By Ryan Siebert
When building a home building and remodeling business contractors need to pay attention to the type of client that works for their business. Early on there is a tendency to take on every client that asks for a quote. At some point there is a realization that certain clients work for certain contractors. Here are a few of the questions we go through when selecting clients for our projects.
In a perfect world we as the contractor would be able to ask our clients for references of different contractors they have previously worked with. It makes sense. They can ask us who we have build homes for, or remodeled bathrooms with. Why can’t we ask them who they have built with? Unfortunately, we have to spend a lot of time paying attention to our clients needs. What is it that is important to them? What type of personality traits to our clients possess? Are they going to crunch the numbers and take the lowest bid? Are they more concerned with finishing at a certain timeline? Are they going to throw the budget and timeline out the window to make sure they get a one of a kind custom built home? The sooner that contractors can identify their strengths, the better off they will be able to service their clients rather than trying to be the answer for everyone.
Saying No Is a Good Thing
Which leads to my next point – it is ok for a contractor to say no to you. As a salesman, I hate saying no to clients. However, once I had a better understanding of the clientele we were suited to work with it made saying no easier. For some contractors smaller and cost effective jobs are their bread and butter. Their challenge is to say no to higher end projects that may require long term project management skills. Contractors that cannot stick to a timeline, but will provide top notch finishes need to stay away from clients that want to hit a specific date. Work with a home builder that understands their strengths. They can properly set the expectations for you as the client. This will make your decision to work with them much easier.
Stick To A Profit Margin
Building a home can be stressful for a contractor, but it is worth it if the transaction is profitable. It is important for a contractor to understand what is considered a successful financial transaction. A profit margin for one contractor may be 10-12 percent, but for others no less than 20 percent is acceptable. Another question to take into consideration is the time involved with the project. If 10 percent margin works, but the total revenue is low some contractors will walk from the deal. Understanding the financial risk and reward of the transaction will allow contractors to make better decisions. It allows contractors to avoid blind spots and taking on home building projects they won’t be profitable on. Managing a home addition vs managing a bathroom renovation involves different amounts of time. Be sure your contractor understands your expectation for time involved in a project before you sign off thinking you obtained the deal of a lifetime.
Custom home building and remodeling can be a stressful transaction for both homeowners and contractors. However, when a contractor understands their strengths and identify clients that want what they can give.
If you are looking for help identifying what type of contractor will work for you, give me a call, I would love to help anyway I can, 847-602-7641. You can also email me, Ryan@SGHomeBuilders.com