Are You Quoting To Make Money?
I’ve been coaching builders for a number of years now and quoting seems to be one of the biggest frustrations builders face. And that sucks because quoting is so important.
Quoting a straightforward new home is reasonably easy. But it’s the renovations, larger builds and architecturally designed homes that are challenging. That’s because the unique details and structural particulars make quoting complicated.
You probably know of builders who have underestimated the amount of time a job will take. You may have experienced it yourself - losing money is never nice!
So when it comes to quoting there are many variables to consider: the fitness of your team and how fast they work; their skill level; the ability of your foreman to plan ahead, the scheduling of subcontractors; rework; wastage of materials...not to mention weather and unexpected problems!
So I want to share with you 5 tips that will relieve your frustration and reduce the risk of incorrect quoting - so you can quote to make money.
Know Your Limits
You’re a builder...and a GREAT one at that! But when you hear the words maths and spreadsheets it make your insides squeem? If that’s you and you struggle with spreadsheets, don’t feel that you have to create your own for quoting. It’s so easy to make a formula error in a spreadsheet that ends up costing you HEAPS!
It’s also easy to confuse markups, margins, charge out rates, preliminary and general, and profit percentages.Instead, invest in a good piece of quoting/estimating software and take the time to learn how to use it well.
Know When to Estimate
Fixed-price quotes or estimates? Just because a client wants a quote on a reno or a complicated build...it doesn’t mean you have to give them a fixed-price quote. Better to give them an estimate of the overall cost and then quote your rates. Especially if you’re not experienced in the particular job.
Highlight Uncertain Areas.
Similarly, if you can’t quote accurately on some parts of a job...DON’T!
Don’t be afraid to separate the uncertain parts from the fixed parts of your quote. Just give those parts a rough estimate, but make sure you make it clear which part is which.
Use A Quantity Surveyor
Instead of labouring over numbers and quantities you’re not sure are right, spend the time more profitably improving the other components of a great quote...Reviewing the plans and coming up with the best build process so you can reassure your client that you really are the BEST choice of builder.
Correct quantities are important for developing accurate quotes...as well as spot on labor forecasting.
You can ensure that you have accurate quantities by getting a professional quantity surveyor to help on your jobs.
Back Cost Previous Jobs
Henry Ford said, “history is bunk,” and at school you might have agreed. But a contemporary of Ford his said, “those who cannot remember the past are condemned to repeat it” (George Santayana).
I can’t emphasise how relevant this is for YOUR building business. Because when a builder heads straight into the next job without back-costing the previous one, he is likely to repeat the mistakes he made on the previous job on the new job. But when you back cost, you get real information about the performance of yourself and your team.
If you estimated 500 hours for a job and it actually took you 650, then next time around on a similar job you’d be foolish not to allow 650. You’d adjust your estimating formula.
Although it might seem too time consuming...it’s WORTH the effort.You build a record of your team and you can estimate jobs more accurately in the future.
Getting your quoting right is really important in building a long-term secure business. Make sure you don’t leap into giving out quotes just to stay in the game! Because doing so could put you out of the game!
Talk again soon.
Graeme
P.S. Whenever you’re ready….here are 4 ways I can help you grow your building business:
1. Grab a copy of my free book
It’s a road map of a successful 15 minute sales call that’s guaranteed to increase your conversion rate. Download Here
2. Join Trade Mates and connect with builders who are scaling too.
It's our new Facebook community where smart builders learn to get more income, time and freedom. View our free business resources for builders. Ask questions of like minded business owners and business coaches. Give your knowledge and expertise to help others. Join TradeMates
3. Join My New Group
I’m starting a new group called “OnRamp” to kick start sales and marketing in your business. If this sounds like you, message me with the words, “OnRamp”, and I’ll get you all the information.
4. Join Loft Members
If you’d like help to get off the tools, make more money and get your life back...just message me at graeme@thesuccessfulbuilder.com and put “LOFT MEMBERS” in the subject...tell me a little about your business and I’ll get you all the details.