A number of analysts are talking about the recession coming to an end and that things are beginning to turn around. But, as small business contractors, you will see that you will continue to go through the ‘Shrinkage’. Do not get sucked into believing that the public is suddenly going to start throwing money back into an economy that they have started to question.

While we fight through these tough economic times, we are at a pivotal place in our careers. While we learn the meanings of the terms ‘Shrinkage’ and ‘Growth’, we must also learn how to use these tools wisely. Several experienced contractors who have listened and learned from studying their businesses have adapted to this concept.

Smart business owners have been prepared for these issues that have plagued our industry from the date of our economic breakdown. These smart business owners have prepared for the shrinkage and have mobilized themselves for the turnaround in the economy.

However, it is highly unlikely that you are going to see Sales like those back in the Season of 2007. But when the customers do start pumping money into the economy, you ought to be ready. And in the meantime, take a close look at your financials. Watch your expenses. And scale back when you can. Cut your costs wherever possible. But most importantly, you need to hang in there.

If you haven’t started on a plan to manage the ‘Shrinkage’ and if you are still dredging along and not anywhere close to where your projections should be, then just call us at Contractor Business Profits. Together, we can put together a plan that can be implemented right away and will start yielding the results you are looking for.

Back when I ran my own company and I was first approached by a local radio station for advertising, the idea seemed very exciting. As I did a bit of research, I began to understand the different strategies in small business contracting sales. That’s when I realized that Radio and Television work OK, but only after you have exhausted every other avenue of advertising which are within your budget. Your typical sales and advertising strategies include flyers, mailings, referral incentives, magazine ads in senior citizen magazines and home improvement magazines, advertising on vehicles, bonus incentives for your technicians and of course your office staff as well.

All these are proven forms of advertising that provide you with a return on investment if done properly. On the other hand, Radio does not have a great track record for small business contractors. The segments are usually short and comparatively quite expensive, and have no time structuring. Although your Radio sales person may be nice, the Radio DJ may be quite difficult. And on top of everything else, you may be running a segment with other trades people. Meanwhile, it is highly unlikely that a customer will listen to the segment and write down the phone number or your website address and add to your customer base.

As a small business owner, you can and will find much more effective and proven methods of advertising that won’t cost you an arm and a leg. I like to call Radio and Television advertising ‘Passive’ – that is, the customer hears and watches the ads in a passive manner, and that it does not have much of an effect on them after the segment is over. On the other hand, Magazine or Newspaper advertising is what I like to call ‘Magnetic Advertising’ – where you stand a better chance at attracting your target audience and they have your contact details right there in front of them where they can easily rip off the paper or add your number to their cell phone.

Businesses that do invest in Radio and Television advertising usually have sales figures over and above 5 million dollars or more per year – and they usually combine these advertising spots with a mail blitz or home shows.

Watch your financials and learn what they are projecting. These details will help you determine your advertising budget and its allocation.

Although many of the small contractor business owners are very well versed in the technical aspects of our industry, they do not have the basic concepts to effectively price for profit. It is important that contractors realize that they are not just mechanics but business owners who are running a business for profit. It doesn’t matter if you are a one man show, or if you have 100 employees. You should price your services in such a manner that it won’t drive your customers away and still let you make a profit. It is important for you to understand your company’s financials so that you can price your services effectively.  It is the only way to be profitable – and it is the only way you should price your job.

Guessing your margins is not an effective method of doing business.  Know your margins – understand them and add them to your prices accordingly.  Understand your financial statements so that you can price for a profit.

In any type of business deal for small contractor businesses, a contract is something that should offer you protection from liabilities. It may seem very basic for some HVAC business owners, but a solid agreement is the way to profitability.

Starting a relationship with an Attorney who knows Business Contracting will probably be the best investment you can make for your business. Be aware that it may cost you a couple of thousand dollars, but it will certainly be money well spent.

Having a contract will protect you from all kinds of financial troubles in cases like late payments, where you can charge penalties for them. Contractual Payment Clauses will also show many of you prospective ‘High End’ clients that you are not just another mechanic with a truck, but a bona-fide businessman who knows how to protect himself while offering exceptional service.

As more and more homeowners are becoming savvy with the Better Business Bureau and the individual State Department of Consumer Affairs, these customers are learning how to manipulate and take advantage of small contractors.

As a contractor business owner, there are many different things you can do to ensure proper and timely payment, and protection from the dreaded manipulative customer. And the best method of ensuring that you are protected is to make contractual agreements. I have advised several of my HVAC Contractors to put together a well composed Home Improvement Contract that is put together and endorsed by an Attorney. Starting and maintaining a solid relationship with an Attorney is one of the best investments that you can make for your business. Another advantage of having a customized contract is that you can include clauses for change orders, payment requests and potential Lien statements within the contract and protect yourself from any probable liabilities.