Smart Business: Five Ways to Destroy a Business
The construction trades have no shortage of candidates for their own version of the Darwin Awards. No company really wants to kill itself, though they have devised endless policies and practices that make it likely to happen. Here are some of those actions that routinely take place in the ordinary course of business to spell doom for that business over time.
1- Failure to show up.
Scheduling is a dicey proposition for any construction business. Weather conditions may make it impossible to work on any given day. An emergency on one job site may reduce the manpower available to work on another. Equipment breakdowns or material delays can shut down work for hours or days.
Granted, these are largely unavoidable situations, but they should be rare. When they do occur, customers ought to be informed as soon as possible that crews will not be coming out and what they will do to make up the time. For too many contractors, however, the legitimate excuses are merely lies told to cover up management shortcomings that result from poor planning or personnel problems. For example: a crew member takes the day off unexpectedly, so you blame it on a machinery malfunction.
What too many contractors fail to realize is that customers don’t care about excuses. They will understand weather delays and other conditions that make it genuinely impossible to work, because they can experience these things for themselves. But no-shows and delays with mysterious causes that may or may not be true will be held against you.
Numerous surveys have shown trust to be one of the main reasons customers patronize certain contractors over and over. Breach that trust and you can never gain it back.
2- Walking off the job.
Disputes do occur between owners/GCs and subs, and various means exist to resolve them. The absolute last resort is walking off the job.
Construction law in general takes a dim view of this procedure. Better make sure every last option is explored before taking this step. You may think your grievance is airtight, but you’re only looking at it from your perspective. Penalties are severe if a court or arbitrator determines your company pulled the trigger in less than dire straits. There are two sides to every story, and an objective observer may think the other party has the stronger case.
Most walk-offs occur over payments not received. That’s a good reason to be upset, but “pay when paid” or “pay if paid” clauses in most construction contracts work against subcontractors. In extreme cases, walking off the job is a bet-the-company maneuver. The only time to do it is when you’re in such bad shape the company is likely to go under anyway without redress of your grievance.
The best way to avoid this pickle is to be choosy about who you work for and whose jobs you bid on.
3- Failure to acknowledge mistakes and make restitution.
For most contractors, complaints go in one ear and out the other. Anyone who’s been around while knows that every job entails things that don’t go exactly according to plan, and that certain customers are inclined to whine about every little thing in order to extract as much as they can out of the contract terms.
If that’s the way you think, it’s time to turn it completely around. Start thinking of complainers as the best friends your business could possibly have.
That’s because some classic business studies have found that the average business does not hear from 96 percent of its unhappy customers. They will never let you know about their unhappiness. This means that for every complaint you hear about there are an additional 26 people who have problems that they’re not telling you about. And, the same studies have shown, about six will be serious problems.
Between two-thirds to 90 percent of these non-complainers will never patronize your business again, and you’ll never know why.
But they will let others know about their problem with you. On average, a customer who has an unpleasant experience with a business will tell 10 other people, and about 13 percent will tell more than 20 people. So, by aggravating that one customer, you can end up with as many as 21 people holding a negative opinion about your company.
Lesson: treasure those 4 percent of customers who take the time to tell you they are dissatisfied. They alert you to something wrong, and that enables you to take steps to fix it. Surveys show that anywhere from half to three-quarters of these customers can be won back if you resolve their complaints.
It’s been noted that people who come late to religion become the most fervent believers. The same holds true for business skeptics. Once you convert complainers to your cause, they are apt to become your most loyal customers.
In other words, treat complaints not as problems, but opportunities. Solicit complaints by asking customers, informally or via questionnaires, how they perceive your services and ask how you could do better. Keep records and make whatever changes in company policies and procedures are needed to avoid the same mistakes in the future. Develop incentives for employees to identify and resolve customer problems.
4- Insulting customers’ intelligence.
There are many ways contractors insult their customers’ intelligence, some blatant, some subtle. Among the blatant forms of insult are:
• Talking down to them by using excessive trade jargon to explain situations. You might as well tell them you know things they don’t, so they should keep their mouths shut and let you do your thing.
• Shifting the blame to customers when something goes wrong. Even if it is their fault, the attitude ought to be, “let’s find a solution,” not score debating points. Worst of all is when a problem results from your equipment or crew, and you find a way to make it the customer’s fault. See item 3 about failing to acknowledge mistakes and make restitution.
In the more subtle category, I would include trying to shift blame to a third party, be it the crew from another trade, your suppliers or whoever. Excuses, even legitimate ones, do nothing to solve a customer’s problem.
This is not to say you should take the blame for problems caused by others. Of course not. It’s a matter of emphasis. A simple explanation of cause-effect will suffice to pinpoint what caused a problem. Your narrative should focus on finding a solution, no matter who caused the problem. Constantly trying to pass the buck is a bad way to do business.
Subtle insults can also occur with casual comments that suggest to customers that they are incompetent or negligent. These remarks are often prefaced by “You should’ve … could’ve …” Or, “You’ll have to (do this, that or the other thing).”
It’s not so much what you say as how you say it that conveys whether you are trying to help the customer solve a problem, or trying to establish who’s right and wrong.
Watch how you phrase things. For example, instead of saying to a customer, “I think you misunderstood,” put the onus on yourself with: “I’m sorry I didn’t explain that better.”
5- Thinking they need you more than you need them.
This is a mindset that creeps up when work is plentiful. When you have more work than you can handle, it’s easy to fall into the trap of treating customers like disposable goods.
This isn’t to say you shouldn’t be picky about choosing who you work for. By all means, use good times to chase the most profitable jobs. Just remember to treat the people you work for-and those whose jobs you decline-with respect. Good times don’t last forever.
I suspect for most of you, right now they’re long gone. Those of you who are scrambling for work might want to reflect back on jobs you turned down in the past. Did you burn bridges with potential customers you would love to get a call from right now? W&C