More clients are demanding that you lower or at least maintain their current prices, but still provide quality service. “This is especially true in the commercial bidding market,” says Bill Horn of Terracare Associates in Martinez, CA. Horn says that if you draw a line in the sand and say, “This is our price and we will not go lower,” you’ll probably get left behind. You have to adjust to the market.
Cut Costs, Not Corners
Find ways to cut costs so you can hold prices in line without watching your margins erode too severely. By reducing their own costs and lowering prices where possible, Texas-based Native Land Design has been able to hang onto most of its customers. “I strongly believe that we know our cost structure and manage our expenses with the best of them,” says CEO Ben Collinsworth.
Get more productive in the field. Horn says his company is evaluating crew performance on each and every jobsite—from the time employees jump out of the truck until they jump back in.
“Don’t let your crews fall into ruts,” Horn says. “One guy grabs this while the other grabs that, and off they go, whether the property needs it or not. That’s not good enough anymore. We’re altering schedules and identifying what clients want done month to month, week to week—then using our personnel in the right places.”
Employees with less experience could do the mowing, for example. Horn says it’s often the guy with the most seniority who operates the zero-turn. But it should be the other way around. “The lesser-experienced employee should do the mowing so the foreman can spend his time touring around the property doing detail work, identifying what else needs to be done,” Horn suggests. (Note: Ensure that employees receive proper mower operation training.)
Smaller crews have helped many contractors improve productivity. “We stick with two- or three-man crews,” Horn shares. Bigger crews can result in higher levels of lost time due to confusion and reduced personal accountability. Small crews, on the other hand, must find a way to be super-efficient.
If it doesn’t add value for the customer, see if you can eliminate it. Take a look at every single aspect of how you conduct business, Horn advises, from the time you open the doors in the morning until you and your crews go home at night. “If we’re doing things that don’t add value for our clients, we’re seeking to eliminate them,” he relates.
Don’t Assume Anything
Treat each bid situation and/or client as if it were the only one you’ve ever had. Just because you’ve always done something a certain way does not mean you need to continue doing it that way—especially if a given client doesn’t care.
Find out exactly what the client wants. If you include something in your proposal that the client doesn’t really want, your prices are probably going to exceed what the client is looking to spend.
Pruning is a good example. “If we’re pruning all the shrubs on a property six times a year because that’s what we’ve always done, we must find out if the client would be just as happy with three times a year,” Horn explains.
Stay True to Your Core Values
Quality is still important, so as a company you’ll have to decide which concessions you’ll be willing to make. While it’s important to find out exactly what the customer wants, it’s also important to guard against seeing your reputation head south for doing less than spectacular work. “Sit down as a company and define your expectations up front,” Horn advises.
Your portfolio and customer referrals will still work overtime for you, even in a tough economy. Back down in Texas, this has been the case for Native Land Design. “Price has seemed to be king in many negotiations lately, but in those instances where price has been relatively flat among bidders, our book of work and client recommendations have meant much more than a slick presentation,” Collinsworth relates.