Partnering Against Garage Mechanics
Some contractors prefer to take the whole-house approach to locking in customers, e.g., offering plumbing, electrical, duct cleaning, or insulation as part of the whole package. Larger corporations like ServiceMaster are an example. They have HVAC, plumbing, maid service, pest control, and lawn care divisions to ensure their customers don't have to go anywhere else for in-home services.
It may not be practical for all contractors to branch out in different directions, but it may be practical to seek businesses with like synergies in the community to partner up with. I'd like to call it the "anti-jack-of-all-trades" philosophy. Let me explain.
Handyman Strikes Again
The success of big box stores like Home Depot and Lowes is grounded in the theory that many people are do-it-yourselfers (DIYers). The rise of TV home remodeling shows and extreme makeovers share some of that credit. But another reason why the big box stores continue to thrive is that they sell to many mechanical tradespeople, either those working for medium-to-large businesses or to the smaller one-person shops, which I'll discuss here.These smaller guys, a.k.a. garage mechanics or jack-of-all-trades, don't make large purchases through a distributor because they work small jobs, one at a time, or haven't established credit with a supply house, or just prefer to shop at the neighborhood hardware store.
Many of them fashion themselves as entrepreneurs, free to travel from jobsite to jobsite, lowballing established businesses and keeping busy enough to pay their bills and stay ahead of the taxman (and possibly the local sheriff). Not all are bad people - they're just bad for construction trades like HVAC businesses.
The Buffalo Business First newspaper recently published an article which stated that 1.4 million New Yorkers run one-person firms. Of that total, 111,000 one-person construction businesses (including HVAC) existed across New York in 2003, taking in $5.2 billion, the equivalent of $46,500 per company.
The number may be diluted by the larger category but can you imagine a few of these people in your neighborhood, taking business away from you?
Grab A Partner And Fight Back
Now, back to that heating and insulation business.One way of combating the garage mechanics is to stop them at every turn. If you are in a customer's home, and they are interested in having their carpets cleaned or their kitchen remodeled, you may be passing up a profitable opportunity if you shrug your shoulders and refer them to the phone book - or don't refer them at all.
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The best solution is to have a referral list of businesses that you can recommend to your customer. If your customer hires a business you have referred, you should be able to collect a commission or finder's fee. And you should extend the same courtesy when the carpet cleaning business refers its customer to you for a new furnace.
Let's face it; any competitive edge is a good one.
The jacks-of-all-trades don't care about competition. They care about survival and staying busy, at the expense of the more established, qualified businesses such as yours.
There are guys throwing down lawn seed and calling themselves lawn care experts and others painting driveways black and calling themselves paving experts. You could have referred your customers to the real experts.
Having several local business partners gets your name in more homes and keeps you busy while the one-person companies look elsewhere to find their $46,500.
John R. Hall is business management editor. He can be reached at 734-464-1970, 248-786-1390 (fax), or johnhall@achrnews.com.
Publication date: 10/31/2005