How much to charge for your services is the focal point of any trade business. Charge too much and you won’t get the job, charge too little and you’ll go broke. Then you have to face the facts that every job is different, estimating is an inexact science and customers always can get a bid that’s cheaper if they shop around.
The craft work you do requires paying attention to hundreds of little details. Nobody’s perfect, but competent contracting companies make relatively few mistakes when it comes to working with the tools of their trade. What’s more likely to go wrong are communications breakdowns that lead to problems in the field.
The late 1990s were the best time ever for the airline industry. Seats were packed elbow-to-elbow and the airlines made more money than ever before. United Airlines, then the nation’s biggest carrier, saw its stock price jet to more than $125 a share. United’s biggest hub is in my hometown of Chicago. They go almost everywhere out of O’Hare Airport and their fares are usually among the lowest, so I fly them a lot. What I remember most about traveling in that prosperous era was the rudeness and arrogance of United employees.
Angie’s List is an Internet-based ratings and referrals organization that collects customer satisfaction ratings on companies in scores of home service categories, everything from plumbing to pet sitting to piano tuning. Roofing contractors are included. Formed in 1995, Angie’s List has been used by more than 500,000 homeowners in 124 cities nationwide, and it is steadily expanding. Most people who use the list pay a modest membership fee, which gives it some tangible value
Periodically I get calls from market researchers asking for industry statistics or for me to explain our industry’s lay of the land. One of them recently asked the question, “What are contractors like?” My initial response was to ask a question in return: “Which type of contractor?” Then I explained that the industry harbors different kind of work specialists, each with different characteristics and concerns. Later, in reflecting back on this conversation, I asked myself whether there might be some unifying characteristics among all of these different market sectors.
The January 1990 issue of Plumbing & Mechanical magazine had a cover story titled “The Manpower Crisis,” written by me. It featured interviews with apprenticeship recruiters and other industry experts addressing a skilled labor shortage that had already started to rear its head. Demographic and social trends indicated the problem would only worsen in years to come.
Subcontractors in certain trades experienced a magic moment in time during the roll-up craze of the 1990s. Scores of owners were able to sell their businesses to consolidators for millions of dollars. Many are still living the good life off those deals. A few got burned by accepting payment mostly in consolidator company stock, almost all of which subsequently tanked, but those who negotiated cash or mostly cash buyouts did well for themselves. For a handful it was like a well-paid extended vacation, because they ended up reacquiring their old companies a few years later for pennies on the dollar compared to their selling price.
general, size is not an asset in the construction field the way it is in so
many other industries. There are relatively few economies of scale compared to
many other businesses, and far-flung operations tend to raise overhead without
providing commensurate value to the company or its customers.
I’m one of those guys who turn to the sports pages first thing when I open the daily newspaper. Don’t get me going or I could talk all day about the designated hitter rule, zone vs. man coverage, three-guard offenses or a thousand other sports-related topics. This is a lifelong sports nut coming at you.