This is how to surpass $10 million a year in your construction business.
There are 2 investments that you should be making in your construction business. One of them is what everybody does and the other one is what nobody is doing.
And that’s what we’re going to focus on today, is what nobody’s doing so you can get ahead of the game and capture those really big gains in your construction company.
All Contractors Are Salespeople
Yesterday I was in the car dealership with my wife and the car salesman was telling me, “Hey my dad was one of these Cuban construction worker guys that did additions and things like that.” And we started talking and one of the things I realized was that what a lot of people are doing is they’re focusing on small projects and not actually investing in building the relationship with their clients.
That led me to create this simple formula:
Quality Work + Build Relationship = Successful Business
When you do residential jobs, you’re typically working for one client, one time and that’s it. But when you’re in commercial, you have such a big opportunity to really take your business to a whole other level by spending time, investing in the client.
The 2 Investments Every Contractor Must Make
Maybe your business has already surpassed $10 million. If you’re a general contractor, that shouldn’t be that hard. If you’re a subcontractor, you probably need a bigger subcontracting business to actually be at that point because obviously, the returns for each project are a little less.
Either way, there are two investments that every contractor needs to make:
1. Investing in the project. (Common)
2. Invest in the client. (Rare)
Investing in Projects for Bid Opportunities
Here’s what everybody’s doing, investing in the project.
They get on the bid list, get invited to bid, and end up bidding 1 or 2 jobs and that’s it. Does that sound effective?
The truth is most contractors are rarely doing any sort of real follow-up and then end up not landing any of the jobs they work so hard to bid on. Then they turn around and say, “Hey, this bidding thing doesn’t work.”
But what if you spent some time investing in the client?
Invest in the Client and Win 3x More Construction Jobs
Investing in the client means spending time building a relationship.
In some of our other content, we go over the mere exposure effect and how important it is for your sales. Essentially, it’s showing up in front of someone enough times for them to be familiar with you.
This is key to building solid relationships, having a good reputation with clients, helping them understand your business, and most importantly, developing that connection that will lead to more work in the future.
How can you do this in a way that’s effective and will lead to more projects? By making a schedule so you can visit the clients.
After you bid on the job, you’re going to want to start visiting them, calling them, and following up. The point is to see what else they have coming up. I recommend having around 8-12 touchpoints with all your potential clients throughout the bidding process.
Many people keep in touch with their leads, but not many do it correctly. How do you get the client to want to keep using you?
How to Win Over Clients for Life
#1 – Get your foot in the door with the right people
So we have to bid for our first job (which everybody’s going to do). If you’re a sub, the key here is to really spend the time to build a relationship with the project managers. Because guess what? The project managers are the gatekeepers of the project.
You can call any construction company, any GC, any architect and they’re going to give you the opportunity to bid, but who’s ultimately the one that selects the job?
When I was a superintendent at CAMCON, I used to see my project manager literally get the bid package and say, “Okay, these are all the bidders, these are all the proposals.”
And then he would literally open the stack and start saying, “Okay, this painter, nah, I’m going to use my painter. I’m going to call him. But now guess what? I already know who the low bidder is. So now I could call them and say, ‘Hey, I need your price to be at this much.’ And then you skip the whole bidding process.”
Then I remember one time I saw him get a completely different company to take care of the drywall on a job. And guess what? He gets that low bid and then he calls his guy for better pricing!
And that’s when I figured out that the one that makes the decisions is the project manager.
General contractors + Developers
On the other hand, if you’re a GC, you’re going to be pursuing architects, who are typically going to be one of your greatest clients.
If you’re a developer, they probably have their own project manager. So you need to build those relationships, and guess what? You only need a few clients.
#2 – The secret to getting more project work is to ________
Think about these numbers.
To do $7 million as a subcontractor, and let’s say your average project value is $250,000. You’re looking at 28 jobs a year.
Divide that by 12 and you’re looking at 2, maybe 3 jobs a month. Do you think you can’t close two or three jobs a month? That’s what $7 million a year is for the average construction company.
Let’s say the average general contractor project is at $600,000. 7 million divided by 600,000 divided by 12 is 1 job a month. That means if you bid on a few jobs, you’ve got to get at least 1 of them.
But guess what? What if you end up bidding for the same people, the same developer, the same GC… every time?
Don’t you think the bidding is going to be a little easier? When you walk in the door, it’s going to be a little bit more competitive because, hey, they don’t know who you are. They don’t know your quality. So we’ve got to build up that perceived value.
First things first, you have to do the first job. Once you do the first job, you have to kill it. You have to think about customer service.
A lot of times construction companies bomb it in the actual execution of their first job with a new client.
They’re good on paper, they have all the branding right. And then they show up on the job site and their crews don’t show up on time, they don’t answer the phone when you need them to, etc.
And if you’ve been in construction at all, you know the struggles. That people tell you they’re going to be there at 7 am, then they don’t show up and you start calling and then they decline your calls. And then they show up the next day like it’s all good.
So those are the struggles. And that’s what kills future work. It’s super rare when you have a contractor that does exactly what he says. He doesn’t destroy you with change orders and he knows what he’s doing.
It’s almost like you always have to be on the defensive. Whenever you’re going to hire a drywall guy or a painter, or even a GC, you have to ask yourself, “when’s the next change order going to come at?” It’s like a chess game.
But why does it have to be that way? It doesn’t have to be.
What Does Your Dream Client Want?
What do General Contractors Want from Subs?
GCs want somebody to walk the job with them, help them secure the project, help them with their schedule.
They want somebody that’s going to be reliable.
Here are some tactics you can start doing today:
- Once a week set up a time to take a 10-minute walk with the superintendent (of the GC).
- Walk with them and say, “Okay, this week I have plans to do _______.” And let them know how you’re going to sequence the job.
That helps the general contractor sequence the job.
What do Architects and Developers Want from GCs?
What if you’re a general contractor? You have an architect and imagine if every single time that architect uses you, you execute to perfection.
You show up on time, your guys have hand-picked subcontractors. They don’t give them a hard time. They do quality work. That’s what you need to do if you want repeat work.
How to Generate Word-of-Mouth Referrals Like Crazy
So a lot of people depend on word-of-mouth referrals for all their business. Don’t get me wrong, word-of-mouth is extremely effective and the best. The only problem with word of mouth is you can’t scale it. You can’t ramp up your advertising for word of mouth… or can you?
Follow these steps to the tee and start blowing up your phone with referrals:
1. Make a list of 50 potential clients. (Don’t know where to look? Read this article.)
2. Pick 10-12 to be your main focus. The exact kind of people you want to work with.
3. Bid jobs for them and implement the strategies above to win.
4. Do a good job.
5. Let the referrals come rolling in.
Pick like 10-12 out of the 50 and those are going to be your laser focus. As you work with them and you start to see how they’re like, you’ll put them on your main target list. And then after maybe one or two jobs, you don’t like them, take them out and replace them with someone else.
And focus on building those relationships. Because guess what? Let’s say you’re a GC and you have 10 architectural firms on your list. Those guys have so much work that they can give you.
Think of this process. A homeowner or a business owner says, “I want to do this a renovation,” or, “I want to build this three-story building,” or whatever.
They typically don’t know anything about construction. So what they’re going to do is they’re going to find an architect. They’re going to put all their trust in that architect to execute. They don’t know anything about permits, drawings, structures, etc.
Most of the time homeowners don’t know this stuff right? So they’re putting a tremendous amount of trust in their architects. And then typically at the end, sometimes it takes six, seven months, maybe even a year to do a full set of plans between the schematic, design development, the construction drawings, all that stuff.
And they build a lot of rapport with that architect because of all the trust they have in them. Their money is in that architect’s hands. At the end of the drawings, what is typically the next question?
“Hey, do you know a general contractor that can build this thing?”
And imagine if you kill it every single time with the same architect, you do a great job. He says, “Hey, you know what? The only person I will recommend is I AM Builders Construction or ABC construction, or I’m going to recommend John Smith. I’m going to recommend him because I think he’s the only guy that’s going to do the best job for you. The only guy I could put my reputation on.”
What are the chances that that owner is going to say, “Thank you very much, but I’m just going to Google some random guy that I don’t know and I’ve never talked to. And I don’t even know if they’re good. I don’t know if they’re going to steal my money, and I have no idea if they’re going to be a bad contractor.”
Obviously, they’re not going to do that. They’re going to just literally say like, “Hey, here’s the job. What’s their budget? Oh, it’s this much? Okay. Can we do a little bit of a discount?”
But you’re not going to be destroyed in your price is what I’m saying. You’re going to end up getting a lot of repeat work. That architect is going to keep using you.
Imagine, you don’t think that architecture firm is going to have one product a month for you? Maybe two, maybe three, maybe four, maybe five? And imagine if you’re talking to general contractors?
If you’re a sub-contractor, just literally bid like crazy as much as you can, and find out who the other bidders for every job are.
Bid Faster and Better — The Budget Method
If you sit in your office and you calculate and you prepare a material list for every job and you send it to your suppliers, you’re only going to be able to do a couple of bids here and there.
But if you do the strategies in the Xplode strategy, one of the things we talk about is the budget method. How do you bid jobs if you’re a subcontractor and you’re in the field and you’re doing a bunch of other stuff? How do you bid on so many jobs if you don’t have the time?
If you’re still hanging drywall, if you’re performing concrete footings, if you’re excavating, there is no time for estimating.
As a side note, we are an estimating firm. So if you need help with estimating, you could actually reach out to us at email@example.com.
But anyways, if you don’t have time to estimate, then you don’t have time to grow your business, and you’re never going to be able to surpass the $7 million dollars mark.
And I think $7 million for a construction company honestly isn’t that much because I’ve seen companies that are a $100 million+. I think that 7 million is a good target to reach in the next maybe couple of years. And it’s definitely doable. So like I said, focus.
A Final Recap (with Instructions)
Get More Bid Opportunities
1. Use paid lead generation services to find a list of potential clients and begin asking them to get on their bid list.
2. Find a couple of projects you actually want to bid and start bidding on them.
3. Go back to all the clients that you’ve worked with in the past and all the people that you did a good job for that are super happy with you and start asking for more work.
Estimate and Bid Jobs
Prepare the bid for the projects quickly using the budget method outlined above. Use your average costs and prepare a rough budget to get your foot in the door on multiple projects.
If you don’t have time to prepare a bid call us at 305-433-6432 or send in your plans to firstname.lastname@example.org and we can take care of the whole bid for you.
Here are the different ways to follow up:
- Office visits
Don’t do it every single day, maybe every 2-3 weeks. And then the next part of that step is find out who else is bidding the job. If there are multiple general contractors or multiple developers or whatever, find out who else is going to potentially be the main contractor or the architect handling that and just send your bid to them.
So that’s what the Xplode Strategy Blueprint is all about. And if you need help estimating, remember I AM Builders is an estimating firm so we estimate for GCs, developers, subcontractors, and more. So if you need help estimating, you can reach out to us at email@example.com
If you need help with your lead strategy, with growing your construction business, if you’re stuck, you need help, you want to grow, and you don’t know how to do it. Reach out to us at 305-433-6432. I hope this post brought you a ton of value, thanks.