Learn How To Run A Construction Business From The Rich Contractor

Getting Started With The Rich Contractor

Posted on November 5, 2011 by Scott

Welcome to the Rich Contractor, the ultimate business resource for contractors, service professionals, and those who dream of some day dumping their dead-end job in exchange for the wild world of small business ownership. Consider yourself lucky, because you’ve just found the playbook that I wish had been available to me when I was getting started.

MY ROUGH START

Around the time of my 30th birthday I decided that it was time to rock the boat, so to speak. My day job was sucking the life out of me, and the idea of breaking free and starting my own business was the only thing that got me through each workday. Finally, after years of dreaming about it, I got off my butt and did it. I started my own home services business. But it wasn’t a walk in the park. I was tackling an industry in which I had little experience, and I was clueless about how to get started and how to run the operation. Searching the internet for answers, I realized that there wasn’t much in the way of helpful information on the web for people like me. I also noticed that many of the other contractors in my city were just as “lost” as I was when it came to running and marketing a business.

I PERSEVERED

Well, I forged ahead with my new business anyway. I learned a lot during those first few years and devoted myself to consistent improvement whether it came to marketing, customer service skills, or simply running a more streamlined operation. As time went on my tenacity and willingness to learn began to pay dividends, and I eventually became one of the most highly-regarded professionals in my chosen niche worldwide.

But it still nagged at me that so many of my new-found friends and peers in the contracting industry were having a difficult time with their business. I realized that many of them were still as lost as they had been years earlier, and would always struggle financially unless they learned a new way. I knew that it was time for somebody to step up and develop an online resource that was truly helpful and comprehensive, and since I had some basic web publishing knowledge and the work ethic to see it through I decided that person would be me.

THE RICH CONTRACTOR IS BORN

So I started RichContractor.com towards the end of 2007, my primary goal being to educate, inspire, and empower other contractors and would-be contractors who were eager to succeed but lacked basic business know-how, just as I did years before. The rest, as they say, is history. It’s now one of the most authoritative sites in the world on the subject of starting and running a successful contracting or home improvement business. So how can it help you?

Well, let me point you toward a few different entry doors:

Door #1: If you want to become a professional contractor but haven’t started yet, first read my epic post about how to become a contractor.

Door #2: If you’ve already started your business and need help with marketing or getting new business, I would suggest you begin by reading my posts about getting free construction leads and choosing construction business cards.

Door #3: Other popular points of entry include my rant about how to make a lot of money, my comprehensive introduction to nailing contractor leads, and my take on contractor liability insurance.

Then just keep working your way through the site. There’s a mountain of information available to you here, so you’d be wise to bookmark the site for later reference. Well, that’s all for now, folks. Now go grab a cup of coffee and start reading…it’s time to turn that dream of entrepreneurship into a reality!

Posted in Starting Your Business | Leave a comment

Knowing When To Quit Your Day Job

Posted on February 21, 2012 by Scott

Okay, so it’s fun to think about quitting your day job and starting a new business. And I remember how good it felt that day I went to my boss and put in my two weeks notice – there’s nothing quite like it. But, can I be brutally honest? The truth is that you need to be very smart about how and when to make this transition. Do it the wrong way or prematurely and you could be setting yourself up for a world of hurt.

To put it simply, if you just drop your job cold-turkey and have no savings to live off of while your new business gets its footing then you are almost certainly doomed to fail, and you could eventually be reduced to begging your old boss to hire you back. I know that’s not what a lot of you want to hear, but it’s the cold, hard truth. You absolutely must have some money put aside for life expenses, because new businesses don’t typically spit off lots of cash flow right from the beginning. There are considerable startup costs that will eat up most of your profits in the early phases. Tools are expensive. Trucks are expensive. Marketing is expensive. Getting new projects when nobody trusts you yet is expensive.

There’s no hard and fast number because everybody’s financial situation is going to be different, but in general it would probably be a good idea to have enough money set aside to live off of for at least six months before you quit your day job. So, let’s say you require $3,000 per month to pay all your bills and meet all your obligations. That would mean that you really ought to have at least $18,000 set aside before quitting your job. 12 months worth would be even safer, if possible. The more the better.

I’m sure some of you will read that last paragraph and think that I’m crazy, but take it from somebody who has been there – your profits will be minimal in the early stages, no matter how good things are going! The startup costs and investments will pretty much devour most of your profit and cash flow. And keep in mind that if you want to grow as a business then you will need to re-invest a healthy chunk of your profits back into more marketing, more equipment, more people, etc. If you start taking out too much cash for yourself right from the get-go then you will starve your business to death! It needs money to grow and prosper. That’s why it’s so crucial to have backup savings to live off of. Give your business a fighting chance! The idea is that after six months or a year things will be really rolling and you can then afford to start taking a healthy salary for yourself that will meet your personal financial obligations.

Perhaps you’re thinking that either (A) you’ll go insane if you have to stay at your job full-time for another 6-12 months or (B) you’ll never be able to save up that kind of backup cash before starting the business. I hear you. It’s understandable. In this situation I would try to find some kind of half-measure to make it work. Do you have the kind of job where you can slowly wean yourself off as your business takes off? Cut back from 40 to 35 hours, then down to 30 hours a few months later, then down to 20 hours a few months after that, all the while building your business in your spare time. That way you’re not totally cutting ties with that weekly paycheck until you’re absolutely sure that the business is going to make it. I’m not going to lie – it will be hard to keep your day job and launch a contracting or service business at the same time, but this is usually the smartest way to go if you don’t have 6-12 months of living expenses set aside. The alternative, however, is not a pretty picture. Cut the job off too soon and you could very easily sabotage your new business and your personal finances. Suck it up, punch that clock for just a little bit longer, and you will be doing yourself and your business a huge favor in the long run.

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Contractor Liability Insurance Explained In Detail

Posted on August 6, 2011 by Scott

These days, nearly any business in operation needs to have some type of liability insurance coverage to protect itself from being sued. Building contractors are no exception to this insurance rule. Plus, this is true for both big construction companies that take on huge projects as well as small business contractors, regardless of the types of projects that are being completed. This means that even if your contracting business is small and you only do minimal home improvement projects, you will still need to purchase contractor liability insurance to protect yourself.

We have all heard about liability insurance before, particularly when choosing an automobile insurance policy. In this case, we have the option to purchase full coverage or just liability coverage, which only covers damage that your car may cause to other people or property. Contractor’s liability insurance is actually quite similar. For contractors, the liability insurance covers damage that is caused to both property or individuals as a result of the work that is being completed. This type of insurance policy is appropriate for all facets of construction or building from home building, to home remodeling and even road construction crews.

When starting a new contracting business, we often focus on the planning, financing and marketing aspects that go into a successful company but we often forget about purchasing the required insurance. It may seem like a hassle or an unnecessary expense; however, when the need for it arises, you will certainly be glad that you took the time to get it before something disastrous occurred. Without the appropriate insurance, you can risk your business and your livelihood by leaving yourself or your company open to costly lawsuits.

An important part of running a successful business is learning how to minimize risk, and getting contractor liability insurance is a good step in the right direction.

One of the most important reasons to procure liability insurance is purely as a safeguard for both yourself and your business. Without insurance, any type of accident that causes damage to another individual’s property or to another person can potentially cost you a large amount of money, along with exhausting court dates, and not to mention, it could possibly force you out of business. You cannot plan accidents, which is exactly why they are labeled ‘accidents’. Obviously, we do not wake up in the morning and intend for any accidental damage to occur at our current project site. They happen at any time and seemingly at the times during which we are least prepared. But if we prepare in advance by purchasing liability insurance, we can make dealing with accidents as seamless as possible. While we do not wish for them to happen, it certainly does not hurt to have a financial plan set in place before a disaster occurs.

In addition, depending on where you live, contractor’s liability insurance may not be an option; instead, it could be a requirement. Some states require all contractors to purchase insurance before the appropriate governing board will issue a contractor’s license. In addition, individuals or companies seeking to hire contractors may require proof of liability insurance and proof of a contractor’s license before you are awarded or physically begin a project, regardless of the state laws. It is actually best to obtain the insurance policy and have an original certificate of insurance in your hand before you even think about bidding on projects, even though many states may allow you to bid prior to purchasing insurance. Depending on how quick your insurance company works, it may take several days or weeks to physically obtain your certificate and copies are typically not acceptable. Usually, construction projects have set contracts with predetermined start and finish dates. Obviously, if you have to wait for your certificate of insurance to come in the mail, you may miss crucial deadlines and as a result, break your contract. So it follows that obtaining the appropriate insurance policy can either make or break your small business construction projects.

When it comes to finding a policy, the liability you choose will be dependent upon a number of things. First, you will need to research the dollar amount of coverage that your state requires you to have based on your line of work. These requirements, if applicable, are simply a minimum baseline that you should follow. However, keep in mind that accidents may occur that could cost well over that minimum coverage requirement and you may have to pay for the excess out of your own pocket when a claim is filed. So you will need to consider the type of work you do and how much your yearly contracts are worth. If you are building commercially, you will probably want a policy worth a couple of million dollars or more, depending on the types of commercial buildings you intend to build or work on. However, if your business is smaller and procures approximately $200,000 in yearly contracts, your policy should probably cover up to three times that amount.

Of course, the dollar amount of liability coverage you need will play a huge role in determining the price you will pay for the insurance policy. Likewise, similar to the rules on car insurance, construction liability insurance policies will vary in price depending on the danger that the business experiences throughout the duration of the project. For example, roofing companies should expect a higher rate than other trades, such as painting, simply because of the danger associated with working on roofs. Other factors that go into policy pricing include the overall risk of damage based on the line of work and the number of employees that the company employs.

Smaller businesses often have a more difficult time in paying for construction liability insurance, which is why finding the best deals can be essential. The best way to get a discount on your liability policy is to use the same insurance company for each of the insurance policies that you hold. Often, companies will offer a discount for each policy that you bundle. Another important factor in getting the best deal is to make sure you are dealing with an honest insurance agent. Some agents are only looking out for themselves and will sell you any policy, whether you need it or not, just so they can make money. However, not all agents are like this and many will actually help you determine what coverage you do need and what you do not need. So before choosing a company or working with one single agent, be sure to perform a quick judge of character before signing any paperwork. You should also be sure to do your own research before discussing policies with an agent, just to make sure the agent is not being deceptive.

Another option is to use the internet to research small business contractor insurance policy quotes. Doing research, in general, is always a good idea anyway. However, these days you can actually get multiple quotes from multiple insurance companies before you ever talk to anyone, as well as overall suggestions for the policies you may or may not need. This can really help you compare and save when it comes to business insurance policies. The downside is that you will need to determine what you need and do not need on your own. But if you are not quite ready to search and save on your own, you can also enlist the help of an insurance broker. These people do not work for insurance companies. Instead, they work for you to help you get the coverage you need and nothing more. These insurance specialists are typically professionally licensed themselves and can usually steer you in the right direction without being biased. The downside is that premiums are usually a little higher when purchasing through a broker. However, you may rest more comfortably knowing that a professional in the insurance industry is looking out for your best interests.

When seeking out insurance companies, you may quickly be overwhelmed by all of the options. My favorite way of picking out the good, the average, and the terrible companies is through word of mouth reviews and experiences. The best way to get a sense of how good an insurance company is, is to ask some fellow contractors about their policies and the companies they use. Ask for the good experiences as well as the bad and you can make some decisions from there. Another great source is the Better Business Bureau, which grades companies based on performance, complaints and resolutions. A quick search on the BBB’s website for the insurance companies you are contemplating to use will give you a general status of their business practices and an overall letter grade between A+ and F, with A+ being the best rating.

Even after doing a lot of research about contractor liability insurance coverage, everything can still be rather confusing. If you still have doubts about requirements or how to get an affordable policy, you can also check with your state’s contractor license board to get more information. Even if your state does not require the purchase of insurance, it is still a good idea to obtain a policy anyway to protect yourself and your small business. You will certainly be happy that you incurred the monthly or yearly expense of a liability policy the next time something unexpected happens during a project.

Construction Sales Leads – Online Generation Primer

Posted on November 3, 2010 by Scott

Most smart contractors and service business owners know that pursuing construction sales leads is crucial to success, but in general they tend to lean towards more traditional strategies that have been used for decades. Sure, cold-calling, flyers, mailers, and networking groups have their place, and should be part of a larger marketing plan. But far too many contractors dismiss online-based job leads as a viable complement to their real world strategies. The reasons for this are many, but none of them hold water.

To be blunt, there are two reasons why fellow contractors or service professionals might try to tell you that chasing internet leads is a waste of time. Reason one is that they are ignorant and clueless. Reason two is that they know full well just how powerful online marketing is and don’t want to create any more competition for themselves in their local market. While the first reason is inexcusable, the second is more understandable. After all, what sane entrepreneur would willingly share the secrets of customer acquisition that he has discovered with his local competitors?

There are many methods for generating construction sales leads online, but some are more effective than others.

Consider yourself fortunate, however, because I’m going to reveal a few secrets right now. I’m going to give you some, but not all of my strategies, just in case you happen to be one of my local competitors. I have to keep a few tricks up my sleeve in order to maintain my competitive edge. Hopefully you all can understand that.

I should start by saying that generating construction sales leads online could very well catapult your business to a whole new level, so you need to be ready for the increase in the volume of work. If you’re not prepared then you could quickly get buried by estimate requests and new projects. Best to start slow and work your way up as your equipment, systems, and personnel adjust. Ready for the challenge? Alright then, let’s get on with it. Here are some tips to start scoring online contractor leads on the cheap:

Tip #1: Create a blog and start writing. I see you rolling your eyes but if you ignore this one then your are a straight-up fool. Building online content that is tailored to your local audience is just smart business because it gets you in front of the millions of people who no longer use their phone book and who need to Google every single problem and question that they encounter. If starting a site scares you or you can’t write to save your life then hire somebody to do it for you. The investment will pay off a hundred fold over the long run. Example: A homeowner in your city (let’s say Dallas) has a clogged drain and doesn’t know what to do. He goes to Google and searches “plumbing help Dallas”. The first result shows a blog post (written by you) titled “Helpful Tips For Dallas Plumbing Issues”, in which you laid out a few suggestions for DIY enthusiasts whose particular plumbing issues are geo-specific (due to the city water content, the extreme temperature swings, or what have you). Keep in mind that most people who think they can take on a project on their own end up calling a professional because they don’t have the tools, time, or skills to finish things up. So take a big guess which local plumber they’re going to call when it’s time for help. They’re going to call you, of course (the net savvy pro who must be qualified because he has his own fancy blog and website).

Tip #2: Learn as much as you can about ethical, white hat search engine optimization and apply this knowledge to your blog and/or website. This relates to secret #1 but is the extra component that can really take your blog and brand to the next level. This topic deserves several dedicated posts, but for now I’ll give you a few tips to get started.

The title tag of your blog should include your service and city name. “Kitchen Remodeling in Miami, FL” is a good example. This should be an accurate representation of what you do and where you work. It’s a helpful piece of information that will not only pull in search traffic but will signal to the search engines that your site is relevant.

Each post and page should have at least 500 words of quality content, and should be as relevant as possible in terms of the services you offer and the city or state you live in. The more useful information you can provide the more favorably you’ll be viewed by the search engines. The more posts the better. The more frequent your posts the better. The search engines like big sites that are updated frequently with great information. In simple terms, show your blog some love and Google will probably love your site. This tends to result in higher rankings, greater traffic, and more business.

Your blog’s domain name (URL) should include your main service and city name. An example of a good domain name would be ChicagoRoofingPros.com. An example of a poorly chosen domain name would be JackTheShingleHopper.com. Jack might be the most experienced roofer in the Windy City but if the words “Chicago” and “roof” are not in his domain name then he is making it harder for the engines to know what his blog about, which makes it harder to get a high natural ranking.

Tip #3: Collect potential customers’ email addresses through a box on your blog or website. Think most people are afraid to give up their email to complete strangers? Think again. If given the right incentive, many people will happily join your email marketing list. Offer them $25 off their first service in exchange for their email and phone number. In no time you’ll have a huge list that you can go back to again and again whenever sales are slow or you’re running a new promotion.

Tip #4: Expand your presence on the internet with viral marketing and social networking. This could be as simple as creating funny YouTube videos about your company. Or it could mean that you devote 15 minutes each day updating your company’s Facebook and Twitter accounts with fresh information and enticing promotions. Widen your net on as many different platforms as possible and once in awhile you will catch a monster fish. Even if these tactics only gain you one extra kitchen remodel per month isn’t that time well spent? The best part is that these are free construction leads, and only put a small ding on your time.

Tip #5: Utilize Google AdWords. We’ve used this program for years and it is one of the biggest drivers of new business for our company. Ignore it at your own peril. Some contractors are afraid of the pay-per-click system, but I have no idea why because Google has this stuff down to a science and if done correctly it can be one of the most cost-effective methods for pulling in serious leads day after day after day. If it makes you nervous for some reason then put a daily cap on your spend and slowly work up from there as the effectiveness of the system reveals itself to you. Perhaps the coolest element of the system is that you can create multiple ads to run in your campaign. This is useful because Google tracks which ads perform better from a click-through perspective, and you can use this data to further sculpt your ad copy and promotional materials.

In addition to trying out these tactics, you should also consider a few internet-based contractor lead services. This will result in more expensive leads than the ones you can generate on your own with the above methods, but it will likely save you some time. If you decide to go this route I recommend picking out three or four reputable services to test out in the beginning. Start with a small budget for each one and keep meticulous notes on how things progress and which one or two companies give you the biggest bang for your buck. Make a spreadsheet and track things like average cost per lead, average leads per week, average conversion rate per lead, etc. You should quickly figure which services are worthwhile and which ones are a complete waste of time. Testing is imperative because lead services that work well for one industry may not be the best option for other ones.

That should be enough information to get you going. The importance of construction sales leads cannot be overstated because it is one of those few factors that can literally turn a struggling small business into a market-dominating monster in a relatively short amount of time. Aggressively pursuing new customers is the hallmark of a successful business, and I encourage you to educate yourself as much as possible on the subject of job leads going forward.

Posted in Leads | Tagged construction leads, construction sales leads, contractor leads, internet leads, online leads, sales leads | 2 Comments

Construction Business Cards – Choose Quality

Posted on August 30, 2009 by Scott

As you’re starting up your contracting or service business one of the first things you’ll need to purchase are construction business cards. If this comes as a surprise to you then you probably need to back up a few steps and reflect on how big of a role professionalism plays in your ability to get work and move your business forward. If you don’t even have a business card to hand out to prospective customers then I can almost guarantee that most of them will cross your name off their list without thinking twice about it. This goes back to putting your best foot forward and working on your image. If you’re not willing to spend the piddly amount that is required to buy a box of cards then you can probably forget about ever having a successful business.

What Your Construction Business Card Shouldn’t Look Like

I don’t mean to suggest, however, that simply having business cards will make a good impression on people. In fact, I’ve seen some cards that were of such poor quality that they actually reflected negatively on the company’s image. I can think of one gentleman in particular who was operating a construction-related business and wanted to earn my trust. He said “Let me give you my card”, then removed from his back pocket a small, rough-edged square that had clearly been cut out from an old cardboard moving box. Written on his “card” (with a magic marker) were his name and phone number. It was the most pathetic excuse for a business card I had ever seen. I’m sure this fellow was simply down on his luck and didn’t feel like he could afford to spend anything on marketing materials but, my goodness, I can’t begin to imagine how much business this guy was losing because he was too cheap to drop just a little money on some decent, printed business cards. Now I’m all for cutting costs smartly but if your idea for getting free construction business cards involves an old U-Haul moving box and a box cutter then you seriously need to rethink your marketing strategy.

A black background can occasionally be effective for construction business cards, but my personal preference is a white background as it makes the text easier to read.

Here’s another example of what not to do. I recently traded cards with a local lawn maintenance business operator and had to bite my tongue to keep from laughing because his was a complete joke. To his credit, the cards had obviously been made by a printing company and were printed on standard white stock (as opposed to a cardboard box), but the graphics and text were totally absurd. The graphic was of a plain stick-figure just standing there and waving. It looked like something that a preschooler would draw on a rainy afternoon. Can someone tell me what that has to do with landscaping or mowing? At the very least, could he not have found an image of a stick figure that was actually mowing a lawn? The text was even worse, if that’s even possible. It was simply his name, phone number, and a brief list of what services he provides. Let’s just start with the fact that there were at least two misspellings on the card. Yes, you read that right. Secondly, there was absolutely no mention of what his qualifications were or if he was even insured. Finally, he chose a font that was so silly that it really did look like his little kid designed the card for him. The card as a whole was a complete disaster and I felt bad for him that he was handing it out to prospective customers and thinking that it was actually helping him to grow his business.

How To Design Contractor Business Cards For Maximum Impact

So now that I’ve mercilessly trashed a few of my fellow local contractors you’re waiting for me to get around to actually telling you how business cards for construction should look, right? Well, let’s start with the graphic (and, yes, I do think it’s a good idea to have one). Keep it to less than half the size of the card face. It should be either a high-resolution replication of your business logo (you do have one of these, right?) or an image of a project that you worked on that turned out particularly well. A before and after photo on the back side couldn’t hurt, either. If neither of these is a possibility then just leave it blank. Blank is better than a corny cartoon graphic or, worse yet, a darn stick figure.

Make sure the text is spaced out well and easy to read (white background is best), and choose a font that looks professional and neat. Skip the bubble font, okay? Your card should have your name and title, your company’s name, address, and phone number, your cell phone number and personal or business email, and your company’s website address. It should also tell people what you do and what your qualifications are. Finally, it should spell out for nervous nellies that you are fully licensed and insured. If there’s room put any awards on there that you might have earned from Angie’s List or the like. That’s it! Try to keep descriptions short and to the point. You want enough information on the card that it is a helpful resource for potential clients but you don’t want so much that it looks like a darn dictionary. Remember that a lot of the people that hire you will be older and may have trouble reading very small print. The bottom line is trust. Look at your card honestly and ask yourself how it looks to complete strangers. If it looks like crap then start over. There’s no shame in admitting that you made a mistake and need to correct it.

Opt For High Quality Materials When Your Contractor Business Card Is Printed

The last piece of this puzzle is the actual card material itself. When you order your cards they will ask if you want certain upgrades and features. For the most part you’ll want to say yes down the board. Extra thick stock? Say yes. Glossy face? Say yes. Picture on the back? Say yes. They may even try to sell you a unique card material like wood, plastic, or metal, and in some cases this makes sense. For example, if you run a log siding installation company then I think it would be totally appropriate to order wood cards. True, all these upgrades will cost you a few more bucks but what’s a few bucks when there’s thousands of dollars worth of business on the line? Do you really want to risk losing a $15,000 roof job because you were so worried about spending an extra five dollars on a business card upgrade? Think about it, folks. When you hand someone your card you’re saying that it’s an accurate reflection of who you are and how seriously you take your business. If your card looks like junk then people will assume your business is junk. Spend just a little more time and a little more money on those construction business cards and I assure you that they will pay for themselves thousands of times over.

Posted in Business Marketing / Advertising | Tagged construction business card, construction business cards, contractor business card, contractor business cards | Leave a comment

Free Construction Leads For The Taking

Posted on August 3, 2009 by Scott

I recently wrote about the importance of being willing to pay for leads, but if your budget simply won’t allow it at the moment you should know that there are ways to get free construction leads. It all comes down to using your imagination and creating your own opportunities. Really try to think outside the box and you will come up with some great ideas for getting no-cost leads. Here are a few to get you started:

1. Start a blog. When you hear the word ‘blogger’ you might think of politics or entertainment but it’s a medium that has become increasingly useful for small business owners all over the world. It’s easy to start up a free blog at blogger.com and you can be up and writing within minutes. Call it something simple like “The Official Blog of XYZ Construction CO. in Denver, Colorado”, then start writing articles about residential construction and remodeling. The more the better. Write about how a remodeled bathroom can help you sell your house, about what you should look for in a qualified general contractor, about how experienced and knowledgeable your construction company is, etc. I won’t get into a lengthy discussion here about search engine marketing but just know that the more web content you have out there the greater the chance of someone in your region finding your blog while searching for information on the internet. And guess who they’re going to call for all their construction needs? That would be you, the web-savvy remodeling CEO who’s blog they just stumbled across. This method is particularly effective when attempting to score residential construction leads.

Getting free construction leads is not difficult, and the task is made even easier if you already have some basic internet skills or are willing to learn them.

2. Build a free site. If you don’t have a website for your company yet then what the heck are you waiting for? More and more people are using the internet to find local contractors and service professionals and it’s safe to say that the Yellow Pages will be dead within five to ten years. You can easily build a free site with no html knowledge by using Google Sites. You can then use your web address in all your free online profiles like the Google Business Center or Yahoo Local. Also try to have a place on your site where people can give you their email address. You can get a ton of these by promising to send out occasional discounts and deals to their inbox. Then you’ve got a huge, free list of potential customers that you can bombard with sales emails whenever you need to. If you find that you get a kick out of creating your site then offer to build free or low-cost sites for other non-competing contractors in your city and simply put a link on each one that points back to your site. It could say something like “Website created by XYZ Construction of Nashville – home of the $1995 full bathroom remodel”. Imagine how much traffic, exposure, and free construction project leads you’d get if you had a link like that on 25 or 50 other sites related to your region!

3. Network on Myspace, Facebook, Twitter, and other social media sites. These websites are no longer just the domain of teens and college students – they are free marketing platforms just waiting to be exploited for your benefit. Set up accounts with as many of them as you can keep up with (using your company name as the title) and really try to spend some time on it. Build up friend lists, post useful information pertaining to your business, and send out occasional reminders to your list. You’ll find lots of other businesses in your city who are doing the same thing and would love to network with you and work on mutually beneficial relationships and lead swapping.

4. Get free listings with online service recommendation sites like Angie’s List, Merchant Circle, and Super Pages. Ask customers who were happy with your work to log onto these sites and put in a few good words about your company. These kinds of online testimonials will go miles in sending you one free construction lead after another that is easy to convert into paying jobs.

5. Create DIY or informational videos for YouTube and local cable access stations. If you can make a short and funny business-related video and post it on YouTube you might just be surprised how much local exposure it can get you. If you’re lucky it could go viral and within a week you could have your business name, number, and web address in front of literally tens of thousands of people (many of them local who could use your service). Free job leads for contractors are just waiting to be discovered on the internet – you just have to shoot for as much online brand exposure on as many different platforms as possible. You could also create some short and educational videos about home improvement and submit them to your local cable access station. Often times they’ll put them on the air to fill the space, and it’s almost always free.

6. Create and manage a local network of service professionals. Set up a website called “Premier Service Professionals of (your city here) Club”. All members of the club would agree to spread the word about all the other members’ services to their customers. So Plumber Joe would only send painting leads to Painter Bob and vice versa. It would be totally free for participants. This is a great way to leverage each other’s growth for mutual benefit.

7. Call in to your local TV stations on snow days and ask them to include your business in the ticker list of closed businesses at the bottom of the TV screen, even if you don’t have employees or even if you plan on being open anyway. Why? Because you just got your business name in front of about half a million people for free, that’s why. You can do the same thing for radio stations. There’s no telling how many free construction sales leads you can get out of this tactic. This one’s borderline ethical but I leave it up to you whether you’d like to add it to your bag of tricks.

8. Write an article for or ask to be interviewed by your local community newspaper. Community newspaper editors are usually pretty desperate for interesting stories and content, and they’d probably be receptive to publishing the article you just wrote about remodeling and the importance of keeping your home up-to-date. Of course at the end of the article would be your name, number, and web address for all in the community to see (for free, of course). Or if you have an interesting story to tell or your business is about to achieve some sort of milestone try to get them to send out a reporter and photographer. Who knows, if you’re lucky you might just hit the front page in the following week’s edition!

9. Have a twist in how you operate your business that will draw local media attention. For example, you could start a remodeling business that is owned and operated exclusively by women. Or you could work out a barter system where you build new additions in exchange for cars, boats, or other vehicles instead of cash. Or you could become known as the construction company in town that only hires military veterans. You get the point. Have a hook. Have a story. Be original. Soon enough a TV or newspaper reporter will catch wind of it and decide to use you story on a slow news day. Just one mention on the tube or in the paper and you’ll probably be swimming in free construction job leads.

10. Give free DIY classes and seminars at your place of business once a week. You’ve probably noticed that Home Depot offers free DIY classes all the time, but they’re not just doing it out of the kindness of their hearts. They know that most of the people in those classes will then take a stroll through the store and purchase all the required materials on the spot. The same idea could work for your service business. If you have a residential construction company you could offer Saturday classes on everything from painting to tiling to drywall, the idea being that most of them would quickly realize that they have neither the aptitude nor the desire to take on their home remodeling projects. Of course there you’d be, just waiting in the wings to offer your services for hire.

11. Contribute your skills to charitable causes and watch the free construction bid leads roll in. There are always opportunities available to give your time to worthy causes. You could help build a house for Habitat for Humanity, you could offer a few hours a week of free labor to seniors at your church, or you could help build the set for your local community theater. These kinds of things always offer you the chance to promote your business and get your name out there, whether it be in a printed bulletin or simply via word of mouth. People will remember you and your good works the next time they need their basement remodeled or deck re-built.

Do I really need to keep going? Surely you can see by now that there are endless ways to get leads for your business without spending a dime. They are there for the taking if you can open your mind enough to see them. Granted, most of these ideas involve spending time instead of money, but for many contractors who are just getting started they tend to have more time than money anyway. Might as well put that time to good use and start generating your own free construction leads.

Posted in Leads | Tagged construction sales leads, free construction leads, free construction project leads, free contractor leads | Leave a comment

Contractor Leads 101 (The Best And The Cheapest)

Posted on June 12, 2009 by Scott

If you’re like most home improvement professionals these days then you’re constantly trying to hunt down new work, and this means getting involved in some sort of system for generating contractor leads. Now there may be some among you who take great pride in your marketing skills and think that resorting to paying for leads is somehow a demonstration of failure, but this simply isn’t true. No matter how skilled you are with advertising or how much you spend on flyers or newspaper ads, the truth of the matter is that there is a good chunk of the public that you simply will never reach with traditional advertising, and this is where paying for good leads comes into play. Let’s take a look at some different methods of getting new business and how they compare.

The Best Leads For Contractors Come From Previous Customers

Getting customers is a numbers game - but you'll find that some contractor leads convert better than others depending on their origin.

In my experience the leads that cost me the least and convert the most often are those that come from previous customers. Now you might say that this is technically a “referral” and not a “lead”, but instead of arguing semantics with you I’ll just say that this method for getting new business kicks butt. Why? Because of trust. People trust their neighbors, friends, and family members and will take their advice when it comes to contractor referrals, often times without so much as getting a second or third price estimate. Do good work for someone and you have an “in” with their whole network of people for years to come. If you’re smart you’ll make it worth their while, too. You could set up a formal referral plan where you pay a certain amount per referral or you could just have a general understanding with someone that for every lead or job they send you you’ll mail them a gift card to their favorite store or restaurant. You might be surprised how much more people will talk up your business for a measly $25 gift card to Chili’s.

The Next Best Contractor Leads Come From Other Contractors

I can’t tell you how many times I’ve been finishing up a job at someone’s home and they approach me to ask if I can recommend any contractors for other projects they have around the house. I’ll almost always have a name or two to give them for their particular need, and for whatever reason these recommendations tend to be given great weight by homeowners. I guess people think that since I’m a contractor I’ll have the “inside scoop” on who the qualified players are in my city for other industries, and they probably also know that I’m not going to recommend someone who does poor work because it would reflect poorly on me.

How does this apply to you? Simple. Network with as many other contractors and service providers as possible and let them know that you will pay for leads. Imagine how much work you would have if you told every painting contractor in your city (most big cities have hundreds if not thousands of them) that you’d pay them $200 for every roofing lead they sent your way that resulted in a new roof. You would literally be inundated with new jobs. And the beauty of this system is that you only pay when actual work results, unlike traditional advertising where there’s no guarantee that $1000 spent on mailers will result in even one new job.

You could even take this a step further and create a formal city-wide network of contractors who pay a yearly fee for membership. Each member would understand that they are only to recommend contractors who are paying members of the group. Your network would include the city’s best painter, the city’s best plumber, the city’s best electrician, the city’s best remodeling company, etc. You could call it the “Elite Home Services Network of (enter city name here)” or something similar. The point is that if you’re not working out lead generating relationships with the thousands of other contractors in your region then you’re missing out on a HUGE untapped reservoir of new business.

Internet Contractor Leads Can Pay Off Huge If Done Correctly

If you’ve spent any amount of time on this site then you know how much I like using the web to expose my business to consumers. There are as many ways to spread the word on the internet as there are grains of sand in the Sahara, and you should be aware that some of them will be amazingly successful while others will be an utter waste of time and money. Ultimately, a lot of it will come down to trial and error (create a spreadsheet to track how much each converting lead is costing you on average per service and slowly weed out the non-performers), but I can give you a general break-down of my own personal views.

Get to know Google. They currently have total domination in the search space (I think something like every 7 or 8 out of 10 searches done on the net is done with Google). Make sure you’ve created a listing in their Local Business Center (free) so that your business comes up in the maps section for local search results. Also get a professionally designed website and either hire someone to get it optimized for the search engines or teach yourself how to do this. If you can achieve a #1 ranking in Google’s organic listing for your local keywords then you can generate a TON of business. These rankings are great because once you’ve got them you’re set to get unlimited free construction leads in the future (unless some other SEO-savvy business owner comes along and knocks you off your perch). Also consider using Google Adwords to advertise your business in the ad sections of search results (these are the ads you see along the top and in the sidebar when you do a search). This will cost you some dough but in my experience is definitely worth every penny.
Get listed with Angie’s List and other free contractor review sites. Okay, so you can’t list yourself on Angie’s List but if you do good work it’s just a matter of time before one of your happy customers posts a positive review on their site. Once you’re in you should see a remarkable uptick in calls as a result. These leads are so effective and convert so often because they’re based on that magic word that we talked about before: TRUST. Best of all, they’re totally free!
Finally, there are loads of lead generation services on the internet for contractors that will promise you everything under the sun. Many of them are worthwhile while others could be a disappointment, but again just keep track of your cost-per-lead and weed out the duds. I’ve heard good things about ServiceMagic, for example, but the results will differ for different industries and regions. You’ll find that some of these services attract homeowners that are merely “tire-kickers” while others will find you more serious prospects, and it really just comes down to trying a few out and seeing what works. If you’ve shelled out $500 to one service for leads and only landed one or two small projects then dump it and move on to the next one. I think it would be a mistake to completely write these services off, however.

Swallow Your Pride And Shell Out The Money For Leads

I hate to harp on this but some guys (and gals) have a hard time paying for leads because they think it somehow reflects badly on either their marketing abilities or their trade skills. If you’re one of these people then you need to get over it. I don’t care how good a painter you are or how perfect a tilesetter you’ve become, your talents as a contractor will only take your business so far. At some point you just need to take the plunge and open yourself up to the idea of dropping a little bit of cash in exchange for a lot more projects.

Posted in Leads | Tagged construction leads, contractor leads, contractors leads | Leave a comment

Becoming A Contractor During A Recession

Posted on April 26, 2009 by Scott

If you’re like a lot of this site’s visitors then you’re here because you want to learn how to become a contractor, but you’re also unsure if this is the best time to be starting a business. With all of the current economic problems you might be thinking that this is a terrible time to become a full-time contractor. You might be scared that after dumping money and time into getting your little company off the ground that it will fall flat on its face because everyone is telling you that consumer spending is down, bank lending is down, and the end of the world is near.

My response to these doubts? Simple. Stop making excuses and get going already!

Many people have dreams of starting their own contracting or service business but in reality few of them ever actually break free from wage slavery and become business owners. Why? “Because it’s too hard.” “It’s too complicated.” It’s too time-consuming. It’s too risky. It’s too scary. I’m not smart enough. The economy is tanking. I might fail. I might not have a consistent paycheck. Blah. Blah. Blah.

If you want to do it then do it. Timing should be the least of your concerns. But just for the record, this could actually be a great time to start your small contracting business on the side and see what happens. Why? Because most people are so fearful right now to make any investments in themselves or their businesses that it has created some wide-open opportunities for the rest of us to make inroads in our local markets. While the other would-be entrepreneurs in your community are cowering in fear and unwilling to part with their so-called “secure” 9-5 job, you’ll be out there getting work, building a brand, and forming professional relationships. The result is that a few years from now when the economy is booming again you’ll already have the foundation in place for record growth while everyone else is just getting started.

Be a contrarian and reap the rewards down the road. Those who are most successful in the long-run are often the ones who become aggressive when others are running for the hills, whether it be in real estate, stocks, or entrepreneurship.

Just get going.

Posted in Starting Your Business | Tagged become a contractor, becoming a contractor | 2 Comments

Make A Lot Of Money – Here’s How

Posted on January 16, 2009 by Scott

I’ve gone over this a little before, but the volume of questions I receive on this topic make it clear to me that I need to revisit the question of how to make a lot of money. I guess because this site’s title has the word “rich” in it, it attracts all sorts of people on the internet, and that’s fine. I don’t have the hangups about money that some others do, and I don’t think that having a lot of money is inherently evil. As long as your growth as a person is accelerating at the same rate as your bank account, then you’re A-OK in my book. After all, it’s what you do with your wealth that really matters.

There is no shortage of people who want to learn how to make a lot of money, but few of them have the work ethic necessary to actually achieve true financial freedom.

The problem, though, with attracting all types of cash-seekers to this site is that many of them seem to be looking for that quick hit that requires a minimal amount of effort. Lots of people want to know how to get rich quickly or easily, but as those of us who have been around the block a time or two will attest, achieving wealth is almost never quick or easy. There’s a reason why only a small percentage of people on this planet are absolutely loaded, and it’s that only a small percentage of us have both the desire and the enduring drive necessary to get there. Newsflash: If you want to make a lot of money you have to work your butt off! There is no easy way unless your last name is Hilton or Walton, and even those families spent decades and massive amounts of energy to get to ultra-wealth status. Anybody that tells you otherwise is selling you something, and that something is a big, heaping, steaming pile of BS.

This is not to suggest that your contracting or service business will necessarily require decades to make you rich. I’ve seen situations where a young small business owner worked extremely hard and became a millionaire within 5-6 years (and it’s a model I’m personally trying to follow right now), but if you’re expecting to earn a six-figure income right off the bat remodeling kitchens and bathrooms then you’re in for some disappointment. It will take time. It will take sweat. It will take sacrifice. If you really want to learn how to make a lot of money then you better be prepared for battle.

There’s a Lance Armstrong quote that goes something like this: “Pain is temporary; losing is forever”. Apologies to Lance if I got that wrong but I think the gist is evident. There have been days in my business when everything that could go wrong did go wrong, when the deck seemed stacked against me, when all signals seemed to be that I needed to give up and go ask my old boss for my job back. But, so far at least, in each of these instances I’ve been able to pull back from that edge by reminding myself that pain is temporary and losing is forever. It is the decisions we make in these instances of doubt and confusion that ultimately separate the winners that make money from the losers that make excuses. When the stuff hits the fan 95% of us will wither and retreat. The other 5% will fight on with the knowledge that no matter how bad today is it will be a better tomorrow, not only because things are never as disastrous as they seem in the moment, but also because they know that the other 95% will have thrown in the towel. The 5% consists of some ornery and stubborn SOB’s, and if you want to make a lot of money with your own business you’ll have to be that way, too.

Okay, so let’s say you’ve got the work ethic and you understand that in order to make a ton of money you’re going to have to put in the time. Next step: what kind of business to devote yourself to for the next several years or more. I’ve gone over this in previous posts so I won’t rehash. I suggest reading about making money with a simple service, getting rich via replication, and finding a profitable niche, just for starters. Just know that unless you’re ready to scrap and bust your butt the rest is a moot point. A tenacious business owner can make a go of it in the worst of industries while a limp noodle will have trouble growing a business even in the hottest fields. Oh and, by the way, if you think that you can grow exponentially without spending at least a little money on the exploding opportunities that are available right now in small business web marketing then you are sorely mistaken. Familiarize yourself with the leverage that the internet can offer or risk losing out on the huge percentage of consumers who no longer even use their phone book.

This post has sort of rambled on and I apologize to my regular readers for the sermon, as this is intended not so much for you but for the new folks who stumble in here expecting that I’m going to show them the “secrets” to making a lot of money without doing much work. It was time for some brutal honesty.

So, a fair and kind heads-up to the newbies out there. Send me an email demanding to know “how to make a lot of money fast” and expect that I will reply with a link to this post and probably nothing more.

Posted in Starting Your Business | Tagged how to make a lot of money, make a lot of money | Leave a comment

How To Become A Contractor (Becoming Your Own Boss)

Posted on November 15, 2008 by Scott

I’ve put together a ton of information on this website to try to help the average guy (or gal) get his (or her) own contracting or service business going and thriving, but occasionally I’m asked basic questions that demonstrate to me that I need to go over more of the basics. One question I get over and over again: “What exact steps do I have to take to actually become a contractor?” These questions come from folks who usually already have a skill but have never owned a business before and are afraid that starting one would be too complicated or too risky. It doesn’t have to be either. Learning how to become a contractor is actually a rather straight-forward process. Here’s a basic list for turning that dream into a reality (note that this list could be slightly different for your state):

Have the guts to go for it. Either you can make excuses all day long not to start your own business or you can grow a pair and take the leap. As for me, I worked at a job that I hated for years, putting up with crappy bosses and average pay just because it was a predictable paycheck and because it offered the illusion of security. I reached a point however, around my 30th birthday, when I realized that life was passing me by and I wanted something more. I wanted to take a risk. I wanted to be in a leadership role. I wanted to experience the ups and downs of the American entrepreneurial experience by becoming a professional contractor. Above all, I wanted to build something that was tangible and that I could be proud of. So I went for it, and I’ve never once regretted the decision. There have been highs and lows, good days and bad, but overall it’s been a terrific experience, and my only real regret is that I didn’t have the stomach to strike out on my own sooner in life. (Please make this transition in a smart and calculating way, my friends. Unless you have mass cash reserves set aside, it’s a good idea to keep the day job and work your biz on the side until things really start rolling. For more on this subject, please see my post about knowing when to quit your day job.)
Decide what kind of service to offer. I think the most important part of this decision is making sure it’s something that you have at least some level of interest in. Don’t become a contractor in a trade that you hate just because you “heard” that there’s good money in it, because you’ll burn out before the big money even starts to roll in. You don’t have to love it, either, but it should be something you can tolerate long enough to hire on laborers. Ideally, your business should also involve something that you’re already skilled in. Learning the ins and outs of a new trade is extremely time consuming, and time is money (you’ll have your hands full with administrative tasks, anyway). If you still don’t know what to do, ask your family and friends for advice. Often times those closest to us know our talents better than we do. If you’re more of an organizer and a leader then you might want to focus your efforts on learning how to become a general contractor.

Learning how to become a contractor is not difficult, but few people take all the necessary steps to ensure legitimacy and, ultimately, success.
Name your business. Keep it short and memorable, but not hokey. People shouldn’t laugh when you tell them the name of your business, nor should it be so convoluted that you have to repeat it five times before they get it. Remember, your business is a brand, and you’ll be identified with it for the foreseeable future. Make it a name to be proud of, and include the type of service you offer in the name if possible. Check the website of your state’s Secretary of State to make sure the name is still available, then register it as a sole proprietorship, LLC, or corporation (among others). My business is set up as an LLC but check with a lawyer to decide what’s best for your situation.
Apply for an EIN (Employer Identification Number). If you are set up as a corporation or LLC then you need to do this even if you have no employees, and you can apply online here for free. You’ll need this for things like opening a bank account, applying for a license, and filing a tax return. If you are a sole proprietor then you are usually not required to have an EIN, but it may benefit you to have one anyway as it helps to protect your personal information and shape your image as a real pro with a legitimate business.
Apply for a service vendor’s license from your state. This one came as a surprise to me back in the day when I was in the process of learning how to become a contractor, but it’s one of those red-tape steps that shouldn’t be overlooked. Depending on your business and state this may or may not be necessary but it was for me. Again, a simple google search should point you in the right direction on this one. Most states now have a business gateway website that will walk you through a lot of this kind of stuff.
Open a business bank account. This is easy. I walked into my local bank, met with someone for about 15 minutes and it was done. I walked out with a booklet of checks and received a debit card in the mail a week or two later.
Get insured. Nothing says “amateur” like an uninsured contractor. This will be a significant expense for you but well worth the cost when you consider how many potential customers will turn you away if you don’t have it. Talk with a local agent to go over your particular situation and to make sure you’re fully covered for your services, vehicles, and equipment. If you plan on hiring employees right off the bat, you’ll also need workers compensation coverage and probably an unemployment compensation tax account with your state’s department of job & family services(check with your state for more information).
Register with your state’s department of taxation if you’ll be collecting sales tax. This is usually a pretty straight-forward process, and I pay collected sales taxes to my state on the internet once a month.
Make sure you take the necessary steps to become a licensed contractor, if the law requires it. My business did not require any sort of trade license, but obviously for people like electricians and plumbers this is a must-have. In some states you’ll need a license even if you’re trying to learn how to become a general contractor. Starting a legitimate contracting business means playing by the rules, and avoiding them will burn you eventually so take this one seriously. It’s hard for me to be more specific about getting a license because every state handles it differently, but just Google it and you should have your answer.
Find a location. Obviously it would be wise to start your business from home and then if growth justifies it look for an industrial space to rent or buy. Many states also offer a department of development website with an online database of available commercial space.
Set up a business phone number. Setting up a dedicated line for your business not only comes across as more professional but also usually gets you a complimentary listing in the phone book. Try also to get a number which translates into an easy-to-remember “vanity” number. For example, if you’re starting a roofing business see if they’ll find a number for you that ends in 7663 (which coordinates with the letters R-O-O-F). It’s easier for a potential customer to remember 999-ROOF than 999-1928. When I set ours up the rep at the phone company was very helpful with this and it was done in a matter of minutes.
Prepare for the accounting. You can either hire this out or use software like Quickbooks. I use Quickbooks and it’s a huge timesaver once you get the hang of it. I know, I know, you want to become a contractor, not an accountant, but sometimes in the early stages you have to wear several hats. It comes with the territory.
Get the word out. Time to tell every person you know and meet about your cool new contracting business. Have professionally designed construction business cards on you at all times. Order postcards and have them direct mailed to wealthy suburbs in your city. Most importantly, get a website and hire someone to market it for you online. Our web efforts have been, by far, the single biggest factor in providing us with free construction leads and growing our business. Web marketing is far more cost-effective than TV, radio, or print ads. It’s still shocking to me just how few contractors bother to utilize the internet, but that’s a good thing for you because if you go that route you’ll have very little competition.

Now sit back and watch the money roll in. Yeah, right! Now the real work begins, but if you’ve made it this far you’re already ahead of the 99% of people out there who talk a good game but will never do what it really takes to get a business off the ground and running. Please keep in mind that this is a generic list and that there could be additional steps and procedures in becoming a contractor that you’ll need to take depending on what state you live in, what your legal structure is, and how many other owners are involved. Though I set up my business without the help of a lawyer, you’d be wise to consult one just to make sure all your bases are covered.

So now you know how to become a truly self-employed contractor. It’s not hard. You just need to do it. Do you have it in you? How much longer will you tolerate a job you hate and a boss you despise before you start to make your move?

Posted in Starting Your Business | Tagged how to become a contractor, how to become a general contractor | 95 Comments