What will this mean for your business?  When the tide rises, will all boats rise?

Based on the recent uptick over the past 6 months, and my direct involvement with building industry firms, I would answer that questions with a definitive NO.  I am observing firms that have positioned themselves to capture opportunity, and cut the slice of pie that fits their business model, while others are struggling to find answers.

There is a 3rd group out there: A firm that “feels” as if they are growing and achieving short term success, and their slice of the pie is satisfying their needs for the next few months.  I raise caution to this group, and challenge them to set long term goals for capturing the appropriate amount of the growing pie.  This is your chance to break through to the next level!!

The first step is to ensure you have a rock solid short and long term financial plan.  Without this, you will not be able to make the investments your firm needs to build process, grow your marketing system, and build out your sales force for the long-term.

I would equate a firm’s ability to make calculated business investments, the number one skill set you must master between now and 2017 in order to be able to say “I cut my own piece of the pie.”  On the flip slide, you could be dealt with your competitors deciding how much pie to leave you.

Action: Take out a piece of paper, and write down the last 5 business investments you made to grow your business.

Bonus: Document what the original investment amount was of your last 5, and then document how you tracked the return on your investment. Finally, ask yourself if it was worth it, or if you would have invested the money differently.

Bungalo recently used this data to look up income data for households in a St. Paul Minnesota zip code. There were 1107 total returns with AGI of $100,000 or more, and 251 returns with AGI over $200,000. The average income of the group with incomes greater than $200K was $293,000.

The data is useful in answering two important questions:

1. Size of market: how many households have the income to buy?

2. Market share: dividing the number of clients you have in a specific zip code, by the number of qualified buyers (households who meet income criteria) will give you an idea of your share of the market.

I ran into 5 firms that flushed 100% of their investment down the tubes through the following actions by their sales reps:

1. Sales rep openly mentions, “I would quit my job and work somewhere else if I could.”

2. Sales rep says, “the economy has hurt us so bad, we don’t have the resources to care about our customers.”

3. Product development manager says, “Our product can’t be purchased anywhere yet because it may not be structurally sound.  We will find out in 3 months.”

4. Without qualifying, the rep openly shares pricing, competitive information, and trade secrets.  

5.  4 reps at more than one booth sit in chairs texting as 30 people walk right by……

The main theme around many of these blunders comes back to how the rep “feels” about the company they work for.  The investment in morale has been tough through the recession, but it is now playing itself out on the trade show floors.

On the flip side, I talked with many professional people that truly “bled” their company colors.

The magic of  morale + product offering + level of service = trade show success and brand building.  

You can set rules for your reps and build processes, but you can’t control how they feel about working for you unless this is part of your growth plan.

Last week I learned that this same builder is hosting a cooking demonstration at a local showroom. But he had not sent me an invitation. He hasn’t added me to his mailing list – even though I live just three doors down from one of his best projects.

Here’s one way to add project neighbors to your database. Easy and not very expensive. Once you learn how, you can select neighbors, purchase records, and add them to your database in less than 15 minutes.

There are several commercial databases that allow you to purchase mailing list records online. This example is from infousa.com.

Step 1. Enter the address of your project.

Step 2. Draw a shape to select the addresses you want to add to your mailing list.

Step 3. Purchase the records (in this case their are 18), download them and then import them into your database, or add them to a “master list” in Xcel.

“If I could have reached through the screen and had a word or two with the publisher,  I would have been able to flush out the “real” reason why they sent this email. (to get eyeballs reading it).”

As the recession neared a few years back, the speculation was overwhelming on what we were headed for.  It is time start analyzing the necessary planning it may take to create a “proactive firm.” One that can grow despite external market conditions.  It is also time to STOP doing things that got us in trouble last time around, and froze us in our tracks.

3 Things to Stop Doing this Time Around

1. Stop reading press from National news sources that have little bearing on your local market, and your local niche inside of your local market.   Broad economic statements should not be used to plan the growth of your business.

2. Avoid listening to a small sampling of your peers as they try and predict the “pulse” of what’s going on.  Just because someone “feels” things are slowing down, doesn’t mean it is because of real economic shifts.

3.   Don’t be the farmer sitting around with the other farmers asking, “is it going to rain today.”  Get out in the field and harvest what you have, and stop worrying about events out of your control.

3 Things to Start Doing this Time Around

1. Capitalize on “all” leads.  Treat every inquiry as if it will be a lifelong relationship, and be willing to be flexible with your client’s timelines and immediate available budget.

2. Have systems in place to produce immediate data for sales, gross margins, and overhead costs.  Know exactly where you stand every month to remove risk, and to be able to make “quick” shifts in your overhead if necessary to hit your profit targets.

3.  Create a business plan based upon three scenarios.  Good, better, best.  Execute to obtain the “best” plan, and if the economic forces are too tough to bear, you may be knocked back to “good.”  It is a lot easier to rebound from “good” than from a negative position.

Back to work on your growth plans.  Be ready to shield yourself from negative conversations, negative media, and a lot of “speculation” in the coming months.  Last time this information may have froze us for a while, but this time, it won’t!

If you are busy running your business and need someone to help you keep an eye on your business strategy, finances, or marketing strategy in order to adjust to a rapidly changing business climate, your investment in a Virtual VP may be the answer.  

For more information on how Virtual VP’s help residential building industry firms improve business results, click here.