How’s Your Backlog?
The nature of this business is that we are always working ourselves out of a job. If you don’t have an organized plan for where your next project or client will come from, you could go hungry. Every leader’s primary objective should be to secure adequate revenue to feed everyone and make a profit. Everything else grows from the revenue objective.
I’m a real believer that to ensure enough revenue in roofing or any other business, you must build a system to ensure a constant pipeline of good, profitable clients and opportunities. Every revenue strategy involves five distinctive steps.
1. Target Your MarketThe first step the leadership must take is to decide which markets the company is going to pursue and how it is going to manage the process.
- Are we bidding or selling? This is an important question. If you are bidding in the public arena, you should subscribe to publications that request bids. These publications are online and easy to access. If you are attempting to target the private sector you need to network, prospect and advertise to ensure a steady supply of opportunities. Both strategies are effective and profitable. You just need to stay focused on who you are and what the company is attempting to accomplish.
- Are we project-driven? Some contractors become specialists in a particular field, such as hospitals, freezers, warehouses, restaurants, etc.
- Are we product-driven? Do we do only single-ply, metal, built-up, tile, etc.?
- Are we client-driven? Do we have a large concentration with a few specific clients?
The key is to stay focused. It’s difficult to be all things to all people. The most profitable contractors are those who focus on niche markets. They become the low-cost producers in their respective niches and experts in field operations.
Every market or client has a life cycle. Pay attention when a market starts to change. Understand when a market changes and be flexible enough to find your next niche. Remember: People do business with people they trust.
2. Estimate the CostThe estimator’s role should be to underwrite the anticipated direct cost of labor, materials and subcontractors. The first step when attempting to estimate a project is to start by understanding what is specified or what the owner is hoping to accomplish.
Too many estimators grab the plans or measure the project and just figure the job like the last one. It’s been my experience that too little time if any is spent qualifying the client’s primary objectives. Too often we are rushing to get the bid out and don’t take the time to explore the most cost-effective options. Only a real seasoned estimator has the wealth of information to mentally explore all the alternatives. Estimating is both a science and an art.
Tailor your solutions and service offerings to meet the desires of the markets you have selected to pursue. Stay current with what’s happening with the manufacturing community. New products and application methods are always developing. Listen and ask probing questions. “Value selling” or “value engineering” is the best way I know to differentiate yourself.
Some estimators rush through an estimate “square footing” costs or “rounding off” approximate costs. These methods lead to mistakes. You will be missing projects you should have gotten and getting projects you should have missed. Final estimates should be precise.
Your estimating process should have a standard format that is always followed with standard production rates such as units/man-hour or units/man-day; production rates that everyone understands and agrees are achievable. This ensures that whoever is responsible to build the project has the same production rates on every project. Good estimators can then account for the difficulty factor when conditions become congested.
If you are still doing estimates manually, you’re making mistakes and not being nearly as productive. It’s critical to have an estimating system that is “condition”-driven in the way it prices the job. The estimating system should take every component into consideration. For example, if you are pricing wall flashing, you should be able to tell the program the amount and the system should calculate everything that goes into that flashing condition, the membrane, adhesives, fasteners, metal, labor, etc.
3. Pricing StrategyMark-ups should be determined based on market conditions, backlog, workforce availability and gut feeling. Contract work in most cases requires firm bids. Past relationships might entitle you “last look” (the chance to match the low bid) in some situations. This is where “value selling” or “value engineering” comes into play. More contracts are obtained when you find the most cost-effective solution to the client’s objectives. Maintenance and service work in most cases can be negotiated once a relationship is established.
4. PresentationDon’t get too technical or be too brief when presenting to a buyer. Simple bullet-pointed presentations that walk a client through the project are most effective. Try to have sample products and pictures that your client can touch, see and feel. Most important is that when you leave, the client should understand the entire scope of work.
Don’t get carried away with fancy brochures and expensive image pieces. These can be perceived as excess overhead to a client. Most clients want a simple, easy-to-understand package that gives them samples, options and the assurance that you’re going to be around if the roof ever leaks.
Be sincere, professional, on time and consistent. Third-party testimonials are the best way to endorse your company.
5. Measure the ActivityUnderstand who’s doing what and what’s going on with your sales staff. Keep in mind that there is a selling cycle in the roofing world. Only in the public bid market will you know if you are low bidder and have an idea when the project will be awarded. In the private markets, award of contracts takes time. I have always used six months as a basic rule of thumb for the average time it takes to bring a project to contract.
It has been my experience that sales people and estimators don’t do a very good job filling out reports, nor do you want them to be wasting their time on administrative functions. Your sales management tools need to be easy to use, comprehensive in scope and monitored weekly.
Every proposal is an investment. Too often files get lost, a salesman leaves or someone is on vacation. Without a disciplined tracking system to organize proposals, estimates, pictures, plans and conversations, you could easily miss an opportunity.
Follow-up is a critical function in any sales process. Because selling cycles are about six months, the account manager who stays in touch, asks questions and shows the most interest has the best chance of getting the sale. Be courteous with your follow-up. If nothing is happening, ask when would be the best time to call.
Quick Start IdeaUse a tracking system to measure your sales activity. These are activities you should be tracking:
- Create a bid calendar. When does the proposal or bid need to be submitted?
- Have a system that organizes your outstanding proposals, estimates, correspondence, pictures, etc. We’ve all misplaced a file. Make everyone follow the process. You never know when someone could be sick or leave.
- Where do your leads come from? Track your marketing efforts. This allows you to spend marketing money where you get the greatest return.
- What is your bidding or presentation volume overall and by the individual? Remember that we have long selling cycles in the roofing business. If you have a month with low bidding volume, you will most likely feel it six months from now.
- Track your closing percentage as a company, as an individual and with a client. Understand where you can spend your sales efforts most effectively.
- Know your proposal status. Rank each proposal’s potential of closing the sale. What does the pipeline of future business look like?
- Keep a record of conversations and what’s going on with the project. If you are working numerous opportunities, it can be tough to remember everything discussed.
Remember, “What gets measured gets done.”