Compete by knowing your strengths

illustration: iStock.com/skegbydave

If you’re trying to compete with the big boys in commercial or residential, the following guidelines will help you.

Commercial

For commercial work, you need to be sensitive to how the large commercial management firms operate. They have a sophisticated approach to decision making. It’s different from an owner/operator of a strip mall. You need to find out:

• At what level the enhancement jobs go out to bid;
• At what level the property manager can make his own decision without it being kicked up the ladder;
• How capital expenditures are handled differently from other small projects; and
• Whether they have different management and restoration strategies for their different properties.

A small or midsize firm should be able to compete against the big boys with a high level of proactive communication with clients and by providing consistency across properties—same account manager oversight, same level of detail. Also in your favor is likely a consistent labor pool, hopefully with less turnover, bringing a consistent level of quality. Your company also may provide an ease of doing business that the big boys are not able to give. Finally, you should use speed of turning around requests—if you are smaller, you are also more nimble—to your advantage.

On the other hand, be proactive when you sense you will get behind schedule, which may happen due to your size. The big boys may be able to gear up more quickly after a late winter, for example. You need to get in front of that problem by starting the communication earlier in the season.

Having said all that, don’t be overly concerned about the risk of bringing on new account managers to take your place as the owner. Your large clients will understand and value that move when you have a backup plan with competent people on their account supporting you and them.

Realize that the reason (besides pricing pressure) large clients change out contractors from time to time is due to complacency and their properties getting stale. So let me ask you two sets of questions.

Have you gotten stale on how you take care of your clients? Do you take them for granted? Do you take the same approach every year, just because “it’s working?” If you do, then you’re in trouble, though you may not even know it yet. You are about to lose work to someone else, not because they’re better, but because they might be better.

Do you have a systematic way of reinvigorating your perspective, your service and your clients’ perceptions of the value you bring? Do you wait for your clients to make requests or are you proactive on how you increase your value to your clients? If you do, then you are much more likely to retain your clients, earn new business and earn their referrals.

Lastly, let’s talk about niche. The best way for smaller firms to compete in the commercial market is to find their niche. In commercial, the most profitable client niche is owner/operator because they will care about more than just price. They will care about the quality of their properties.

Residential

Many of the tips above count for you, as well. But let’s take it further. In residential, you also have to find your niche: either a geographic area where you can create momentum, a type of work you do better than anyone else or a type of client you focus on. When your niche is clear, you can build your marketing and business development around those strengths.

Don’t try to copy the big boys in residential or compete head-on; rather, try to differentiate. Ask: Where and why are you better and different from them?

You should not need to compete on price if you are brutally honest with yourself about who your “green light” clients are. If you stay focused on them, you should be able to price your work and make a good profit doing so.

With the trouble of labor these days, you also may want to focus on work that brings a high throughput, which I define as gross profit per man-hour. My throughput metric will ensure you enjoy higher profits, fewer headaches and stronger cash reserves.

Whether you compete in residential or commercial, you need to know and own your strengths and compete from a position of strength. As Sun Tzu, the ancient Chinese general, said, “Know thy self, know thy enemy.”