How To Build Your Dream Business

I think many times as contractors, owner/operators, we feel like we’re caught in the middle…

On one side you have clients saying you’re too expensive, on the other side you have employees wanting more money.

What about what you want in business?

How do you achieve the goals you have for your own business as a contractor?

Why does it seem as though all it is, is working to get other people what they want, and you’re left holding an empty bag of wishes, visions, and dreams.

Well…

I have a little tip for you.

It’s kind of like running your business by design, rather than by reacting.

Which starts by breaking the addiction to the urgent and giving time and thought to the important.

So, what is this cute little tip that gets you out of this vicious cycle?

Practically speaking, what I mean when I say, “running your business by design”, is start with the end in mind, and then align everything else around achieving that end.

If you wish you could hire that office admin to take things off of your plate, but you have no money…

If you wish you could upgrade your truck, but don’t have the money…

If you wish you could pay your employees more, but don’t see how you’re going to pull that off…

If you wish you could get that nice tool, subscription, attachment for your excavator…. you fill in the blank.

You get the idea.

The truth is if you continue as you were, you’ll get more of what you got in the past.

It’s going to require doing something about it.

And so so often, contractors start out in business, look at their competition, and set their rates somewhere in the middle.

As they grow their business, the costs go up.

But the rates stay the same….

It doesn’t take a genius to see the problem, but we also struggle to read the label on the bottle when we’re inside the bottle.

We have to get out, and look at our business in a pragmatic way, kind of like a coach or an accountant would.

It’s obvious that as your costs to keep the lights on goes up, you can’t continue charging the exact same rates.

And that’s before we even talk about your wish list that we were looking at above!

So, what is the solution?

Base your hourly rate on your true costs of being in business.

But… hold on a minute.

Not only your true costs as of today, but also the costs you wish you had the money to pay for.

You can do this by finding your true cost for your labor, but then also finding your true overhead cost per hour (with your wish list expenses included!) and add those two together – and you have your breakeven.

Now…

You are running your business by design…

You are taking the bull by the horns and saying – “this is the business I want to be!”

And finding out what the costs are in that business of your dreams and setting your rates accordingly.

Once you’ve done that, there is still one hurdle.

You still have to sell the work, at those new rates.

The market gets to say yay or nay to your vision.

You have to satisfy the market.

You have to be able to create value at a price that the market is willing to pay for.

So… once you’ve figured out your costs, wish list items included, and you’ve found your hourly rate for that business, now you have to go find the market that will pay those rates.

If you can sell the work, the market has smiled on you and you, my friend, have the greenlight to go spend the money on those wish list items.

The market is giving you the work, at the rates you need, to fund the business of your dreams.

And sometimes, as a side note, this pursuit of creating the business of your dreams requires you changing the market that you serve. The clientele that you serve.

Because when you started out mulching, doing simple 10×10 patios, etc. for $50 an hour – you attracted a certain type of client.

Now you take pride in your work, and you want to grow your craft, and move up by building incredible outdoor living spaces – or whatever your service is.

You want to do premium work that you’re proud of.

Well… the clientele that buys such premium work is not the same clientele that buys your $50/hr mulching and small jobs services.

There’s nothing wrong with providing either service.

It’s just that sometimes we start out providing one service, we take pride in what we do, and as our service offering grows or evolves… we are still stuck trying to serve the same client.

And then we really second guess ourselves when that client tells you “You are so expensive!”

And yes, your pricing should have changed as the infrastructure of the business and product you are building is changing.

And it’s not your fault that the client you used to serve can no longer afford you.

….as long as there is another client that will happily pay for your services, you are good.

So once you’ve figured out what you need to charge to run the business of your dreams, then it’s just a matter of going and finding the market that will buy your services.

When you get a lead, if they’re going to tell you no, you want to get that “no” as quickly as possible so you stop wasting everyone’s time and can go focus on the next lead that will say yes.

If it were true that the cheapest price will always win, well… then Porsche would never sell a car.

And… ask yourself, are you trying to sell a Porsche to a Kia customer?

As soon as you discover they are a Kia customer, kindly give them directions to the Kia place.

Or, model your business to serve the Kia market.

But you can’t pay for the R&D (overhead infrastructure) it requires to build a Porsche, on the budget of a Kia.

Pick who you are.

Design your business.

Start with the end in mind and align everything else to that.

Don’t get caught trying to sell Porsches to a Kia market.

Stop being addicted to the urgent and give time for the important.

If you want to sanity, check your rates and want to see where you really should be with your hourly rate, you can use this quick little hourly rate calculator and see where you should be.

Just remember, plug in the overhead expenses for the business you want to be, not the business you were yesterday 🙂