Simple rules and a simple number range for residential contractors (think 3 to 5%)

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Michael Stone has been providing business guidance for residential contractors for years; and he constantly advocates the importance of marketing and sales skills to business owners who struggle in part because they rely exclusively on passive referrals, expensive third-party leads services, or chase “low bid wins the job” contractors.

In this Markup & Profit eletter, he summarizes the basics of his marketing and business development advice. While it is geared for smaller residential renovation/service contractors, it reflects basic guidelines for virtually everyone in AEC marketing:

If you’re doing remodeling work you should be spending three to five percent of your total sales dollars on marketing your company. Are you? It’s obvious the contractors in his community aren’t doing a good job of marketing themselves. I sent him the name of a contractor we knew in the area and hopefully that was a good connection.

Potential customers won’t know who you are unless your name is out there. You might want to work by referral only, but not everyone who needs you will have someone in their life who knows you. Not everyone who knows you will take the time and effort to talk about you. If you want to be in front of as many potential clients as possible, you need to make the effort to market your business.

Hand out business cards, at least one a day. If you don’t have business cards, get some made. You might think they are old-fashioned, or they aren’t needed any longer, but you’d be wrong. They are one of the most affordable ways to get your name out there, but they do take effort.

Make sure you have quality signs on your vehicles and at your jobsites to let the buying public know you are in business. A few years ago we saw a van in our area with great signage and, as a bonus, a business card holder on the side. It was parked at a local store, so anyone interested could just walk up and grab a business card from the holder. Simple, basic, low-cost and brilliant.

Getting a website put together isn’t low-cost, but it’s not as expensive as you might think. Unless your annual volume is below $100K, you can get a website put together without overspending your marketing budget. That’s the initial investment; after that, the ongoing maintenance and hosting cost can be minimal.

Your website needs to be listed on your business card, but it also needs to be findable on the web. If someone is searching for a contractor in your area, you want to appear in that search, preferably with positive reviews from clients who will vouch for you. That’s the best kind of referral. A little education and planning goes a long way to helping your website show up in search results, and MyOnlineToolbox has helped many construction-related businesses develop affordable websites that will generate leads. If you’re hesitating because you don’t want to have to write the content, we know affordable copywriters who specialize in construction.

Going back to the note we received, I need to comment on his statement about the contractors he knows: “They usually don’t seem to want to invest an hour a day into bettering their methods, all the while complaining about how hard the business is.” Gang, this business is as hard as you want to make it. If you run your business like a hobby, you’ll have a lot more problems. There’s an old saying, “Life is tough; it’s tougher when you’re stupid.”

I’ve bolded the remark about how much you should be prepared to spend on marketing your business. The three to five per cent is not carved in stone, and even within that two per cent range, there can be a huge difference in absolute dollars, especially if you are a larger business. But it suggests, if you have a modest $500,000 annual volume business, a $25,000 marketing budget is reasonable, and you should be really looking at where you are going if you are spending less than $15,000.

That money can easily pay the cost of a top-dollar, full service contract for website development. (I’ve explained elsewhere how you can get the work done for one or two orders of magnitude less, if you know what you are doing, but for most contractors the learning curve to become that competent at website building simply doesn’t make sense.)

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