Are Your Beliefs Hurting Your Business?

From opinions on wages to growing your operations, these commonly-held beliefs could be hampering your contracting business

Motivational speakers have been known to say things like, “You are what you think about.” I am not so sure. If that were totally true, I would have probably turned into a can of beer or a pretty girl at the age of 18. However, there is no question that our lives become an accumulation of what we think and believe.

Our beliefs and thoughts are determined by influences, personality, and experiences. Of course, perspective varies from individual to individual. The internet and politics have created a society of absolute rights and absolute wrongs. I do not believe life and business are so simple. Changing some of your internal beliefs regarding your business may help you adapt to today’s ever-changing business environment. Remember, for hundreds of years people thought the Earth was flat. Here are some common false business beliefs.

I Can’t Raise my Prices

I have been a contractor business consultant for over 40 years, and I have never encountered a contractor who at first did not believe his or her business was one of the most expensive contractors in the market. The number one reason contractors fail is they do not charge enough. I get calls from contractors who are absolutely convinced they are the most expensive in their market; yet I have contractors in their market who are 20-30% higher and have more work than they can get done. Living in a vacuum can generate beliefs that just are not true. One of the greatest values of our networking groups is to see what other non-competing contractors are charging. Many contractors are amazed that when they too raise their price, they lose very little business.

I Can’t Afford to Pay People That Much

Understand that economics and wage competition drive wage prices, not what you are willing to pay. Most contractors understand that you have to pay more money for good tools. You also have to pay more money to attract and keep good people. Competition for good employees is fierce and demand for tradespeople will continue to grow. Many Americans just do not want to do blue-collar jobs. We do not see this changing. As fewer and fewer people want to do manual labor, the more competitive the marketplace will become.

If I Can Just Grow, I Will Make More Money

Maybe, maybe not. Make money to grow, do not try to grow to make money. Growth requires more workers, more cash, more equipment and more overhead. Think of a contractor that went bankrupt. I bet that failing contractor had lots of work. A funny story my deceased partner liked to tell was about two contractors who sold produce in the winter when their business was slow. They would drive to Florida and pay $1 each for watermelons and sell them for a $1. They could not seem to make any money so what they decided to do was buy a bigger truck. Most contractors who fail are busy, not idle. Buying a bigger truck may not be your solution.

If You Do Good Work, Your Business Will Grow

This statement includes lots of assumptions. You are assuming people understand the difference between good and bad work. Remember, when buying contracting services, you are buying a promise of performance, not a product you can touch or feel. Just because you build a better mouse trap does not mean customers will flock to your door. They may be happy with the mouse trap they already have or fail to see the value of yours. Without a website or other marketing, those customers may be unable to find you. It takes more than doing good work to grow a business. Remember, quality is in the eye of the beholder. Quality is performance to a set of standards. A snow tire is great in a snowstorm but not so good on a drag strip. My teenage daughter’s definition of doing a “good” job of cleaning her room varied greatly from my definition of a “good” job.

I’m Going to Sell My Business for Big Bucks and Retire

Really, who are you going to sell it to? And is your business really worth anything without you? Unless you build a business where you are not needed as a daily hands-on owner, I doubt the business is worth very much. Your employee or employees may be the most likely buyer, but how are they going to pay for it? Yes, contracting businesses can be saleable, but it might not be as valuable as you think. My advice is not to put all your eggs into one basket.

The older I get, the more I realize there is a lot that I do not know. Others seem to think they have it figured out, but with age can come being less open minded. Socrates said, “The only true wisdom is knowing you know nothing.”