CFI Report: Installation Is a Great Adventure!
For me, installation is a great adventure! It has provided well for my family and I have met some of the world's finest installation professionals along the way. I began my career, probably like most of you. I was a remodeling contractor when a gentleman by the name of Al Moore asked me if I would like to learn how to install carpet. I was fortunate; he was a master craftsman and taught me so much of what I use today. I sincerely believe that flooring installation is a great career. It is all about organization, accountability, profitability, skill and above all, service, service, service! It is our chosen life's work. Just like all adventures, you must be excited, prepared and willing to be successful to reap the benefits of your endeavors. Napoleon Hill once wrote, "Life is like a checkerboard and the player opposite you is time. If you hesitate before moving or neglect to move promptly, your men will be wiped from the board by time. You are playing against a partner who will not tolerate indecision." This means every day, you hit the ground running! It's a race of success!
Always remember there are three things in life that are not replaceable: your health, your family you're your reputation! Take good care of these things.
You must be a leader to be successful. I recently read that your body language tells 55 percent of your feelings and attitudes to the other party. Only 7 percent of what you say will be heard. And, only 25 percent of those who read this will do something with the material. These are real facts.
The information that is presented in the next three issues of Floor Covering Installer is prepared to assist you on your road to success. CFI sincerely hopes that you will find something of importance that will make a difference for 2006. CFI cares about your success.
Communicate! Negotiate!Those who possess the ability or learn how to communicate, win. Communication is one of the greatest gifts. Most of what you will receive in life will be because of the negotiating skills you possess and use. You can learn how to be a better communicator.
LeadersLeaders do not make excuses. "If this," and "If that," and "But." What we hear is not an excuse or alibi, but folks who do not have the courage to find out what is wrong and take steps to correct it. This type of person should spend more time analyzing his or her weaknesses and less time building alibis to cover them.
Leaders are rarely, if ever, born. Circumstances and persistence are major components in the developmental process of any leader. The World Floor Covering Association sponsors the CFI Leadership Conference annually at Convention and each year, the attendance increases. Leaders succeed! CFI believes in you and your success.
InstallationInstallation is a service business - service is what you sell. To receive a price that is higher than your competition, you must provide service, service, service! Educate your dealers to sell your service. And, always be accountable for the service you sell.
Marketing Your CompanyHow do you sell your services? The best way to start an installation business is to partner with a dealer who is as concerned about quality, appearance and customer satisfaction as you are. Believe it or not, there are many who do not know where to find you. You will not be around very long if you work cheap. Cheap and quality are two very different words. Remove yourself from even considering doing business with a dealer if you are aware that the majority of the installers do inferior work. You cannot be successful.
CallbacksCallbacks are just another form of advertising. If the attitude is right when the callback is answered, you have a customer for life. Callbacks are going to happen; no one is perfect. Problems are usually the direct result of a breakdown in communication. Communicate! Communicate! This cannot be stressed enough. We all learn from our mistakes. We are in the people-pleasing business. Unless, recalls become the standard for your company, they must be looked at as a cost of doing business, an opportunity to "sell" the company again to a customer because you responded rapidly and enthusiastically to their "situation." Customers must be contacted in 24-48 hours and the work scheduled immediately to avoid the angry situations that build up when the problem is ignored. It will not go away. It is important to remember that when callbacks arise, new labor that becomes income producing is missed.
Factors that Affect Your Cost
- Quality of material to be used
- Degree of job difficulty
- Accessibility - elevator time, high, wide, narrow, steep, hand carry, etc.
- Productivity - Efficiency
- Size of job
- Code requirements
- Availability of materials
- Performance of your workforce
- Other trades
Profit and LossAccording to government statistics, the contracting workforce that includes flooring installation has the highest failure rates of any industry in the nation. In the first five years, 80 percent of all contractors go out of business. The reason: Most contractors start their business knowing a lot about their trade, but very little about numbers, profit and loss. A contractor must make between 35 and 40 percent gross profit in order to stay in business.
Many installers operate as independent business people and do not charge enough to meet the following requirements:
- Funds to operate the installation business
- Funds to pay the installation assistant
- Funds to receive a paycheck for the owner of the installation business
If work is not priced to meet all three requirements, there will never be enough money left for the owner-installer to meet personal expenses or to support a family in the manner that is deserved.
Far too many dealers use the least expensive independent contractors and cut their cost substantially. Bidding against an entity that uses this practice becomes difficult if one is not selling service, service, service. The price is generally so low that the independent contractors' only salvation is speed and inferior materials. Installing carpet quickly is one thing, but installing it too quickly means the work will definitely lack quality.
Gross Margin - Consider the facts:
- 10% decrease in price will cut the gross margin 20%
- 10% decrease in price at 35% gross margin requires more than an 81% increase in volume to make the same profit
- 10% increase in price allows a 34% decrease in volume before a loss of profit occurs
Your overhead costs will be more than expected when you do extra work to compensate for the gross profits lost because of price-cutting.
A Very Important FactIf you do not ask for it, you will not get it.
Obstacles to Success
- Not marking the job up enough for fear of losing it. Installation professionals must have a take-no-prisoners attitude and never reduce your markup for any reason.
- Do not attempt to do everything yourself - you will get burned out.
- Delegate responsibility.
- Do not be too overly optimistic about the job estimate. Ask for feedback from the crews of actual time and material to earn the necessary margins.
- Working for dealers with whom you cannot afford to do business!! Be selective! Work for companies that are searching for quality. Never work for a company that continually charges you back for problems that are beyond your control. Never work for a company that does not honestly communicate with you. Never work for a company that you do not trust or know of poor business practices - you will be treated unfairly!
- Poor customer service. Don't let it happen!
Going broke is not the game you want to play! In the end, the only people who really fail are those who do not try.
- Business is not a game of volume!!!!
- It is a game of margins. Work smarter.
- Are you running your business? Or is your business running you?
- 16 out of 17 businesses fail or go out of business in the first two years.
- The #1 cause of failure is unclear expectations.
EducationYou will never know it all! You must spend some time each year in updating or learning new skills. The World Floor Covering Association (WFCA) offers CFI a great opportunity to share in the benefits of their organization. By adding $200 to your CFI Membership, you are afforded an endless source of business information. You also have available $500 in educational funds. This is a substantial return on investment! This means you receive $500 to be applied to training or even to the CFI National Convention, August 10-13 in Dallas, TX. It is loaded with educational information and networking opportunities.
In conclusionInstallers have only two things to sell, time and talent. If either one is mistreated, the installer loses. No more effort is required to aim high in life, to demand a profitable life with prosperity, than is required to accept misery and poverty. One must always be proud of the work performed. Installers are like true artists, we paint a picture for all to see and turn around at the end of the day saying, "I did this! It is my signature! I love my work and I am proud!" I've always said that if there is ever a Tommy Hilfiger of seams, I will fight for my name to be on those seams. You should do the same.
"I bargained with life for a penny and life would pay no more, however, I begged at evening when I counted my scanty store. For life is just an employer, it gives you what you ask. But, once you have set the wages, then you must bear the task. I worked for a menial's hire, only to learn quite dismayed, that any wage I had asked of life, life would have willingly paid." - Napoleon Hill
Motivation determines what you do...Attitude determines how well you do it. Don't be cut short in life! Be willing to stand up and be counted. The New Year has started. Make those changes and locate those dealers to ensure that 2006 counts for you! Wishing you the best that life has to offer.