How to Grow Your
Electrical Contracting Business
When Times Are Tough!
Is this You?
You trained to be an electrical contractor, no doubt starting off as an apprentice and then perhaps working for someone else as an employee, before branching out on your own as a contractor. You're now working long hours, trying to keep your clients happy, your staff happy, your family happy and the taxman happy. Things are getting tougher, and you sometimes wonder is it worth it?
Why Can I Help You?
Like you, I’m a trade qualified electrician.
John helped us to add "The Difference Is..." value to the VIC/TAS Traders 500, the first industry trade expo of it's kind to hit the Australian market. He provided our contractors with the opportunity to learn about his
industry experience and understand the challenges that he has overcome.
John's session gave our contractors the time to reflect on their business
and allowed them to walk away with some simple tips that can assist their
Lydia Azel, Marketing Services Manager,
I started my apprenticeship straight out of high school in 1970. I spent almost 20 years practicing and perfecting my trade.
In 1988 after completing work on the construction of Australia’s New Parliament House, I came to a career crossroad.
I had to decide whether to continue in the electrical field, or to add to my trade experience by pursuing a career in business management. I chose the latter and have spent the last 18 years running successful projects or businesses.
So I've put together this proven step-by-step guide to exploding your electrical contracting businesses’ profits. It's built on my 37 years experience in both the electrical and business fields.
It reveals how to quickly and easily grow your business so you can make the money you deserve and have the lifestyle you dream about.
Instead of "one day", it will be "when"!
How Do You Get Started?
The first thing you need to do is allocate time every week to work ON your business - and less time working In it.
The second thing is to understand that your business is a means to an end, not the end. By this I mean that it should not control your life. You should control it - to the point where it's delivering you the money you need to do what you really want to do, when you want to do it, and without stress.
Answer this question honestly- Why did you go out on your own and start your Electrical Contracting Business? Was it to
- buy yourself a job
- to run a successful business which provides you with a great income and an asset?
If you answered no 2, then the way to achieve this goal is to build value in your business. (If you answered no 1 - sorry, I can't help you!)
Why Do You Need to Build Value?
You want to build value in your business because one day you may want to open more branches, or float on the stock market, or even sell it for lots of money.
The idea is to create a money making machine that works without you even being there, so you can take time out for other things.
So you can spend time with your family and mates
So you can go on holidays
So you can duplicate it
So you can sell it
How do you Add Value?
There are six key actions you can take to generate value in your business, and we’re going to talk about each one in detail so that you can implement them into your own business.
The Six Ways to Build Value in Your Business are:
Build your customer base
Build clockwork systems
Build your brand and market relationship
Build your asset base
Build a great team
Build the profit in your business
1. Build Your Customer Base
Your customer base (commonly known as your List) is basically a list of contact details for your clients, prospects and suspects – that is people who are likely to buy the services you're selling. Your list includes:
Customers - people who have used your services in the past.
Prospects - people who have not used your services but have enquired before or responded to a promotion you've run.
- Suspects - people you've identified as potential customers, but you haven't
contacted them yet
There is no value in a list that isn't related to your business in some way. For example, you can open the yellow pages and find thousands of people on a list - but that list has little to no value to your business.
The “value” of the list is determined by two things:
The number of people on the list.
- The relationship the business or you as the owner has with the list members.
Your list is the most valuable asset your business can have. Of course you'll have equipment, and perhaps property, but when it comes time to get a valuation on your business for sale purposes, you will be able to negotiate a great price if you have built and nurtured your customer base.
How Do You Attract New Prospects?
There are many ways to attract new prospects to your business.
- Media advertising
- Direct marketing
- Referral campaigns
- Free publicity
- Joint venture arrangements
- Cold calling
- Email marketing
- Online advertising
- Social marketing
The list grows bigger every day!
What’s important is that you choose low cost strategies which create lots of enquiries from the right target market and then ensure that you have a good system to convert them to customers. You need to be able to track and measure everything you do so you know (to the last dollar) which activities brought you the most business for the least cost.
So, you can put ads in the Yellow Pages and newspapers like all your competitors and attract a lot of price shoppers, or you can differentiate yourself using some really clever techniques and achieve greater profits.
If you’d like to know how to add value
and grow your customer list
for some step by step coaching
How do you Maintain Customer Loyalty and Increase Your Profits?
It’s extremely important to nurture your clients when you get them. You’ve no doubt worked hard to land their business in the first place, so don’t lose them. If they like what you do for them, they’ll use you again and again, and tell other people about you.
This is the one key area that most small businesses fail in. They spend a fortune on marketing campaigns to attract new customers and don’t see the enormous value of their existing customer list. There’s a lot you can do to increase average spend and lifetime value of your customers.
There’s also some fantastically simple things you can do to get your customers working for you - bringing you more and more business.
All it takes to have a valuable list of loyal, highly profitable customers is a few specific marketing and customer service techniques which are easy to implement and simple to maintain.
One simple way to increase the turnover in your business is to contact past customers who haven't used your services within the past 12 months and offer them an incentive to re-use your services. You can tie this in with a seasonal holiday like Easter or Christmas or a change of season.
What John McKenna has achieved is truly remarkable. He's proven that any trades person can build a successful business if they put their mind to it, if they step outside their comfort zone and have a go.
He is a great motivator, without the hype. He's sincere, and true to his word.
You couldn't ask for a more dedicated and knowledgeable mentor to help you build a successful electrical contracting business.
Annette Welsford, Brisbane
I have watched John add millions of dollars in turnover to a previously ‘average’ business with simple, repeatable, predictable results. He does it every time.
John’s ability to take ordinary businesses both large and small and give them an adrenaline shot that propels them to massive success is second to none.
Having met John McKenna five years ago and worked with him extensively ever since, it came as no surprise to me that he is now considered an industry guru.
Paul Blackburn, Canberra
2. Build Clockwork Systems
A systemised business is one that consistently produces the same results by performing the same actions. To build value in your business, you want three main systems:
System for the delivery of your services. Ideally the system should be automated and not require human beings to operate it, but it could also be a system of having employees who can follow the steps without you holding their hand. So you can focus on building your business or go on holiday and the business runs like clockwork while your not there.
System for simplifying quoting and tendering. Using a checklist is the best way to ensure that you include everything that's usually required and that your quote or tender is professional and comprehensive.
System for getting new customers. The marketing systems used by your business must be measurable and produce predictable results. For example, every time you run your referral campaign, you know you'll get 12% take up, which immediately puts $15000 on your bottom line.
Franchising is a great example of using systems. The franchisor creates a system which works, and then sells franchises to others and spends time training them in the systems. So no matter which franchise the customer calls, they will always get the same level of service. eg: Jims Mowing, Lube Mobile, Snap On Tools, etc.
Systems give predictability. You know if you do steps A-K the end result of the services should be the same.
Systems also build value for businesses, particularly when the systems repeatedly attract and secure new clients.
The system that sends you new clients is one of the most valuable strategies you'll ever put into place:
It allows you to continue getting new clients and your business remains profitable.
Your system of getting new clients is part of the value deal which will help other outlets or new owners to replicate.
For example, let's say you have tried and tested a few different types of marketing campaigns, and one or two of them consistently produce the same result.
Every time you run one of these campaigns you achieve
- Between 50 to 75 responses
- 10 requests for sales visits or documented quotes
- 3 sales with an average sale value of $1000
|75 respondents (suspects)
$300 marketing cost
10 hot prospects
This marketing campaign is part of your system. The system has added value to your business because you've created a process which can be duplicated over and over again to fuel your growth.
If you’d like to know how to create systems
that will automatically drive new
people to your business,
for some step by step coaching
Want to Know More About Systems?
Here is a link to a recent article I wrote on the "Key Things you NEED to Consider about Business Improvement Technology Before You Buy"
3. Build Your Brand and Market Relationship
The value of a business's brand is the perceived relationship the business has with the general public. Using McDonalds as an example- the McDonalds’ brand is known worldwide. The relationship is one that puts McDonalds in mind of anyone who becomes hungry- automatically, they know that McDonalds is an option to fulfill that hunger.
That brand has value.
As a small business, it is much harder to develop a brand. Financially, developing a brand can be outside the reach of most small businesses, unless you do something that's unusual and gains attention - like a publicity scoop of some kind.
Another issue with branding is that most people who develop a brand for their business do so by branding the personality of the business owner instead of the business. Coke & McDonalds are examples of businesses that are branded, but consider Donald Trump – he is the brand. So the issue is - if the personality leaves the business, the relationship and brand have been compromised.
Branding is also very vulnerable to public opinion, which means the brand and relationship you've spent 10 years creating can be erased in a moment with a single, disgruntled customer or event.
For most small businesses the better way to establish a brand is to build it within your specific niche. It's not only easier to brand your business for a certain target market, but it is far less expensive and the end result is the same. The business has more value when it has a “brand”.
There are several inexpensive and effective ways to build a brand, and I can show you how to do that. Professionalism and consistency is the key.
4. Build Your Asset Base
Another way to build value in your business is to consider buying the property your business uses rather than renting it.
Here's why . . .
If you buy the business property, all your business needs to do is pay the mortgage and keep its head above water for 10 years and you'll make money.
A) Jerry decides to rent a property. He might spend $1000 a week for the commercial property.
B) Alan’s business buys his property for around $2,000 a week.
In example A) Jerry might feel the rent is affordable, and can go out and buy nice things for himself - a house, a new car, etc. If he doesn't follow our 5 techniques for building value in his business, he will be left with a nice house and car, but no value in his property or business when he decides to sell or retire. Basically, Jerry is no better off than when he started the business (except for having nice “things” which he may not have been able to afford otherwise).
Alan, on the other hand buys the business property instead of renting (and assuming his business can stretch to make the payments) – is on the road to building value in his business. He may struggle a bit more to meet the mortgage, and may go without an amazing house or car for awhile - but 10 years down the line Alan’s property is probably going to be worth a lot more than he paid for it (it could be worth hundreds of thousands- if not millions). So even if he ignores our other four techniques for building value in the business, he’s still sitting on a great asset which he can turn into cash. He has something of great value to sell.
In some areas you can buy a residential house and convert it to commercial property. The conversion of the property often offers instant value to the business as you could end up with additional offices or space you can rent out, and the asset value increases based on the rent prices.
I have known John McKenna since 2006 and from the first I met him realised, that he was a person who understood how a business should run and that it was OK to make good profits from your business.
More importantly though, John's continual message to me was, the reason you should be in any business is to provide the lifestyle you want, not just to make money.
The advice that John has provided has always been easy to understand and just as importantly, easy to implement.
Mac Ismail, Sydney
5. Build A Great Team
There’s an old saying, “If it wasn’t for the customers and staff, business would be easy.”
So now for the second part of the people strategy in your electrical contracting business. If you already employ staff you are probably experiencing the same issues as most businesses:
How to attract good people?
When you have good people, how do you hold onto them?
What to do when someone doesn’t fit?
Developing and implementing a successful business strategy depends on the commitment of the people supporting you. As a business owner/manager you have to anticipate what sort of people you need to drive your business forward.
This doesn't necessarily just include staff, it includes your team of advisors as well. Your life/business partner, your mentor/coach, your accountant, your suppliers and anyone else you rely on to assist you in the delivery of your services.
You need to develop motivating, energizing environments and put the right processes and systems in place to encourage growth. Growing businesses need people with a variety of skills that will meet their changing needs.
One of the biggest risks facing a growing business is how to deal with high staff turnover. This causes problems with morale. It can also potentially lose you customers as they follow departing staff to their next employer.
There is a skilled labour shortage in all trades around the world and the electrical industry is not alone in trying to come up with answers to this major issue.
||A growing business needs to . . .
Plan for the long term by anticipating resource needs as set in your business plan
Establish employee retention measures. Salary and benefits alone will not cut it. Think about opportunities available to provide for personal growth and other non-monetary rewards.
Monitor the progress of staffing strategies and people’s needs
||A useful tool to use with existing and prospective staff is a skills matrix. That’s where you make a list of the skills needed by your staff and record the skills they already possess. This allows you to see, at a glance, the training and development needs of your staff to assist in the growth of your business.
||Annual Staff and Competitive Review
At least once a year you should perform a health check to see how you are performing against your competitors. You need to take into account compensation, culture, training programs and performance management systems.
Assess yourself and then compare your results to your industry or those companies tailgating you.
How do you fare on:
• variable compensation (bonuses, incentives, etc.)
• equity participation plan
• retirement/pension plan
• health, life, and other insurances
• holiday entitlements, paid leave
• learning programs
• lifestyle plans (fitness club, fitness equipment, etc.)
• flexitime, job-sharing, day-care, parental leave policies
• performance evaluation and promotion plans
• lateral moves/exploring opportunities?
6. Build the Profit in Your Business
Did you know that if you increase your revenue by 5%, reduce your direct costs and your overheads by 5% each- the result is a not a 15% increase in profit - it's a whopping 50% increase in profit?
So the trick is to learn how to do these things without compromising the quality of service you deliver to your customers.
I hope that the information I have provided you helps in managing the staffing issues in your business. Getting your staffing right really is critical to the long term success of your business, because that’s what your customers measure your business on. You can have the best vision in the world. But if your staff don’t share it or don’t know what it is, they could be sending a completely different message to your customers.
How to Get Started Now
Of the Six Ways to Build Value in your Business, the three that are worth working on first to give your business a surefire way of building value are:
- Building a Prospect and Customer list
- Building Systems
- Building Profit
So, set your goals and start working on your business now so you not only end up spending far less time in your business – but you build a money making machine with excellent value.
||The easy way to do it
If the idea of building a mailing list, developing systems for your business and everything else we've talked about above just seems too hard, you'll be happy to know there is an easier way to do it. For just $49 per month you'll gain access to our membership program which will literally take you step by step through all of these aspects of building value within your business. You also get access to us via email and phone for additional hand-holding when you need it.
If you’d like to know how to build value and improve your profits,
for some step by step coaching