Seven ways to wreck your business

When your clients are upset, two things can happen: you don’t make the sale, and you don’t get paid. And while there are plenty of ways to upset your client, these seven are among the most common. Avoid these disastrous mistakes to ensure that your business enjoys many happy (and paying) clients!

1) Not Returning Phone Calls

This is a major complaint. It’s not unique to contractors, but it’s part of our reputation and that’s not good.

It’s not good when a potential client can’t get a contractor to call him about a project. It’s even worse after the sale is made. If your client has a question, or isn’t sure about something, or simply doesn’t like what is going on in her home or building, the best way to turn her concern into a full-fledged fight is to ignore her.

Calls from potential and existing clients should go to the top of your to-do list. The time spent dealing with their questions is far less than the time spent cleaning up the messes you make when you ignore them.

2) Not Showing Up On Time for Appointments

Consider every appointment you make a promise to the person you’re supposed to meet. When you show up late, you’re breaking your promise. That’s no way to start a relationship.
When you set an appointment, be there—on time. If you’re going to be late, call to let the person know why and to tell him or her when you will arrive.

3) Not Building the Job According to the Contract

What I see in some arbitrations is a situation where the contractor discovered at some point that he underestimated the costs of a job. He’s about to lose money, so he goes into damage control mode to try to figure out ways to cut the cost of the job.

Obviously there are all kinds of ways to cut cost, but most of them result in clients not getting the job they wanted or were expecting. That’s a surefire way to upset a client.

4) Not Building the Job According to the Plans

I can’t tell you how many times I have seen this exact scenario happen on jobs. Someone fails to look at the plans, or willingly ignores the plans and decides to build the job the way he thinks it’ll look best. Or, he finds an error on the plans and instead of checking with the owner/architect/designer/whoever drew the plans, he attempts to fix the problem on his own. Bad idea—and one that’s guaranteed to get you in trouble.

5) Not Writing Additional Work Orders

This is one of the major reasons that contractors go out of business. The client requests a change and the contractor goes ahead with the change. At the end of the job, the contractor compiles all the changes on one change work order. And then the contractor wonders why the client is upset about the price. After all, didn’t the contractor do everything the client requested?

Clients don’t know what things cost. Frankly, most contractors don’t either, until they sit with pencil and paper and estimate it. Before making any changes on a project, estimate the cost, write a change work order, get it signed and have it paid before the additional work is done. That way, there are no surprises.

6) Not Enforcing Punch List Procedures

Have you ever gone to collect your final check only to find blue tape or yellow Post-it notes stuck to everything the client isn’t happy about? There’s an outline on how to handle the punch list in our book, “Markup and Profit; A Contractor’s Guide Revisited”. If you follow the procedure in our book, this won’t happen to you.

7) Not Writing Contracts

And the last—but one of the greatest—mistakes that can be made is not writing detailed contracts for your jobs.

I took a call last week from a contractor asking how to deal with an owner who is refusing to pay overhead and profit on a job his company completed over a year ago. The amount due is over $100,000. I asked the contractor about his payment schedule and he said, “We don’t have a written contract, but I do have XX number of emails from the owner telling us to do the work.” He then told me that his attorney was working on the problem. I asked if his attorney specialized in construction law, he said, “No, he’s a personal friend.”

It is the little things in this business. If they don’t get done, or aren’t done properly, they’ll eat your profit quickly. Do them right and you will be paid on time and in full. 
For more information, visit www.markupandprofit.com/newsletter/things-cause-problems-or-how-upset-your-clients.

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