BE A MILLIONAIRE!

  A very small plumbing contractor commented recently that he couldn't understand how large companies can match his price or even beat it. He felt they were just giving a sweet deal for the first job to get their foot in the door.
    I felt obliged to disagree. When I started my plumbing company, I started it as a big company, with far more overheads than any of my competitors. My competitors were all established companies with minimal overheads. The owners of those businesses were all plumbers themselves, and employed 20 or so plumbers. They each had, to the best of my knowledge, one girl (maybe their wife) working in the office.
    I came in with myself (a finance person), a mechanical engineer and three other staff members. None of us were plumbers. Our overheads must have been 300% or 400% higher than theirs.
    All work was won on competitive bid - meaning we had to be the cheapest on every job regardless of quality. Because the engineer and myself were known around the industry before we started, we were always held to a higher standard than the existing plumbing contractors, meaning they got away with stuff that we were never allowed to get away with.
    Nevetheless, we virtually took over the local market and work was given to other contractors just to keep them in the game. We won every job we had by offering the lowest bid, but still had to provide higher quality than any of our competitors.
    We made a tremendous profit for ourselves and I was able to pay our men higher rates than my competitors paid their employees. There were never any "sweet deals" - because sweet deals would have been illegal.
    Success in business does not come from sweet deals and cutting corners, it comes from being more efficient and providing a better service than your competition - and that can be done at lower prices, as you can see.
    To be successful, you need to focus on how you can become more efficient than your competitors. If you can increase your efficiency by 10% (that means taking 9 hours to do what other companies take 10 hours to do) and your labor costs are 50% of your total bid, your bid can be 5% lower. That means you can bid $9,500 for what someone else must bid $10,000
    And, I'll bet there are lots of ways you can be more efficient in your business.

Frederick Pearce — frederickpearce.com
Building businesses, building lives, building wealth.

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