Sprigg Lynn, principal officer for Washington, D.C.-based Universal Floors, said the most fundamental consideration is to always make sure you get paid. “Your money is your blood flow, so go out there and collect your money when you finish your job. Address any mistakes immediately and don’t let them add up, or you can’t collect.” Additionally, make sure you are charging enough. “You have to keep your profit margin up, or you will close your doors sooner or later.”
Lynn also stressed the importance of working with experienced people when confronting a complicated job. “Experience can be very expensive, but so is trial and error. You need to learn from the best person you can hire or work with for that job, even if you only break even. Once you’ve learned those skills, no one can take them away from you. The more you learn, the more you earn.”
He noted that learning to manage your people is an essential skill. “Not everyone is perfect for every job. Know your people’s talents and where to best put them, or it’s going to cost you.”
Finally, he said be sure to go in with a clear and well-written contract. “When writing your contract, don’t list everything you won’t do on the job. That could be the size of a phonebook. Rather, clearly communicate the basic facts of what you will perform on the job. Be organized, honest and fair in everything you do.”
Jamie Gilmore, president of Woburn, Mass.-based Pavilion Floors Inc., also thinks it is important to have documentation for every job. “Proper documentation of the project from proposal, plans and specs, field work orders and purchase orders to the all-important Field Change Order Slip properly filled out and signed will support your invoicing claim and profits, or if missing, cause your claim to fail.”
He also believes in the value of systems to help track and manage the business. “Systems should be in place for marketing and its subset of sales, human resources, planning, tracking, and financial controls. Planning can help to pre-empt potential problems. Tracking takes the temperature of the day-to-day business, and financial controls provide the fiscal discipline to not only be in business but stay in business for many years.”
Gilmore added that it is important to become involved with any trade groups that reflect the client base, in order to stay on top of any new developments in the industry. John Lessick, president of Apex Wood Floors near Chicago, also sees good business sense in joining trade groups.
“I would definitely recommend utilizing the National Wood Flooring Association as a member. The networking, vast information and training has been huge for our organization,” he said.
Lessick also recommends training your people, utilizing World Floor Covering Association scholarships, and to “be intentional with forming strategic partnerships with vendors to educate you on what their products can do.”
Dan Welch, president of Welch Tile & Marble and the National Tile Contractors Association, said that when joining a trade group, get involved in it. “You receive what you invest. Don’t join to pay the minimum annual fee; join to get educated.”
He added that it is essential to understand the reasons why you are going into business. “Decide that you are in this industry for the long haul. A quick buck is not something that I know exists in the tile industry. Do not take the low road, as this will always cost you in the end.”
Welch also said to build relationships with people, offer value over price, and never stop learning. “You must always strive to be the best at what you do. The business of being a tile contractor should be elevated, not brought to a commodity status.”
David Meberg, president and CEO of Consolidated Carpet, New York, said it is extremely important to always be aware of your true cost of labor. “This includes direct costs (labor, materials, supplies, freight) and indirect costs (taxes, insurance, overhead, warehousing). Each market is unique in its logistical requirements for delivery and installation. Study your market and maximize your efficiencies.”
Jane Walker of the International Certified Floor Covering Association (CFI) believes that one of the biggest pitfalls business owners face is not knowing the costs involved in running the business. “Most contractors start their business knowing a lot about their trade, but very little about numbers, profit and loss.”
New and experienced business owners can learn tips to increase the value of their business, work more productively and increase their earnings through special business seminars conducted each year at the CFI convention, Walker added.
One valuable metric taught at these events is your cost per hour of running the business. “Figure everything by time required to complete the task. How long to remove the existing flooring? How long to install transitions? How long to upholster the steps? Calculate the amount of supplies required to do the job. Determine a wage base for you and your assistant. Know all the costs associated with a business: the gasoline, the truck, tools, insurance, worker’s compensation, licenses, taxes, etc.,” she said.
Never skimp on customer service, Walker stressed. “To remain successful, you must continue to sell your services at a profit and always satisfy your clientele. If you satisfy your customers but fail to get a profit, you will soon be out of business. The secret of doing both lies in two words: service and accountability.”