Hey everyone, this is Daniel, founder of I AM Builders, and today we’re going to talk about the foot-in-the-door technique.
The biggest challenge I always see all my clients having is landing projects. How do I land projects? How do I get the leads? How do I close them? How do I do this? How do I drop my price to be the low bidder? Etc. These are all the things that they struggle with.
Today, I decided to do this live outdoors. I’m here right in front of my office, I have my team in there, working hard on estimating. But for all of my clients that are in Massachusetts and New York, I just want to let you know it’s a VERY freezing 50 degrees here in Miami.
Hopefully, you don’t have a foot of snow. Actually, two days ago I was talking to one of my Canadian clients, I have a couple of clients in Canada, and they’re basically almost in the North Pole, so imagine how cold it is there.
Anyways, so today what I want to talk to you about is the foot-in-the-door technique. I want to share with you the technique that we’re using and that we’re teaching and that we’re showing our clients to actually land these jobs. So this morning, I was driving to my office, and one of my favorite longtime clients, he’s a drywall contractor from Massachusets, he calls me up.
He’s in Massachusetts and he wants to add a branch in Georgia because he wants to get closer to the family, etc. So the last couple of years, we’ve been bidding on a lot of jobs and we’ve been pretty successful. It’s been going pretty good. The thing is that it takes a little bit of time to actually have enough projects coming in unless you do it consistently.
So he calls me up and he says, “I need help to close some jobs. Seriously. You guys are doing the estimating, we’re doing good, but I’m so busy running the jobs that I don’t have time to call every single person and try to close.”
So he asked if we can help him out with that and I said, “All right, but if we’re going to do it, we’re going to do it right.”
Scaling a Construction Company the Right Way [Story]
I always talk about this, but when I was a senior project manager at Caroni, we figured out this really simple lead generation and closing strategy.
This was before I started I AM Builders, it was a drywall contractor here in Miami, we took the company from being just a little labor company giving labor to some bigger drywall guys all the way to getting our own GC projects. Here’s how we did it.
The owner’s a really good friend of mine. He recruits me one day and says, “Hey, come over. I want to grow the company.” So naturally, I was like, “Sure, no problem. Let’s do it.”
But then when I walk in the door on my first day, he’s like, “Yeah, I’m just getting my first couple little GC jobs, they’re $10,000, $20,000 contracts, but I have a bunch of labor money coming in. All my employees, I lease them out to all these companies.”
I was a little stuck at that point because I had just left a really good construction company as the superintendent and I came over here.
And we said, “You know what? Let’s build this thing. Let’s take this thing and let’s blow it up, let’s explode it. Let’s make it something special.”
So in 3 years, we took it from zero to $7 million and this is one of the strategies we used.
The Foot-in-the-Door Technique
The end result is to get in front of the decision-makers as fast as possible and as often as possible.
So normally, the way we do that is to just bid a bunch of jobs. Bid like crazy and cross our fingers. That’s typically what everybody does in the industry.
But did you know that if you do that, you’re going to get the same results that everybody else gets in the industry? And the industry average is somewhere in the 10% or lower in success rates. And I know that because out of the 10,000 contractors I’ve spoken to and the 1,200 clients we have I always ask all the questions:
- What’s your closing rate?
- What’s your percentage?
- How are you getting the leads?
- How are you doing this?
So we’ve been able to figure out what everybody’s doing that’s working and what everybody’s doing that’s not working. That’s how we develop our strategy. Actually, that’s what we did with the Xplode Strategy blueprint and that’s how we got this technique too.
Click below to download our blueprint to growing your construction business!
Here’s what the technique is, the foot-in-the-door. So the end result is, let’s get on the negotiating table, let’s start talking final numbers so you can give me a contract. That’s what we want to do. Let’s get in front of the decision-makers so we can get a contract and we can start construction and start working. That’s the goal.
So how are we going to do it? If you’ve already done a lot of projects, the first thing I’m going to recommend to you is to go down your list of all the people you work for and just call them up. If you’ve done a good job, they’re going to want to use you again.
But let’s assume you don’t have that list, you’re just starting out, or let’s just assume that you’ve taken your company this far, but now you want to grow it. The first thing we need is new prospects.
There are two ways to grow your business:
1.) We’re going to find a few clients we like and nurture those relationships where we get all their jobs and you become their go-to.
2.) We’re going to try to find as many clients as possible.
Compile a List of Prospects
Make a list using Construct Connect or Google of 100 potential clients. And then you’re going to target around 10 to 12 people. Those are going to be your sniper targets.
We’re going to focus on them and we have the list, and we’re going to eventually hit that whole list. And we’re eventually going to have 100, 200, 300, 1,000 people on this list.
The story with that post is one day I thought to myself, “If I’m a GC, who would I go for?” Architects, developers, property managers, commercial realtors, residential realtors. I made a big list. Here’s a screenshot:
Click here for the full list of potential contacts.
“If I’m a subcontractor, who am I going to go for?” General contractors, construction management firms, I could work directly for the owners. Residential owners. There’s a whole other list there. Residential people, malls, property managers, there’s a lot of people you can work with. So I made that list and then what you do is go on Google or Construct Connect and you just start finding people and putting them in a database.
We built out this software called Capstone for you that you can do it there if you’re interested. We haven’t launched it yet, but if you’re interested, give us a call at 305-433-6432.
Basically, it’s this lead tracking software that we developed for our clients where you say, “All right, let’s get out 10 to 12 people and focus on them first.”
I recommend a visit where you walk in the door and you say,
“Hey, my name is Daniel. I’m with I Am Builders.” Or, “I’m with ABC Construction.” “I was in the area and I wanted to pass by and meet you guys.” They’re going to say, “Sure, what do you do?” and then you can say “Oh, I’m a [insert trade] contractor. What do you guys have coming up?”
How to Get a Ton of Projects from Architects
If they’re an architecture firm, they probably have stuff in the design development phase that you can simply offer to give some budget numbers on.
Because what happens is as these architects are preparing these projects, they don’t know how much anything costs.
Their projects always come in over budget. So if you come in and you say, “Hey, let me get your 25% schematic set or your design development set. Let me actually give you a quick budget.” This is what we call The Budget Method, where you can prepare an accurate budget based on incomplete drawings. It’s super simple and it’s a tactic that barely anybody is using.
Prepare a budget and become their best friend. When the time comes to grab the job and award it, you’re going to be the #1 contender, and you’re almost probably never even going to have to compete with anybody else.
It’s a little bit of an investment because you have to invest your time and maybe a little bit of money on the estimating time, and maybe you have to invest a couple of months into it before it becomes a contract, but then, if you do, it becomes a pipeline.
So if you do it now then three to six months later, you’re going to have a ton of projects coming in. And that’s how it works, it’s like an avalanche. In the beginning, it’s a lot of investing, but it’s for sure going to give you a result. 100%.
How to Negotiate Your Bid the Right Way – Win the Job
Let’s say you want to bid on a new project for a new client. You walk in and get an opportunity to bid. These guys don’t know you, so now the next thing you have to do is raise your perceived value. How do we raise our perceived value?
By making sure your branding is good, your websites are set up, and that your team shows up on time. Make sure that if you have a meeting, you don’t show up late. All these tiny little things really create the impression a company has of you.
So now you get this opportunity to bid. What I recommend is calling up your suppliers your subcontractors and trying to get some standard pricing. At this point, you can prepare.
There’s this myth in the industry that you have to be the low bidder. I’ve broken this myth 100 times. You don’t have to be the low bidder, but the only way that you break that is to work with the people first.
Once you work for them for a couple of jobs and you kill it, you can raise up your prices and pull almost whatever you want because then they see the value, they see what they’re paying for.
But in the beginning, they don’t know who you are. They don’t know if you’re good. They don’t even know if you’re going to show up. Contractors are notorious for saying they’re going to do something and then not doing it. It’s just the industry.
I just had a painting contractor come and paint my house and the guy every other day tells me a story of why he can’t show up or why he can’t finish this.
When I was managing drywall projects, for some reason, every week, somebody’s tire blew out. You know how it is. So they expect that. So if you’re the guy that doesn’t do those things, boom, your perceived value goes up instantly.
7-Step Checklist to Have More Perceived Value
So you’re going to bid the job real low just to get your foot in the door. Remember, we want to get in front of the people who are going to decide who gets the job.
If you are a general contractor, the guy who typically decides is the architect because they run construction administration for the projects and they typically have their own project manager or senior project manager from the design team that oversees the whole thing.
Make sure you accomplish all of these tasks:
1. Get your foot in the door with a budget.
2. Bid good
3. Meet them in-person
4. Have a good first impression
5. Have a good rapport
6. Invest time visiting and calling
7. Built a genuine relationship
Do all these and then they’re going to want to use you. But you’ve got to get in front of that table.
One, we’re going to get the opportunity to bid by visiting or by finding them on Construct Connect. Two, we’re going to bid the job real low because we want to get in front of that table.
If you look at your historical numbers, whether you’re a subcontractor or a GC, you’re going to see that you’re probably having between 10% and 30% in change order costs.
So as a hypothetical, if I come in and my original contract value is $100,000, and I know that just in the natural order of the project, we’re going to land another 20%, so another 20 grand or maybe even 30 grand. Just, “Hey, I’ve got to patch this wall.” Boom, here’s a price. “Hey, the owner sent this revision and we have to knock down a wall and rebuild it.” Boom. “Oh hey, you know what? The ductwork, we have to adjust it.” If you know what your change order percentage is, you can go in real low, so we can go in just above cost, so your number is going to look super competitive.
There’s a couple of things for you. When you meet a new client, the way that they’re going to want to use you is your:
So what’s the easiest and quickest thing for us to do right now so that we can get in front of those people?
Coming in at a low price doesn’t guarantee that’s going to be your final number.
I always say that the first price you submit is a preliminary proposal because it always changes since we’re going to value engineer and go down.
So once you get in front of that negotiating table, you come in real low, you negotiate and demonstrate your expertise, and now you have a chance to literally audition for the role of being the contractor for the job.
Many high-end investors and GCs want to make sure that you’re the right company for the job because not every drywall contractor can really provide value to the project by offering consulting and guidance with the overall job.
We did exactly what I’m telling you. We put in our bid, we got in front of the people that were in charge of the decision-making. We had a chance, an opportunity, to sell ourselves and to essentially audition. It’s an audition because they’re about to give you the contract, but they’ve got to make sure that you’re the right guy.
Find a bunch of clients, see who needs what, talk to them, get in front of them.
You’re going to see who you like, who you like working for, and then you’re going to find a couple of hidden gems that have some great opportunities. Whether you’re a GC or a drywall guy this applies, and they are going to be the ones that are going to start using you for all their jobs.
Here’s a recap:
1. Find the project
2. Submit your bids real low
3. Do an amazing job on the job site