Starting a contracting business can be quite tricky. I find that new contractors have difficulty articulating their business proposition and that’s certainly a recipe for disaster. At the end of the day, our job as entrepreneurs is not just helping customers understand what we’re providing but more importantly helping them see why they should choose you over the next guy. If they don’t easily understand your services and feel a strong urge to sign your contract, you’ll have a steep uphill sales climb at best.
So, should you abandon that contracting business idea? No!! Contracting, if done correctly, can be a lucrative business for entrepreneurs – it just needs to be done correctly.
Here are three major pitfalls to avoid as you plan your contracting business.
Avoid Pitfall Number 1
Not developing your specialty
As a mountain biker, I’ve noticed that wherever I aim my tire, there I go. For example, if I stare at that large rock, right in front of me, no doubt, my wheel is gonna hit it. But I had no interest in hitting that rock. I wanted to stay on the single track.
Contracting businesses can often benefit from the same strategy. Promoting yourself as a remodeler, keeps you unfocused and not sure what direction to take. Also, from a marketing perspective, telling someone that you’re a remodeler may sound good, but it really provides very little information and only leaves them confused as to who you are as a company.
What’s more effective is figuring out what aspect of remodeling you do the best. Start with that as your title and then following up with a sentence or two that provides a vivid description of tangible services that can serve a real need for someone.
For example, “Interior Remodeler – a contractor focused on helping homeowners bring new life to their home, inside and out.” Yes, the second version is longer and you shouldn’t blurt it out anytime anyone asks your name, but you should be prepared to share it when you’re asked to describe it.
The simple truth is the title “remodeler” is virtually meaningless and should rarely be used without any additional explanation. Decide on a specialty, develop your subtitle and use it.
Avoid Pitfall Number 2
Providing only services without a product
The upside of a service business is that they require little capital expenditure and barriers to entry are low. After all, if you’re essentially selling your craft, it’s fairly easy to develop a website, hang your shingle, and find yourself in business. The downside for service businesses though is that they’re often quite labor intensive. Contracting businesses relying exclusively on services can find themselves frustrated because they are:
- Exhausted by having to physically work (or bring in other labor to work) to generate revenue
- Revenue limited by their own bandwidth and the amount of services they can provide
- Having difficulty defining and distinguishing their offerings
- Having trouble selling their services, because it is not understood how you differ from other companies selling the exact same thing.
A great option for many contractors businesses is to develop tangible products that can not only complement and expand service offerings, but also help them better serve their clients and generate passive revenue. Typical product offerings could include webinars, e-books or other publications, training seminars or other instructional materials and templates or guides.
Instead of focusing exclusively on contracting, think early on about what complementary products you might be able to offer.
Avoid Pitfall Number 3
Allowing scope creep
As a hungry, new entrepreneur, you may fall victim to scope creep. If you can smell the opportunity to win some new business, it’s tempting to push your scope of services to pursue the contracts. But don’t do that.
A key element of scoping your services is deciding what is OUT of scope for you. This out of scope list truly sets the boundaries of your contracting services and helps you better define your business. Write an in scope/out of scope list that clearly identifies what you do and what you don’t do and stick to it.
Developing a contracting business can sound simple, but it’s really anything but. Performing the contracting work may actually be the easy part. Appropriately defining and scoping your business may prove to be trickier than you think. Don’t make the mistake of underestimating the importance of establishing a strong foundation.
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