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During the past three years, I have had the pleasure of conducting monthly marketing seminars for small business contractor entrepreneurs. I begin each session by asking some questions of the group. What is the geographic range of your service area? Average answer: 60 to 90 miles. How much time do you spend on site doing an estimate? Average answer: 30 minutes. What are you worth an hour? Average answer: $100 What does each estimate cost you? Average answer: blank stare. It does not take an MBA to calculate that 1 hour drives to and from an estimate, combined with the time on site, then added to the paperwork and fuel has these entrepreneurs spending $300 to do an estimate.

The Estimate Money Pit

By Paul J. DelFino


 


During the past three years, I have had the pleasure of conducting monthly marketing seminars for small business contractor entrepreneurs. I begin each session by asking some questions of the group.

What is the geographic range of your service area? Average answer: 60 to 90 miles.
How much time do you spend on site doing an estimate? Average answer: 30 minutes.
What are you worth an hour? Average answer: $100
What does each estimate cost you? Average answer: blank stare.

 


It does not take an MBA to calculate that 1 hour drives to and from an estimate, combined with the time on site, then added to the paperwork and fuel has these entrepreneurs spending $300 to do an estimate.


 


“No one else can do it”


The revelation that these experienced small business people are spending that much for a “maybe” is interesting to behold. It is usually followed by group discussions where, to a person, they conclude that:


1)      They cannot trust anyone else.


2)      They have no time to train anyone else.


3)      They would look forward to delegating the responsibility, but…


 


Standards and sales disciplines


At this point, I enjoy offering up a few more questions.

What is communicated to a prospect as a commitment when they contact your company? That is, how quickly will you follow up and be on site to look at the potential job. Average answer: more blank stares.
Do you communicate by e-mail confirming your appointment for an estimate in the coming day(s), and include a photo and background of the estimator who will be visiting the site? Average answer: stares turn to smiles.
What is your closing ratio by geographic segments of your market, type of work, size of job, or referral source? Average answer: suggestions that I am from another planet.
Do you have a mechanism to touch base with each prospect with an outstanding pending estimate every week with an e-mail or phone call to expedite closing the deal? Average answer: confirmation that I am from another planet.

 


It is here that groups usually work to explain to me that:


1)      Doing estimates is something entrepreneurs do before the job, at the end of the day, and on weekends.


2)      No one in their size company has the resources with the skills and disciplines to do these “big company kinds of things.”


3)      If they hired someone to do all these things, they would not make money.


 


But, to a person, they concede that in their industry such behavior by a smaller contracting firm would be a true differentiator, and a level of service and professionalism that could warrant increased perceived value and, therefore, potentially higher pricing and increased profit.


 


The tech solution


During the past several years, new technology products have become available that allow small business contractors to present an image and to deliver a level of service that mirrors the most sophisticated national service firms. It all started with Cloud-based customer relationship management (CRM) systems. These tools allowed mobile entrepreneurs to deploy mobile devices to manage their customer contact information in real time. However, most recently, business app developers have perfected tablet software that is nearly plug-and-play, allowing contractors to easily execute each of the recommendations inferred in my questions to the group.


 


The vision


Envision a system that costs $10 to $30 per month, which:

Offers a phone/tablet-based CRM system where each contact with each customer can be recorded by each person in your company.
Offers you a tablet estimating tool, which incorporates pictures and project itemization that easily prepares estimates on the spot during a prospect site visit where you can e-mail your customer a professionally produced estimate on the spot, incorporating photos (a portable printer in your truck solves anyone’s need for paper).
Provides up-to-the-minute, real-time reports of outstanding estimates.
Provides tools for e-mailing prospects confirmations of appointments, follow-ups, and even post job before-and-after photos for their records with your invoice.
Plots your pending estimates and pending jobs on maps to improve the scheduling and ease of site visits.

 


An example of perfect execution


Many contracting support firms are commissioning app developers to create custom apps to make the vision above a reality. The customization simply implants arithmetic tools and fields where the service experts provide in the app design a capability for the app to calculate price by dimension of a job. For example, an installer identifies the parts and work required for replacement, and takes a picture with his/her tablet. Each contractor has preloaded his/her individual pricing, determined by market and circumstance. The app produces the estimate for e-mail/mail to the customer and populates all the supporting systems for record keeping and continuous contact with the prospect. A click of a button gives a contractor a map spotting all pending estimates and jobs. An ideal execution of this program is HMI (www.concreteraisingsystems.com), a concrete lifting and leveling contractor that commissioned Logical Engine (www.EstimateRocket.com), a business app software developer, to create a system to maximize the efficiency of their customers. A tour of that system, and the potential, can be viewed at http://www.mudpumps.com/information-center/estimate-rocket/.


 


It’s all about money and growth


Some years ago, I began a consulting assignment with a small concrete contractor by asking him about his estimating process. He told me: 1) It would take six years to train an estimator; and 2) He could not trust anyone else to do the estimates. I told him I was leaving because, if that were true, he is destined to be the same size company forever. That company is now deploying technology in estimating, has a full-time estimator doing 20 estimates a day, is four times larger, and that entrepreneur plays golf on the weekends instead of running around giving estimates.


If you are happy spending hundreds of dollars per estimate, and limiting your growth, that is okay, and is one of the great values of being an entrepreneur — doing it your way. But what will your competition be doing next week, and what will your customers thing?


 


Paul DelFino is a principal of the consulting firm Opportunity Inc. For nearly tow decades, he has assisted entrepreneurs in growing their businesses, responding to economic downturns and merger and acquisition activity. His publications include, “Skewed Entrepreneurial Strategies,” available from all online booksellers. To learn more, visit www.opportunity-inc.com.

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