Back in 2010, we’ve decided to do what thousands of employees would only dream of and we made the big jump : We started our own company.
Ours was specialized in the sale and installation of metal cladding products for residential and commercial clients.
At the time, we were young and ambitious and perhaps naïve enough to believe that we could do it all better than anyone and all for yesterday of course.
That’s all you really need to start a business : Foolishness & Ambition.
Keeping it alive and thriving requires a whole lot of different skills set.
For years that followed, we’ve navigated through some very competitive markets filled with decent and bad clients as well as decent and bad employees who made us realize how much we were lacking knowledges in term of management skills and installation skills.
We’ve learned the hard way that you don’t know what you don’t know, until you know it.
We can’t re-call exactly the number of times that we set foot in the wrong place at the wrong time ending up costing us thousands of dollars.
It is designed by the principles of competition to always direct you in one direction : Failure.
The rules of thumb are simple in our type of business : You will not re-invent the wheel and what you think you can do good , thousands of people who have been around long before you can do it as good as you and most likely for a fraction of your price!!
So knowing all of this, ask yourself this question… Why would clients who has never heard of you or your outfit would trust you with their project and invest their hard earned money into your company in order to achieve their vision?
The ketchup rule:
If a brand name Ketchup is $5/bottle and that the new name ketchup is $5/bottle as well because the company did its due diligence and homework’s by doing a proper business plan prior to start the business and knows how to account for every expense the same as the well-established brand name company etc… Then the client will most likely direct his purchase towards the brand name ketchup as there is very minimal risk to do so because of the proven track record versus investing with a new company without a proven track record.
If a brand name ketchup is $5/bottle and the new name Ketchup is $4.50/bottle because it knows how to account for all the same cost as the well-established business but it simply wants to be a bit more attractive in order to attract clients… then the brand name ketchup will most likely do a price match in order to not open the door to competition.
The brand name ketchup can play that game way longer than you can, being in the business world for the past decades.
If a brand name ketchup is $5/bottle and that the new name ketchup is $7/bottle because of a more expensive overhead cost, mainly because of a lack of investment spent in technologies to reduce the operating cost because face it, when you start a business, you most likely don’t have the millions available to you to invest in such technology, then the client will direct his purchase towards the cheaper brand name ketchup that they already know the quality of. It’s a no brainer!
If a brand name ketchup is $5/bottle and that the new name ketchup is $2/bottle because this time, you told yourself that you wouldn’t miss the sale at all cost!!
Most buyer will have a buyer beware attitude and fear a bad quality hidden behind the price and most of the time, they will be right as you simply can’t offer a lower price than an already well-established company who has been in the market for decades and have all the proper investments in technology and key people to offer a more efficient and cost-effective product.
Therefor the client will most likely direct their purchase towards the brand name ketchup to avoid bad surprise with the lowest price product because everyone knows that a dollar spent on a service or product that you do not appreciate, is always a dollar too expensive.
Most people like to know what to expect when they make a purchase and not being able to provide that sense of security to them when you are a new outfit, makes it very difficult to attract good clients to growth your business.
You , as a new business, will be left to deal with clients that most existing businesses do not want to deal with for some good reasons…and big businesses wants to deal with anyone now days so the few clients left that absolutely do not interest those big businesses, you shouldn’t be walking towards them either.
You, as a new business, will be left to hire employees that couldn’t keep a job elsewhere most of the time for good reasons as well , simply because no one sane enough and worth it would drop the safety of their stable job with the big company to join a new venture who might make it or not.
You as a new business, will also realize how much you over estimated your training and how much real-life events and the ways to deal with them cannot always be thought on a bench class.
Courses will explain to you what path to take in the event of different situations.
Real life events will show you the path as well and add the emotion factor to it and will dare you to take the path now!
How do you build a business that can answer the phone 15 years down the road?
Answer is simple : Relentless work for clients that are not very desirable with employees that you could probably do a better job by replacing them with your grand-ma, even if she is probably six feet underground… And you ensure that no jobs/product ever have a single deficiency no matter what!!
You might be tempted to turn corners round sometimes as the budget is most of the time below what all your competitors would be willing to work for on that same project otherwise, they would keep the sale for themselves, but you disregard it and you keep working.
You go into debts with several suppliers and financial institutions but you keep working and you keep using the new cashflow of new jobs to pay older debts and their interests as the money earned in the past was simply not enough to cover the past expenses of those jobs as remember, bad clients/projects combined with your own learning mistake of being new in business = Not so profitable venture.
You keep going and you keep paying your suppliers and employees and you keep a good communication with everybody that is involved with the activities of your business and you NEVER leave a single deficiency on any site.
You do the right thing and keep going at it, flawlessly, for the respect of your clients , for the respect of the people who you represent (suppliers) and for your own respect… Money comes very last as you don’t even earn enough to cover the bills on most jobs.
After few years, you have enough projects’ done without a single deficiency that newer clients take interest in your services as you can offer them with references of past projects.
Now with all those pictures/references of past projects, you don’t get to finally start charging big money for your services as the big brand name companies are there to ensure that you have a ceiling over what you can charge otherwise, they will take your sale, but you get to be considered the same as the $5/bottle from the well-established brand name company.
With this new opportunity, you will have access to better quality projects but you have lots of debts by now and you sure still haven’t had any surplus in cash yet to invest in technologies so that you can improve your cost on services/items.
Never the less you keep working countless hours for a now little improved budget.
Now you are breaking even as the 5-10% profit that the big companies get to make on top of their most aggressive cost is in reality what you need in order to produce the same service/product but regardless you start breathing a bit more financially as you now have enough money to actually complete a project without being under.
Sometimes you will win a project, sometimes they will win it as you both are using similar techniques of installation and materials so it really just comes down to who’s hungrier at this time of submitting the offer.
They have a small edge over you because of their overall cost which is lower than yours because of all their investments in technologies and key people.
You won’t get them all and it might create a down time and some cost associated with it (to cover overhead expenses during down time) but you are on the right track.
If you lose some, you are doing something right.
If you get them all, that means that nobody is interested in your lunch… Go back to the drawing table as you’ve most likely missed something and it will only be a matter of time before you close your doors.
Now that you break even…. How do you pay back debts from the past and generate profits to improve your current business situation ??
With better clients interested in your services, because of your proven track record, you will have the chance to invest your money to finance a service/product to “ break even “ on bigger projects!!
If done several times without a hiccup, you clients will see a no brainer in hiring you for a top-quality service/product at the same price as the big outfit as most big outfit dictate the rules when dealing with them where you are more in a position of working with your clients and not dictate them.
Most clients prefer controlling the outcome which is very hard to do with bigger businesses than them.
Slowly surely, your clients will offer you bigger opportunities and your suppliers’ better prices in order to get a share of that pie as well, making your offers/prices more competitive to your clients and if all the stars well aligned : showing a small profit.
You can now start showing a small profit and pay back old debts and now invest into better equipment and better employees by offering better employment benefits and therefore growing slowly surely your company.
And then comes the pandemic!! 😂😂
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If you have paid attention to this “ novel” you have learned that you can’t always be the cheapest option for you client.
You also have learned that the process of starting a business is designed to fail right from the start.
There is only two things that will get you through it and allow you to growth : STUBBORN DETERMINATION & PLANE HONESTY
Honesty as in : We will never turn a corner round no matter what the agreement with our client is or if we are over budget.
We do not have millions in the bank as safety net…
Our workmanship is all that keeps us going and safe!
Honesty as in : We will never pretend that we know everything about our trade or our market as there is new materials and technologies coming out every year so we will do our best to keep up to date with all of these so that we can offer you the proper product/service for your project.
Honesty as in : We will not always be your cheapest price ; it is impossible by competition principles but we respect you enough to have taken the time to explain all of this to you in detail in this text so that you can understand and appreciate that our offer to you when we will do business together, will be the most suitable offer and price for your needs.
And finally, honesty as in : You will not find a better suited company to work with for your project as if we see there is one, we will direct you to them ourselves.
We don’t know everything but we know what we don’t know and if we deem it out of field of expertise, we will not keep you as our ginny pig.
We know enough good people in the construction industry that we will most likely have the right person to refer you to if we happen to not be a suitable match for your needs.
We stand behind our quality like no one would dare doing.
We’ve made mistakes here and there in our learning process and by teaming up with few “not so desirable “suppliers/employees and went to fix them as far as 10 years later, free of charge and out of warranty even if it was thousands of dollars out of our pocket now.
It was the right thing to do as none of our products nor services should fail within 50 years…never mind 10 years!!
We are not afraid to admit when we are wrong and we are not afraid to give you the truth even if sometimes it means losing a sale on our end.
You are never making a wrong decision when you know deep down that it is the right thing to do but it takes lots of honesty towards yourself as most of the time honesty comes with a high price tag!
Our reputation is everything and it only get achieved by offering to our client the right product/service for their needs, at the right price with the highest quality possible, when possible, like we would do with any of your relatives.
Architects and clients reference letters now vouch for these statements but after all, let us not forget the most important rule:
In your lifetime, money will come and go… but reputation and honor never comes back once it goes so protect it at all cost!!
JC
