He is right about the cheating but wrong about successful contractors doing it. There is widespread cheating in the industry, but not the kind he thinks.

 

WHO CAN BE CHEATED?

If a contractor cheats, who does he cheat? His customer? His employees? The government? Frankly, it is unlikely that any contractor cheats customers, employees, or the government … for long, that is.

Customers — When a contractor cheats his customers, it is a temporary proposition. He will be discovered, and word will spread. In the past, unhappy customers could tell all of their friends about a bad experience. Today, an unhappy customer can tell millions through review sites and social media. Consumers have the power, and it is a foolish businessperson who cheats the powerful.

To be honest, unscrupulous consumers are a bigger problem than unscrupulous contractors. Consumers are discovering the power of review sites and using reviews to blackmail contractors. The more successful a contractor is, the more likely he is to bend over backwards to ensure his customers are happy, if not ecstatic, with his work.

If reviews do not matter to a company because the contractor has built a marketing machine that allows him to overcome negative reviews and social media, the contractor is still subject to the attention of a headline-seeking attorney general or district attorney. In fact, the bigger the contractor becomes, the more attention he draws. Politicians face little downside from targeting a contractor, whether the crimes are legitimate or not, and receive much encouragement from the media, which is inclined to regard all contractors as suspect.

There are some fly-by-night contractors who swoop into a state following a disaster, but they are quickly gone. Thus, any legitimate contractor will not, cannot cheat consumers in today’s environment for very long.

Employees — If a contractor cheats his team, he will lose his team. Period. Word will spread up and down the technician telegraph, and he will find it even harder to recruit than it already is. The most valuable asset a contractor has today is a base of strong service and installation technicians. These are the geese who are laying his golden eggs, and they have too many opportunities to go elsewhere and get better treatment.

Cheating employees is a risky proposition for the most larcenous contractor. Withhold pay or overtime, and the Feds swoop in as soon as they hear about it. It’s challenging enough to comply with the myriad of government rules and regulations. Why risk waving a red flag before a government bull?

Government — Being cantankerous, independent sorts, it is likely there are contractors who skirt government rules and fail to pull the occasional permit. That is a small-time crime by small time contractors. The more succesful a contractor becomes, the less likely he is to skirt permitting rules, no matter how annoying.

Only the dumb and desperate would ever consider stiffing the Feds on 941s or payroll taxes. The IRS does not treat this event lightly. It is a good way to become a virtual indentured servant until the taxes and ever-mounting penalties are repaid.

Contractors might get a little aggressive with the definitions of business expenses, but using legitimate means to reduce tax liability is, well, legitimate. Those who get too aggressive are likely to receive a letter from their friendly tax auditor asking for more information. Again, it’s too risky to cheat.

 

WHO IS CHEATED?

Contractors do not cheat their customers, employees, or the government for long. If they do, it backfires. As they grow, the targets on their backs swell proportionately. The illegitimate gains are not worth the very real risks. So who does get cheated? The guy in the mirror and his family behind him.

Nearly every contracting business starts with a guy slinging tools from a truck. He knows how to turn a wrench, not a profit. He may have gone to trade school but not to owner school, so he starts out feeling his way.

Those early years are empowering and challenging. The contractor eats what he kills. He has the personal freedom to do the work the way he thinks it ought to be done and the ability to take off any afternoon he desires when it’s deer season or the fish are biting.

Yet, the contractor cannot leave his business for long because he is the business. So there is no vacation with the family unless he grows. If he does grow, he is confronted with the joys of management and the drama of people. Not trained for this, every situation is wholly new, and he has to muddle through. If he’s not careful, the hours get longer and longer. Everyone gets paid before he does, so often, there’s less money than when he was solo.

The early years of a contracting company are stressful. They stress the contractor and they stress his family. If the contractor perseveres and turns his company into a real business, the pain and the risk will have been worth it. People will call him lucky. Less successful peers may say he cheats, but he will know the truth. He took risks, worked hard, grew personally by stepping out of his comfort zone again and again, and overcame one setback after another.

Sadly, too many in the industry never reach this level. They stop as single-truck operators or, if they do grow, never grow enough to leave their tools in the truck. These are the cheaters. They cheat themselves of a profitable future, of reaching their full potential. They cheat their families of their time and the nice things in life.

In an industry full of successful contractors, they are living lives of sustenance by constraining their lifestyle to whatever income the company throws off. Worse, they may not even realize what they are doing to themselves and their families. Indeed, they might revel in it.

They take a false pride in their independence when, really, they are slaves to the company, and their families are slaves with them. The single-truck operator who has a family and no desire to grow is the most selfish individual in the industry. At a recent trade show, a single-truck operator proudly stated he had no intention or desire to grow. He was asked what his family would do if he was hit by a truck.

“I don’t think like that, man,” he said in response.

Selfish, indeed.

It is human nature to think well of oneself, so these industry cheaters rationalize their behavior by accusing others of cheating. They rationalize that it is impossible to find good personnel who will not cheat them. They rationalize away the cost of their behavior on their families and themselves.

Fortunately, it is never too late to change, to grow. Ray Kroc was 55 when he started McDonalds. Contractor Ben Stark has sold his company twice. Each time, he started all over when his noncompete expired. He is currently operating his third start-up HVAC business (and yes, it is already a business, not just a company). There are more resources for contractors than ever in history. The only thing keeping a single-truck operator from becoming wildly successful lies between his ears.

Do not cheat yourself. Do not cheat your family. Get help and grow!

 

Get the help you need from the Service Roundtable.Membership is $50 a month, flat rate, without a long-term contract.Get help with marketing, sales, employee recruiting, management, and buying. Visit ServiceRoundtable.com or call 877.262.3341 to learn more.

Publication date: 4/29/2019

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