Wednesday, March 10, 2010

Am I Crazy?

I was reading an article in Remodeling Magazine the other day and I was very curious about the fact that several contractors were interviewed for the article. One of the quotes that really struck me was: “well a room addition that used to come in at $200,000, now comes in at $160,000.”

Am I crazy? If it still takes $200,000 to build a room addition the right way and have the company make a profit as well as the owner or owners, shouldn't it still come in at $200,000? And if, when times were "good" and it took $160,000 to build our room addition the right way and still have the company owner or owners make a profit, shouldn't it have always come in at $160,000?

One of the other quotes in the article was “while at one point I had 100 employees and I've had to cut back to three.” Okay, if you had 100 employees when times were "good", and you didn't need 100 employees. why did you have 100 employees? If you can get by with having 327 employees to run an efficient and profitable company, why would you look at hiring another 93 employees?

If, indeed, your company can run efficiently with three employees or seven employees, then it would make sense to only hire however many employees are truly needed to run a profitable company. Now this applies across the board in all kinds of professions.

It costs no more money to hire an employee than it does to use an independent contractor. An independent contractor, at least for me, is someone who doesn't have to report to one place every day and do the same job. My webmaster, for instance, sees me three times a week and the rest of the time is free to work with other companies.

Am I crazy? Or doesn't it seem like this is common sense, and perhaps, this is the reason that we're in such a state of affairs that we are? When we really start examining and gaining clarity around what we need first of all personally, then, as a business, we can go from there and create an effective logical working spending plan. I don't call it a budget because the word budget often has a negative connotation to it. I really prefer the words ‘plan of circulation’ because, for me, I choose to keep my money circulating. Not that I don't want to save money for myself or my company and create a prudent reserve, but because I must be willing to circulate my money, so that not only does it go out but it comes back in.

In reading this article, I was very taken aback by the continued lack of common sense that we have exercised as business owners. My feeling, my belief and my knowing is that until we get back to, or even simply discover, total clarity in what we need as far as money, we are going to continue to see the kind of people that we have seen over the last three to five years.

When it gets down to the nitty-gritty of things, it really is all our personal responsibility - whether it's for ourselves or for our company - as far as the money goes.

The last quote that really stuck out in this article was “now it's a matter of getting back to customer service.” Am I crazy? Or is that where we always have been supposed to operate from?

I went to a Remodeling Magazine conference five years ago and it talked about bringing the experience to the customer. What experience? Well, a good experience is when I'm coaching clients - homeowners or contractors - and I am coming from the middle ground position where I'm all about taking the mystery out of remodeling and bridging the communication gap between homeowner and contractor. What I get to first with the contractor is clarity around what they need to earn to run a profitable company and pay themselves - so that they can not only start the job and bring a good experience to the table, but they can finish the job because they are earning what they need to do it. As I've asked contractors in the past, "if a kid’s remodel takes you $75,000 to do the right way including profit for the company and your salary, why would you say okay I'll do it for $60,000?" The answer that I've received, "otherwise I wouldn't have gotten the job." Am I crazy or, if you know it takes you a certain amount to do the job right and earn the money you need, why then would you work for free?

So, it really matters not what the "economic times out there" are, what are the economic times for you and your business?

Am I crazy? Or are there others out there who are willing to get on this "personal revolution" train of doing business?

Reva Kussmaul
CEO – Eye For Detail Inc.

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