator. It's normal to add an amount for overhead (the cost of operating our business) and profit (the just reward earned for the effort and risk involved in producing the job) to this job cost figure in order to determine the price to charge the customer. When we speak of profit here, let's say it is before tax profit, for the sake of simplicity.

In spite of the fact that many pages have been filled with words describing how to identify and understand the ever-changing numbers for overhead, it really can be easy to determine what percentage of every dollar that comes in the front door gets spent on items that are not directly related to the job. These numbers make up the category of business costs we call overhead. Really, there are only two ways to get money out or our businesses. One is by writing a check for overhead, the second is to write a check for job cost.

Let's assume we have been in business for a year or more but have never calculated our overhead. We can perform a simple audit of our checkbook for the previous 12 month period by taking a sheet of lined paper and writing two headings on the top of the page, on the left we have overhead, on the right we have job cost. Now we'll go through all the checks we wrote during that 12 month period and write the amounts from the checks to which we couldn't assign a job address under the overhead heading. These would likely include bills for; rent, utilities, transportation, communication, office equipment and supplies, postage, licensing fees, liability insurance, salaries and benefits for people in the office (including ourselves as the owner), and more.

As we find checks paid for materials, labor (including labor burden, benefits and other perks), subcontractors, plans, permits, rental equipment, and cleanup, for example, we list these check amounts under the job cost heading, as we can easily associate these amounts to a job address. If we haven't been in business for a year, we may have to project what these numbers will be to the best of our ability, imagining what is likely to happen in the coming year.

We also would like to find the total amount of money we brought into the business (income) during the period we are exploring. That information should be available in bank statements or the checkbook. At the end of this exercise we should have a total number for income, as well as for job cost and overhead for the preceding twelve-month window. If you haven't been in business for twelve months, the window you study might be smaller than a full year. This means you might have to estimate what will happen during the months that don't appear in your window, remembering those charges that don't happen every month, like; license renewals, accounting or legal fees, and so on.

To get the most use of these totals we have assembled, we should look at the numbers in relationship to each other. Overhead is most useful when stated as a percentage of income. So if we had $200,000 income and our overhead worked out to $60,000, we could use this formula: total overhead/total income = overhead expressed as a percentage, (60,000/200,000 = .3 = 30%). This indicates that for every dollar of income we receive, we spend 30 cents just to keep the business open. This exercise can be an eye opener for some.

Now, let's assume we have a project with a job cost of $10,000. In order to come up with the price to propose to the prospective client, we need to increase this amount by enough to pay the overhead and hopefully generate a profit. So our equation now looks like this:

        Selling Price = Job Cost + Overhead + Profit

Or, if we want to use a mathematical shortcut, we could multiply Job Cost by a factor sufficient to pay our overhead and give us a profit as well. Let's try this as an example:

        Selling Price = Job Cost x 1.66

This means that we are going to increase our job cost by 66% to arrive at selling price:

        $10,000 x 1.66 = $16,600.00

If our estimated job cost is accurate and our calculations for overhead are correct the outcome should be:

$16,600 (selling price) - $10,000 (job cost) - $4,980 (overhead) = $1,620 (profit)

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Propose

Winning the Job at Your Price

People don't think in words, people think in pictures and/or images. Words are the raw materials of thought. When spoken or read, that amazing instrument, the mind, automatically converts words and phrases into mind pictures, according to research in Neuro Linguistics.

Hearing a word initiates a process by which pictures in the mind appropriate to the individual's experience of that word are accessed. Hearing the words; "Jim remodeled his bathroom," creates one picture. The words; "He installed a new whirlpool tub in his bathroom," creates a different picture. The picture you see in relation to the whirlpool tub most likely is different from the mind picture another person would access in their mind.

When the remodeler speaks to the prospect, he or she is, in a sense, a projector showing movies in the minds of the prospect. The pictures seen by the client are more or less similar to those of the remodeler depending on the communication skill of the remodeler and the experience bank from which the prospect draws his or her photos. The presentation book or, when a laptop computer is used, the presentation screen, bypasses this inefficient communication system and creates a remodeling movie more assuredly composed of similar pictures. This presentation tool, when used efficiently, creates a movie in the prospect's mind consisting of the entire remodeling process, with the final scene being the homeowner enjoying the new environment.

Use of the Presentation Book or the Presentation Screen (laptop);

Remodelers who don't properly present their product leave the door open for competitors. Remodelers who use a presentation book find that it increases their closing ratio substantially. Remodelers on the leading edge of technology have the presentation book on their laptop computer and use a power point system to share this information at the kitchen table. One reason prospects may hesitate to take the necessary steps to become customers is 'fear of the unknown.' The presentation book is the ultimate tool used to educate the customer about the remodeling process, minimizing the fear.

Read the presentation book to the prospect page by page, this age regresses them. When the remodeler sees that he is getting a positive response, he stops for a second, letting the prospect absorb the information. The remodeler uses a little of the kind of tonality used with a kid. People like it. It makes them feel good. Remodelers do want the prospect to feel good, it's a valuable sales objective. Additionally, eyes do not "see," they compute what is placed in front of them. Everyone translates what is 'seen' based on their own experience. Remodelers are highly paid translators who translate today's services and products into solutions for the customer. While using the presentation book, the remodeler translates the value of each point to the homeowner. The remodeler realizes that if they fail to translate what is on each page of the presentation book, the prospect might reach the wrong conclusion. The remodeler uses the presentation book to identify the difference between the company represented and the competition. Establishing such a difference is crucial: If the homeowner can see no difference between this company and the competition, the purchasing decision may be made simply on the basis of price.

Benefits to the Remodeler;


Benefits to the Sales Manager;


Experienced users report that the one single step remodelers should take to increase their ability to sell for a higher mark-up is the proper use of the presentation book. The presentation book is organized in such a way as to lead the prospect through the entire remodeling process by explaining each step in a linear fashion.

    The Remodeling Company
         Company history and philosophy
         Resumes of key personnel
         Trade references
         Certificates of Insurance
         Business Licenses (if applicable)
         Other Credentials

    The Remodeling Process
         Copy of agreement
         Schedule
         Additional work order
         Application for financing
         Right of rescission
         Lead-based paint disclosure
         Lien release letter
         Pre-construction conference form
         Job-site communication form
         Quality control pre-completion checklist

    What the Company Does, for Whom and Where
         The customer list

    Job-location map
         Before-and-after photographs

    Company Performance
         Testimonial letters
         Awards, honors and articles
         The guarantee or warranty
         Evidence of pride

Construction of the presentation book can be as simple as stopping by a photocopy store and requesting 25 pages of material known as 80-pound card stock. The color should be light gray, light blue, or hunter green. Request that this material be bound with the Comb Binding System. The front and back of this 8 ½x 11-inch book should be of clear acetate. This book is the skeleton for the presentation book, the expense at this point, around $3 to $5 dollars. The first page behind the clear cover is simply a piece of company letterhead. In the lower right corner the professional remodeler's business card is attached with a glue stick. Across this page is written perhaps in flowing calligraphy; "2015, Our Seventh Year…" Of course, the presentation book can be much more elaborate. Some remodelers choose a leather binder. Experience dictates that clear sleeves designed to cover and protect photos and documents tend to inhibit easy viewing. With proper planning, a stock of photos and photocopies allow the book to be updated whenever necessary.

To establish rapport verbally, match the representational system verbally. The client says; "I feel like I need a new kitchen." The remodeler replies by saying; "I feel like you are entitled to that"... We all have choices in verbal communication and can communicate the same idea in all representative systems. The remodeler tailors use of the presentation book to match the representational system of the prospect by presenting his or her translations for every page using the same representational system the client displays. The following numbered items represent the contents of the presentation book. Each numbered item includes examples of how the remodeler translates the information in each category of the presentation book to the prospect matching the use of the prospect's representational system: I see, I feel, I hear. The examples are suggestions only, experienced remodelers know that to use someone else's words when communicating is as uncomfortable as wearing someone else's shoes. The suggested wording should be personalized by remodelers and expressed in their own words.

Percentage of population using various verbal representational systems;
    40% I feel: "I feel comfortable.…" (kinesthetic comment)
        "Do you feel interested in knowing more about this?" (matching kinesthetic response)

    35% I see: "I've seen this...." (visual comment)
         "Does this look interesting?" (matching visual response)

    25% I hear: "I've heard about...." (auditory comment)
        "Does it sound like something you would like to pursue further?" (matching auditory response)

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Profit

"Remodelers, please raise your prices!"

Hello, My name is Mike Gorman, you may know that I have been training contractors how to raise their prices nationwide for over fifteen years. What you may not know is that I am presenting seminars for contractors both in small groups and privately in their offices.

I want you to sit back in your chair and get an image in your mind of your happiest customer. You may work for this customer every year. He or she may refer you to neighbors and friends. You might close your eyes until you get a clear picture of this person, and open them to continue reading when that picture is clear in your mind's eye. Close your eyes now until you have the picture!

Now that you have that picture, let me ask if that customer, your happiest customer, is the customer who beats you up on price, or happily pays your asking price every time? If your experience is like almost everyone who performs this exercise for me, you realize that your happiest customer is the one who pays the most! I'll teach you how to find more clients who will pay you more. Much of what I share with other contractors comes from my experience running my own firm in Denver, Colorado. During twenty years as a contractor I earned various honors including "Top 500" and "Big 50" status. From this experience I have developed a system to help you earn higher prices, while still converting your clients into raving fans.

My system is not perfect, but it is good enough that several "Fortune 500" corporations have paid me to travel around the country and present it to thousands of contractors. I have spoken of my system by invitation, at every major convention and trade show over the years with the exception of the International Builder's Show. When I was finally invited to the show in Las Vegas; January 2003, my attendees were so thrilled that I have already been asked back for next year. By now you have to be asking yourself: "What's in it for me?" Let me explain; through seminars and coaching I will not just deliver information, I will provide you with books, forms, programs, materials and information, and then assist you in implementing these systems in your business. These might include systems for your administration, sales and production departments.

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Nick Drummer, Builder/Remodeler


Nick Drummer is an fictional contractor. Check out his adventures and compare his typical day with yours. New adventures are added periodically.

1. Après Ski

Skiers may respond to the term rope drop with a rush of adrenaline, anticipating the unique satisfaction of cutting the first path down the mountain following an overnight deposit of fresh powder. The ritual of participation involves rising especially early and boarding the lift to arrive at the top of the mountain prepared to join the gathered skiers behind the rope restraint. At the appointed time the rope perimeter drops and the skiers each cut their track through the virgin powder.

On this day the powder is especially light, the consistency of duck down, influenced by very cold temperatures overnight, Nick found himself mentally reviewing a typical day at the office as he left the ski-in condominium he had let for the month of January every year for the past three. Leaving the business that first year had been the hardest for Nick, having not yet installed all of the systems required to run the business in his absence. Each year, more systems had been installed until this year Nick had felt a sense of assurance as he finalized travel plans.

A glance at his watch indicated that back at the office the day was just beginning. Alice, as Office Manager was opening the office and John was manning his desk as Production Coordinator. The aroma of coffee would be wafting through the lobby as John began his morning regimen of calls to sub-contractors. Alice and John answer all incoming phone calls following the Organizational Chart which Alice had ingeniously devised defining all of the duties in the company by reaction to incoming phone calls.

Alice had observed that incoming calls drove the company, originating either from past, present or prospective customers, or from venders, sub-contractors, or employees in the field. Both John and Alice do an excellent job of managing phone calls, being sure to spend extra time with those incoming calls from prospective customers using the Prospect Capture Forms as scripts to begin the qualification process before phoning the information to the sales people on a rotating basis. Calls from past customers requiring warranty work or follow-up are forwarded to Terry, the roving Assistant Production Coordinator. Terry is armed with a cell phone allowing her to respond to needs as dictated from the office, whether it be expediting building permits, delivering samples for a customer's approval or tracking down that widget needed to finish out a project. Nick could picture Terry's boyish face punctuated by soft brown eyes, framed in long dark hair. For just an instant he regretted sticking to his custom of having a solitary escape.

As Nick stepped onto his skis for the short run down to the lift the sun was just peeking above the rim of mountains to the east. During the ride up the mountain the frigid temperatures assisted his breath in forming ice crystals on his mustache as he wiped the anti-fogging cloth over his goggle lenses. The brightening sky contrasted with the dark shadows still lurking on the heavily treed mountainside. He observed the employees of the ski area beginning to man their posts; lift operators, ski patrol members, each one responding to the activity defined in his or her job description. In his business, Job Descriptions had been easy to produce after the Organizational Chart had clearly identified all of the duties triggered in reaction to the telephone, much the way the ski area's employee's jobs must be described in relation to the skier's activities. Each position is defined by a results-oriented job description, which describes not only the desired performance, but also defines the desired results, clarifying not only what but also why. Nick's thoughts turned back to skiing as the lift deposited him at the summit of East Peak. The awe of the panoramic view from the altitude of over 11,000 feet locked his mind into the present as the rope dropped. Nick picked his route, always away from the pack, leaving separate tracks behind in 6" of fluff as he descended the mountain in the deafening silence.

Nick skied the morning with his usual fervor before following the catwalk to the rear entrance of the condominium. As he warmed lunch his mind wandered back to the office and he grabbed the pocket tape recorder from the kitchen counter and noted a message he would relay to the office regarding the Warner job. The closer the company had approached annual sales of $3 million per year the less Nick had involved himself in sales. However, there were still times when he felt somehow obligated to service those faithful customers who had placed their trust in him as a one man business in those early years. As time allowed Nick still found himself selling several hundred thousand dollars in business each year under such circumstances. The Warners, for example, were customers for whom he felt as indispensable as the family doctor, having aided and advised them through the purchase and renovation of four different homes as their family had grown and their needs had changed over the years.

Nick finished the last of his toasted bagel with cream cheese, the sesame seeds leaving telltale deposits on his sweater. The last swallow of Merlot rolled down his tongue just as he visualized John sitting down with the sales people, Diane and Tom, for a weekly sales briefing. Diane and Tom would be comparing leads as John quizzed them about the status of proposals. Sales briefings had become much less contentious since John had successfully transferred his confidence in a Unit Cost System of Estimating to the sales people. John had spent the time necessary to interview sub-contractors, verifying costs for their trades. Sales people are responsible for pricing their own work, but John has final say in accepting the job. There were no questions about pricing or mark-ups since implementing the unit cost system, no one could argue with the consistency of the results. Nick had always insisted on the use of a Presentation Book as a sales tool and made it part of his job description to design and update the books. Experience had taught him the importance of every sales person telling the same story about the company as a way of planting similar expectations in the customer's mind. The Presentation Book is indispensable in this regard. This practice makes it possible to attain that important secret of success, always delivering more then the customer expects.

Following a brief stop for lunch, Nick skied several more runs until the powder surrendered its loft to the traffic and the rays of the sun. He allowed himself one last run down Rolex before he called it a day. Mid-way down the slope he paused to observe three ski-patrol members assisting each other as they labored to remove an injured skier from the steep bumps of the run. Nick made comparisons to his organization and the teamwork that had evolved since implementing the Lead Carpenter system for organizing field employees. Every Lead Carpenter orders their own material, manages their own job and is so adept at using the unit cost system of estimating that they even price additional work orders themselves. John in the office coordinates projects and each Lead Carpenter receives a bonus based on performance. This system has created such a level of ownership among the Lead Carpenters that they now co-operate with each other to share the tasks they find impossible to do themselves, much as the ski patrol members share the task of removing an injured from the impossible slope.

Back at the condo it's time to check on business. Nick powers up his laptop to receive and dispatch e-mail, remembering to type in that last bit of information from the tape recorder about the Warner job. Alice, in response to his request, was sending sales figures on a weekly basis. Every week Nick also receives a summary of bank deposits for the week, as well as payroll expenses. On a weekly basis he accessed the Scheduling System maintained by John, allowing him to track production and monitor the backlog of work.

Nick's preference is to limit actual voice contact with the office to once a week, unless he receives distressful information via e-mail or senses a problem. For Nick a voice connection diminishes the refreshing nature of an escape such as this. After several days it seems that he is able to view the work environment from a more objective place, and his mind flows with new ideas about how to make the systems work more efficiently. As Nick prepares to meet friends for dinner he remembers those words that seemed so mysterious when he first heard them years ago but have proven so valuable in his efforts to escape on occasion from the everyday drain of the office: "Systems Run the Business, People Run the Systems." Before he leaves for dinner at the ski village Nick sets out two books on the breakfast bar. Both books explore the topic of "Open Book Management" which he intends to begin studying before he ends his day.

Just before he closes the door to the condo Nick tightens the screws in the striker plate using his pocketknife. The door closes tightly with a precise click. The air carries the smell of pine. Nick wears a satisfied grin to dinner that evening.

Next installment; over dinner with friends, Nick recalls earlier days and a run-in with the Worker's Compensation Authorities.
 

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