There always seems to be someone not following the rules. In some situations, it appears that the cheater wins the business game in the short term by skirting the rules. This creates a challenge for the true professional trying to run a business legitimately.
The cheaters bring down the integrity of the industry, and they hurt everyone. Obviously, I can't recommend prices because it might be construed as price fixing, but when someone purposely avoids following the law so they can charge a cheaper price, it ruins the industry and wrecks the ability for honest contractors to make an honest living. Contractors should remember:
to play fair,
to treat people the way they want to be treated,
to play games by the rules,
and that winners never cheat and cheaters never win.
STUCK IN THE MIDDLEMany communities require permits and inspections from the city inspector when a job is complete. The challenge isn't the cost of the permit, since it's a nominal investment. However, it does take time to acquire the permit, process the permit, and schedule a convenient inspection time for both the inspector and the homeowner. All the while, contractors are in the middle, responsible for something they can't control from either side. This is the real challenge.
Often, homeowners won't pay until the city inspector has signed off and approved the work. Meanwhile, time ticks away, and time is money when the company has already supplied and paid for the labor, equipment, and overhead. The contractor has completed the job and done what was required, but is the one in a bind waiting to be paid for services rendered.
All of this adds to the cost of doing business. Some contractors struggling financially may decide to avoid this nuisance and cash flow challenge by skipping the permit process and throwing caution to the wind, saying, "What's the chance they're going to catch me anyway?"
Many contractors haven't mastered the art of selling and differentiating themselves in the market. They compete only on price, and they look for every shortcut to lower their price. For them, neglecting the permit process is an easy corner to cut to lower the price, avoid the headache, and avoid the cash flow challenge. A professional contractor who understands the costs and builds the cost of the permit into the job is left competing on an unequal playing field.
FACING THE CHALLENGEHere are several ways to help level the field against those not playing by the rules.
Build a reputation of good, quality work. Put yourself in the inspector's shoes. They're usually government employees who get paid a monthly salary regardless of the number of inspections they do. Do you think he wants to do these inspections? More inspections mean more work. Poorly done jobs mean more paperwork and return trips. Make their life easier by building a reputation for quality work. When contractors do, inspectors will often be more willing to run an inspection when time is a consideration, because they know there won't be a problem with the quality.
Today, many cities have the permit process online which cuts down on the time it takes to get the necessary permits. If your city doesn't offer this, permits can be batched together and processed as one batch. That efficiency will help improve profitability.
Develop a neighborhood HVAC permit watch program. One contractor I've spoken to, who chooses to remain anonymous, lives in an area where permits are required. He mentioned that all of the permit information is public domain. He uses this fact in two different ways. First, he'll go online to see who is pulling permits and performing the jobs in the community. Knowing who is getting the installs, he'll observe what they're doing to see if there is some secret he can learn. But since he is the dominant company in the area, few are close to what he's doing. He uses the public information to make it tough on cheaters. Being the largest player in the market, his team is on the streets all day long.
Whenever they see an install truck at a home, they call the office with the address. The office checks to see if a permit was pulled on the job. If there was no permit, he feels he has a right and an obligation to the industry, to the safety of the homeowners, to the city inspectors, to his company, and to his employees, to report those companies that aren't pulling permits and are breaking the law.
As a good neighbor in the community, if you noticed someone was breaking the law at the expense of your neighbor, wouldn't you report them? He says that's the way he helps raise the standard in the industry.
Those are just a few methods to level the playing field for honest contractors and raise the standards in the industry. Knowing the true costs of doing business and building those costs into the price customers pay is how contractors make money every day.
Publication date: 08/21/2006