Below is the transcription for the Digital Marketing for Contractors Podcast: Level Up Your Contracting Business. Click this link to listen to the podcast.
We enjoy this topic around here at Fat Cat because really what it’s about is helping you contractors to be able to figure out where you’re at in your business.
Where do you want to go? What are your goals? What are things all about? And how can we help you get there? Which is what we love doing. Yes, we’re a marketing agency, but we love being in your business with you and helping you be able to succeed.
Let’s Review the Levels of a Contractor Business
This is part two of our three-part miniseries about the levels of a contractor business. And just for the sake of review, why don’t we very quickly go over what the three levels are?
Level one, we’ve loosely categorized as you’re just trying to survive. You’ve decided to start your own business for whatever insane reason, and you’re out doing it, just trying to make it through. You are making it work one way or the other, and you’re paying your bills that’s level one.
Once you reach the end of level one, you start to look around and you’re like, “Hey, I think this is working. I think this is working. I think I can make it a little bit better.” That’s level two. Level two, you are starting to put processes together. You’re starting to think about scaling. You got staff on board, you’re hiring staff. You’re thinking about standard operating procedures.
Then Level three, you’ve gone well beyond all of your staffing. You’ve got great people in place. You are a great leader, and you’ve trained other leaders. And that level three. You are really in that rarefied air where you dominate your local market. You have name brand recognition, like a household name for the trades that you represent. It’s kind of the dream for most of our contractors. That level three. I call it rarefied air because there can be a ton of really successful contractors that are making a lot of money that aren’t at that level three.
What it looks like to Level Up Your Contractor Business
What we want to talk about today is how to get from one level to the next. So what it looks like to be able to go from level one to level two, what it looks like to go from level two to level three.
Because growth as a contractor business is never linear. It is not just one thing to the next. Each of those three levels almost looks like a completely different business. It’s just a reminder that what you do at one level is not going to be what makes you successful at the next level.
That’s sometimes a really hard concept to wrap your mind around. But I think as a contractor, it can be even harder to concretely wrap my day-to-day activities around, like, how do I move from, “this is what I’ve been used to doing all along, and it’s been working, and now you’re telling me, like, I have got to do something completely different.”
Growth Isn’t Linear
One of the things that you’ve said many times, is this whole idea of growth from one phase to the next in your business is not linear. It is not a straight line on that classic time on one axis and money on the other axis. It doesn’t just go straight up and right.
So when you are thinking about growing to the next level or the next phase of your business, oftentimes it takes a lot of risk and a lot of courage and you have to get out ahead of things. And you might need to invest in something that makes that line look a lot more jagged.
There are peaks and valleys along that up-and-right trajectory. You got to be willing to maybe take a little dip in this season so that you can make a bigger climb in the next season.
You may have a great year and have maybe your highest profit year ever and then take a step back and say, wait, maybe that’s a warning sign. Maybe I’m understaffed to take on the challenges of next year. Or maybe I need to invest in some new equipment, or maybe I need to invest in, trucks or a different warehouse.
That’s what we’re talking about. It doesn’t look linear. And sometimes you have to go on instinct and your experiences to know when to take that next leap.
Next On Digital Marketing For Home Contractors
There are several things that we can talk about here in terms of progressing from one level to the next. Let’s lay out what we want to talk about today and what we’re going to save for the next episode because we’re a digital marketing agency, so marketing is our area of expertise.
We want to devote a whole episode to just marketing. In the next episode, you’re going to hear us talk a lot about how to level up your marketing from one level to the next.
Taking Your Contractor Business From Level One To Level Two
So today we’re not going to talk about marketing at all. We’re kind of going to talk about everything else, what the rest of the picture looks like for your business, and how to be able to move from one level to the next.
Let’s get started here because you kind of teased this in our last episode, and I think this is a great way to kind of kick us off. So when we’re talking about moving from one level to the next and in particular going from level one to level two, one of the metaphors that we like to use is this idea of you as the owner. Your role has to start looking less and less like a quarterback and more and more like a coach.
As you’re moving from level one to level two, you’re going to progress from a quarterback to a coach. And what we mean by that is this idea that you’re no longer just the star player like in level one. You are the guy.
All the weight of the success of your company rests on your shoulders. You’re meeting the homeowners, you’re measuring the jobs, you’re ordering the materials, you’re managing the subs, you’re creating the estimates you’re collecting the check and you’re driving it to the bank. At the end of the day, if it wasn’t for you, it doesn’t get done. And that’s kind of the idea of the quarterback that’s that level one.
But that’s not sustainable and you know it. You can probably feel it as you are inching toward the end of that level one phase. You can just tell like, I am tapped out. I just don’t have more hours to give. I don’t have more energy, more focus. So if you’re going to scale up your business, you got to find a different way of doing things.
That’s really what this coach mentality is all about, is beginning to say, okay, it’s not just me being successful, I’ve got to start to lead others in us being successful together. And that’s a whole different way of thinking about it.
Switching Your Mindset: To Build A Team
It is a whole different way of thinking about it. You are starting to look around not only to add staff. That’ll be step one.
You go from being the quarterback, the person that does everything, to starting to fill in some of those lower administrative tasks, who can answer my phone, who can drive the check to the bank, who can balance my checkbook, who can maybe order supplies or help with at least preparing quotes. Maybe not be the one to deliver them, but to prepare them.
Even as you say that, one of the things that I was thinking about was like, okay, so if we’re talking about adding staff as a way of building a team and moving into this coach mentality, how do we think about who you should add? Who needs to be your first hire?
I think more often than not, we usually see contractors kind of start with something like an office manager, some equivalent of an office manager. But that’s usually because most of the contractors that we’ve worked with would say that those are the things that they enjoy the least. Right?
Absolutely. That kind of catch-all paperwork person. Yeah. So a really good office manager is a great staff position to hire.
What Type Of Home Contractor Are You?
The contractors that I’ve worked with over the years sort of fall into really two big categories. I’ve worked with contractors who are born and bred tradesmen. They got started as a carpenter or I had a client who got started doing fiberglass repairs on boats and that led him into doing Acrylic bathroom installs because he was doing repairs on bathtubs and then grew it from there. That’s category one, owners who started as the tradesperson.
The other category that I’ve seen, and both of these categories I’ve seen be very successful. The other category of owner I’ve seen is somebody who first and foremost is a sales and marketing guy.
He understands this is a machine and I’m building the machine that’s going to generate leads that I’m going to fulfill with a product or service. I’ve had that type of contractor, say to me, it doesn’t even matter what I’m installing. It could be shutters, it could be awnings, it could be siding. I’m building a lead generation machine.
So it depends on which of those two categories you are. Are you the trades guy? Are you the sales and marketing guy? Because probably your first hire is going to be in the area where you’re weaker. Either the part that you don’t enjoy as much or that you just don’t know as well.
So if you take my example of the guy who built a very successful bathroom model business and sold it, one of his first hires was a fantastic project manager. Yeah. Because he was passionate about marketing and he was like, “You know what? I need somebody who can lead one crew at the beginning and then build out a system of crews.” And that’s what he hired. That’s great.
And that’s exactly what we’re talking about in terms of being a coach, recognizing what are your strengths, what are your weaknesses, how do you bring on team members that can help kind of augment your weaknesses so that you’re building a stronger team.
Yeah, exactly. So I think that’s kind of that idea is beginning to recognize, it’s time to start hiring, who and for what kind of roles do you need to hire and how do you begin to move in that direction.
Recognizing What Level Your Business Is At
I think another marker here for leveling up from one to two is starting to recognize that when you’re in level one, you’re at the place of, taking any work that you can get. You’re doing it in your trade and your specific industry, but you’re not always necessarily that picky about the jobs that come your way. You’re just trying to get work.
In level two, you’re starting to try to say, I need to get the right kind of work. I need to start finding the right kinds of jobs that are really where our business can be successful. And maybe that’s because this is where our return is going to be the best, this is where we’re going to make the most profit, where we can systemize and scale.
Or it might also be like, “Hey, this is what we are experts at and what we can be known for in our market.” That’s great too, but it’s figuring out what is the right kind of work for our business and how we start to make sure that we’re going after those leads.
What To Do When Your Contractor Business Has Hit The Next Level
The decisions we’ve seen some of our clients make when they hit that phase is often they’ll decide to cut out repairs. Let’s say it’s a roofing contractor and they’ve been doing these small repairs. It’s not a full roof replacement.
Once they get enough of their machine up and running, so they’re generating enough leads and they’re putting out enough quotes to keep their crews busy doing full roof replacements, once they get to that point, then they can go, you know what? I don’t think we need to do these repair jobs anymore.
We have also seen the flip side of that. We have seen one of our contractors that was doing roofing and siding get enough requests for repairs that they decide to staff an entire repair division.
So rather than turning their nose up and going, “You know, we don’t do those stinking repairs, we only do the whole roof.” I had a contractor look at me and say, “You know what? There’s volume there and if we could do it well, and if I could staff it, have maybe a different phone number or a different division, definitely have a different manager that could be its own business line.”
But those are the kind of decisions that we see contractors make when they’re really on that path toward scaling. They start to look at things from a different perspective.
If you take the repair example, they either go, you know what? I used to have to do repairs just to make the end of the month work and now I don’t have to anymore. And then on the flip of that, I’m going to turn repairs into its own division. But both of those are decisions that they made intentionally. Rather than going, “I’m going to do any job that comes my way because I need to pay the bills.”
How to Reach The Next Level With Your Contractor Business
Even as you’re describing that contractor who kind of has this separate division built out for repairs, I heard you use words like division and manager and processes and I think scaling, that was another one that you use. I think that’s a really kind of key marker as we’re looking at moving up into level two is just this focus on processes and scalable systems.
Processes And Scalable Systems
It’s the difference between if we had to boil it down into simple words, it’s the difference between being proactive and being reactive. If you decide deliberately, I’m going to build a division to go after repairs, that is a proactive decision.
The flip of that is somebody called, they needed a repair. I wanted the whole roofing job, but I need money. That’s reactive.
The ability to be able to look at that and say, okay, if I’m going to turn this into something that is going to be profitable in the long run. The way to do that is to have a system, a whole different division within my company that has its own manager, its own cadence. All of those are what you’re talking about in terms of scalable systems and processes.
The spectrum of businesses that operate within level two is pretty broad. There are a lot of businesses that operate here, and I think the ones we see that are getting to the top of level two, are the ones who are doing the best at processes.
That ones that are saying, we’re figuring out how to scale this, we’re figuring out how to systematize this, we’re figuring out how to hand this off to people so that they can do it well without us having to stand over them and make sure that they’re doing it the way that we want it done. Because we have a process that shows them how to be able to be excellent at that.
We were talking a lot about building systems and building processes, and something just occurred to me. Readers might be going, well, that all sounds great, but I don’t even know where to get started.
And I think the way to get started is to ask different questions because you’re trying to uncover places in your business that you’ve been blind to and then ask a series of different questions so then you can drill deeper. And that’s where you put your focus to develop some processes.
Focus Your Energy
A great example of a level one contractor that’s sort of struggling and looking for where is he going to focus his energy to make his business better. This is a classic thing that we’ve seen multiple times. We’ve got a contractor that’s up and running a successful business. But now it’s winter, and leads have slowed down a little bit.
We see all the data, it’s not that the leads are gone. The leads are there. They may not be coming as fast and furious as they were a few months ago, but they are there.
Our contractor is coming to us. “Where are my leads? I need my leads. It’s marketing’s issue. It’s a marketing issue.” Well, we have software installed with the client’s permission. They are completely aware of it, and we can listen to all of the phone calls coming in.
We’ve been listening to those calls, and what we’ve come to find out is the person who’s answering the phone at our contractor’s location just hasn’t been trained and hasn’t been given the right scripts.
Find The Right Scripts To Market Your Home Contracting Business
Clients will get some phone calls where people call for other remodelers that do the same service that they do, but they just may have dialed the wrong business or heard an ad on the radio and then didn’t remember exactly the name of that company. So they stumbled on our contractor, and they called them. And then the person answering the phone will say, oh, no, that’s not us. I think you’ve got the wrong number.
What a missed opportunity. So here you have an inbound phone call from someone looking for the exact service that this company provides, and the person who’s answering the phone has not been trained on how to respond to that. To just be able to say, well, we’re this other company, and we do very similar services. Is there something that we can help you with?
That is a scripting exercise, and that is a role-play exercise, and that is a sales training exercise. And so this is something that we see level one contractors do over and over and over again. They hire a company like ours, or they buy leads from Angie Modernize, and then they go, the lead quality is bad. And sometimes that’s true. Sometimes the lead quality is bad or the lead volume is off, but that might be the wrong place to look.
Are you maximizing every opportunity when your phone rings? And I’m betting that if you’re a level one contractor, you’re not, because I’m betting you do not have defined scripts on how to answer your phone and how to respond to ten of the most common questions that people ask.
Recap: Taking Your Contractor Business From Level One To Level Two
So as we’re talking about moving from level one to level two, we’re talking about a few things. We’re talking about shifting from being a quarterback to a coach. We’re talking about moving from getting any work to getting the right kind of work, and we’re talking about improving your processes.
Taking Your Contractor Business From Level Two To Level Three
Let’s shift gears and talk a little bit about moving from level two to level three because this is a massive transition. Your business has gotten to a significant place if you’re trying to transition into this level three phase.
This is where I think things can get difficult for the owner in terms of figuring out how do I make some of those transitions. I’m okay with the transition. I just don’t know what needs to happen to be able to move into that place.
Understanding The Shift From Being A Coach To A General Manager
Going back to our quarterback-to-coach analogy, in this level two to level three transition, I think it kind of looks like moving from being a coach into being more of a general manager. It’s a completely different mindset to have.
When we say level two contractor, this is a huge spectrum of businesses, probably, let’s say, bookend at 3 million to, say, 20 million. A $20 million business is a healthy business. We are not throwing shade at that at all. You have a lot to be proud of. But, you know, if you’re listening to this podcast, that there are a small number of players in the home improvement industry that have made it well above that, and they are household names.
How did they make that transition? Consider, from the owner’s perspective, when you were level one if you considered yourself a quarterback, you had to make that mental shift to becoming a coach. Now you’re making a mental shift where you are not the coach, you are coaching other coaches. So you’re turning into a general manager where you are more of an executive at a distance.
You are working with division heads, department heads, and managers of teams that might also have project managers under them, and you’re setting big-picture strategy at a high level, and you are not necessarily day-to-day. It’s less about operating and leading your business and more about leading the people who lead your business.
Build Leaders For Your Business
We said when you’re square in the middle of that level two, every day you’re just challenging yourself to be a better leader when you move into that next realm. Now what you’re trying to do is you’re trying to build leaders.
What that means is that you’re honing in on just a very small few key responsibilities that you in particular are overseeing. And for the most part, everything in your business is being overseen by someone else, and you’re developing them.
One of the things that I’ve seen contractors do is the owner of that company will deliberately take themselves out of the traffic flow. They will have at least one day a week when they don’t go to the office.
They are unavailable by phone. They are just unavailable. They take themselves out of the traffic flow so they can give the people that they’ve hired the opportunity to make some of their own decisions and make some of their own mistakes. And it’s a company that’s up and running. It’s a healthy company.
When I first came across this, I chuckled to myself, but the older I get and the more I do this, the more wisdom I see in it.
And I’ve seen that same playbook in multiple businesses where the owner who has been first that quarterback, then that coach, as they’re moving into that GM role and they’re trying to develop other leaders, you have to give people the space to find their own way to do it and maybe make some of their own mistakes.
Just step out of the picture and say, can this thing run if I’m not in the picture? What happens if I’m not here?
Becoming A Household Name In Your Industry
Another shift that has to happen, moving from level two to level three is in level two, it’s been about establishing your place in the market. But then in level three, you’re getting to the place where you’re leading your local market. Becoming a player.
A household name with anyone in your service area. By this point, it may be a really broad service area, or it may be multiple service areas, but for anyone who’s there, when they think about the service that your business does, your name comes to mind.
That’s what you’re after, you are at the top of people’s minds for the service that your business does. And for that to happen, there’s a lot that has to go into being known as a business that is locally reputable and trustworthy and familiar enough that people are going to have your name.
On the tip of their tongue when they’re ready to be able to think about getting whatever kind of service that you provide.
We’re taking a pretty deep dive into that transition in the next episode. Talking about what the marketing changes look like when you go from being successful and being a strong player in your market to being the dominant provider of that service.
Decide Why You’re In The Game: Start On Day One
There is a shift there from asking “How do we keep making more money, how do we keep getting more jobs?” To saying, “How do we become the dominant player in our market?” That’s a different kind of goal.
Having this idea that you have to make it to this level three. I don’t think that’s necessarily true. I think if you can decide why are you in this game, what do you want out of it? What do you want for your family? What do you want for yourself? What do you want for your employees? And work towards that exit strategy.
And that exit strategy might be to sell to a level three dominating player in your market before you get there because you’ve got different things that you want to do.
Yeah, absolutely. I think that’s important to acknowledge, if you’re at the top end of that level two spectrum, you’ve got a healthy, successful, thriving business, and there might not be any need for you to say, how do I push into level three? You may not want to do that at all, and that’s okay.
We’re trying to help you acknowledge that if you do want to move to level three, it’s not going to be by doing the same things that you’ve always done.
It’s going to be a whole different set of tactics and strategies and mindsets. But I’m just a big believer in beginning with the end in mind. I do most of the sales for Fat Cat here, so I’m talking to people when they call in for the first time, and I know that I’ve got somebody that we can work well with.
When they say, “I started this business three years ago, and my goal was to get to $8 million by five years.” When they say that, it tells me they started on day one.
It’s up to you in terms of what your goals are. We want to help provide you with a roadmap along the way and even to be able to say, hey, if you’re looking for a partner who can help you in being able to get from one level to the next, we would love to be able to assist in that way.
I want to remind you that we have an online resource available for you to download that will help you to improve your online presence as a business. If you go to fatcatstrategies.com/homeowners, you can download our resource called “Five Reasons That Homeowners Don’t Choose You Online And What You Can Do About It.” It will give you some great tips and strategies that you can implement right away to be able to improve your online presence and see your lead numbers go up. So check that out at fatcatstrategies.com/homeowners.