My Nephew the Plumber

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hardworkingstiff said:
Sure, it seems like blame is being put on the system electricians use vs. the perceived system the plumbers use. I'm just saying it's not the system.

If you can't get any work, maybe your overhead is too high, or you are not buying right, or ??? and you are not providing a market perceived value.

If you are working your tail off and not making enough money, maybe you are afraid to charge (or don't know how) properly.

I find I cannot make the money I want doing residential work. I quit doing it almost 30-years ago. In fact, I often do other type of work (non electrical), like fuel distribution, lube lines, tank installations.

A friend of mine (build docks) said "I like Lou's motto, 'I work for money' ".

If the economy gets as snug as I think it might, a lot of the 'fixed rate system' guys may lower their prices, or not be working. You need to be flexible. The bottom line is the market sets the upper limit of prices, but will allow you to work as cheaply as you are willing to go. The only way to know how high you can charge is to lose work because of price. If you can't make ends meet on the market ceiling price, then you might need a different market.

before any of this is answered, please tell me how I can lower my overhead as the market softens?

what areas can I really cut costs in?

thanks
 
every winter it is the same here all the trained monkeys that were hired to nail on boxes and drill holes and pull a wire through it get laid off and they think the can now be a contractor( no license required here).Most were only being paid 9-10 dollars an hour so they think charging 20 an hour is big bucks.Adding to the problem is all the new E.C.s who jumped into business in the spring are running out of work and have no money to carry them until spring.It is a race to the bottom.I am holding the line and I refuse to lower my prices work is still coming in and I am getting the price I need a little work at my price is better than alot of work and loosing money.
 
satcom said:
Intel, is in the service, installation market?

I think they are in the commodities market, not the labor services market, there is a lot of information on different business strategies in down markets, we have been thru 4 down cycles, one lasting more then 2 years, and most of the EC's that tried to adjust downward, during these times, dropped out of the business.

If you ajust downward without lowering your expenses, you lose money (or make less). If you estimate with a preconceived price, you will probably lose money.

If you lower your price to gain or maintain market share and you can afford the ride, you may be better off down the road (or not). It really depends on what you are trying to accomplish.

I am reading on these boards that a lot of people are blaming others for their inability to obtain work at the profit margin they expect. All I'm saying is that if you can't make it in the market you are in, you either need a new market, or maybe new marketing.
 
emahler said:
before any of this is answered, please tell me how I can lower my overhead as the market softens?

what areas can I really cut costs in?

thanks

If you have 6 trucks on the road and only enough steady work for 5 trucks, get rid of one of the trucks and the worst employees. It's harsh, but it's business.

Is your office support doing all they can do? If not, maybe you have too much support.

All I'm saying is the world is shrinking. The standard of living in the USA will continue to fall as we compete with the world. Yes, I know you can't outsource our services to a 3rd world country, but we are affected.
 
Rewire said:
....I am holding the line and I refuse to lower my prices work is still coming in and I am getting the price I need a little work at my price is better than alot of work and loosing money.

I agree with that statement. In the past, I've sat idle for 2 months waiting for work at my price. I can afford it because I can afford it.

Now, if I had 5 trucks on the road, I would not have that luxury.

Rewire, how long would you go idle before you lowered your price?
 
hardworkingstiff said:
If you have 6 trucks on the road and only enough steady work for 5 trucks, get rid of one of the trucks and the worst employees. It's harsh, but it's business.

Is your office support doing all they can do? If not, maybe you have too much support.

All I'm saying is the world is shrinking. The standard of living in the USA will continue to fall as we compete with the world. Yes, I know you can't outsource our services to a 3rd world country, but we are affected.

ok...so i sell my trucks and fire the employees...can I lower my mortgage/rent? maybe lower my advertising (isn't that a little counter productive?) How about my material? maybe I can beat them over the head a bit?

point is this...to run a company takes overhead...some overhead is inevitable, without it, it actually costs you money.

there are 2 basic premises to any system like we are discussing here...1- know your costs & 2- charge enough to cover those costs...

the hard reality is that any business has a mandatory amount of overhead. When the economy softens, those overhead costs do not change...what does change is the amount of work available.

we have a finite number of hours that we can sell in a given week. If you have 5 employees and need $500/man/day to cover your overhead...that's indisputable...if you can charge $100/hr, you only need to work 5 hrs a day to make the money...if you drop your price to $50/hr, you now need to work 10 hrs a day to make that money...but either way, you need to make that money.

like satcom said, many companies will raise their pricing when times are slow. This is because their billable hours may drop from 5 to 4, but they still need to make $500...

you can slash and burn to cut your overhead, but in the long run that's a losing proposition.

does that make any sense?
 
hardworkingstiff said:
I agree with that statement. In the past, I've sat idle for 2 months waiting for work at my price. I can afford it because I can afford it.

Now, if I had 5 trucks on the road, I would not have that luxury.

Rewire, how long would you go idle before you lowered your price?

why drop his price? he's better off spending more on marketing and advertising to bring in more calls and get more work at his price...
 
emahler said:
why drop his price? he's better off spending more on marketing and advertising to bring in more calls and get more work at his price...

If advertiseing were the real answer we would never have a slow down in the economy. This last Christmas all the retail stores increased their advertising and lowered prices but still didn't meet sales goals.

It's a sad fact but there is only so much pie to go around. Some companies will be able to increase advertising and get a bigger slice of the pie but for others it will just generate added overhead that drives them out of business a little sooner.

If we have the projected recession then there are a lot of companies that are going out of business no matter what they do. Some will make it because they increased advertising and were still able to get a return on their investment and others will make it because they were able to control overhead and ride the storm out.
 
Iwire sounds like a biz op to me for something like a full service mechanical operation. Call it Plumb-Bob :): All you need is mister Freeze to add to the equation. Then do initial construction jobs. The other two are helpers to the job at hand.

eg. when electrical is being performed roto-rooter and Mr. freeze are helpers. Got another young family member that does HVAC and can learn electrical to take over your half when trained as licensed sparky after you retire to reap profits from partial ownership
 
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BryanMD said:
What he said!

Advertising will help in a down market, target areas of work that pick-up in down markets, we made it thru down markets, but the average EC backs off, and is afraid to invest in expended advertising, and develop new niches, heck you have half of them know, convinced that word of mouth is a good method of gaining market share, so for them to invest in advertising and develop new areas, is just not going to happen.

During the last recession I watched some stores closing while others in the same business were opening additional outlets, and offering goods in demand.
 
hardworkingstiff said:
I agree with that statement. In the past, I've sat idle for 2 months waiting for work at my price. I can afford it because I can afford it.

Now, if I had 5 trucks on the road, I would not have that luxury.

Rewire, how long would you go idle before you lowered your price?
I don't do Idle.I use down time to look for work and re-establish contact with people I have done work for.I go see business owners and drop off cards I stop at construction sites and meet general contractors I look for the new market.
 
satcom said:
Advertising will help in a down market, target areas of work that pick-up in down markets, we made it thru down markets, but the average EC backs off, and is afraid to invest in expended advertising, and develop new niches, heck you have half of them now, convinced that word of mouth is a good method of gaining market share, so for them to invest in advertising and develop new areas, is just not going to happen.

Getting into new niches is a great point (for those capable of doing it).

Advertising is about increasing the size of your slice of the pie.
But it won't make the pie bigger.

Like in the "how to get a lead man" threads, the only way to get more of the work that does need doing (pie)... is take it away from some other contractor.

No matter how good your advertising may be (or how good your work is) advertising in and of itself won't create a NEED for the work to be done.

Or you can influence (upsell) people to do something they want (but don't need) and you can influence (upsell) people to improve what they have (but don't really need).
 
BryanMD said:
Getting into new niches is a great point (for those capable of doing it).

Advertising is about increasing the size of your slice of the pie.
But it won't make the pie bigger.

Like in the "how to get a lead man" threads, the only way to get more of the work that does need doing (pie)... is take it away from some other contractor.

No matter how good your advertising may be (or how good your work is) advertising in and of itself won't create a NEED for the work to be done.

Or you can influence (upsell) people to do something they want (but don't need) and you can influence (upsell) people to improve what they have (but don't really need).
It is not a limited pie,the work is not fixed at a certain amount you will always have new construction,remodels and service calls they will just vary in amount at times growth is in new cunstruction and at others in remodels the idea is to target the market that has growth or create a nich market.
 
Rewire said:
It is not a limited pie,the work is not fixed at a certain amount you will always have new construction,remodels and service calls they will just vary in amount at times...

Yes. But the size of the pie is objectively a given size at any given time.
And that size will objectively expand and contract at all times.

These last comments were following points about the concerns of an upcoming (current?) recession and a time of contracting pies.

When times are good there is room for less efficient management but when times turn bad is when you find out who actually can manage.

A few quotes of what I had with my coffee this morning:
"Manufacturers, construction companies, financial services all cut jobs in December -- casualties of the housing slump. Retailers also sliced jobs."

"The government added 31,000 jobs in December, while private employers actually cut payrolls by 13,000, underscoring the weakness."

"The big worry is that people will clamp down on their spending and businesses will put a lid on investment and hiring, throwing the economy into a tailspin"

http://www.baltimoresun.com/business/bal-econ0104,0,3766288.story



With all these references to pie I'm surprised Celtic hasn't popped in.
 
Rewire said:
I don't do Idle.I use down time to look for work and re-establish contact with people I have done work for.I go see business owners and drop off cards I stop at construction sites and meet general contractors I look for the new market.

I have contractors calling me telling me things are really slow, they are sitting waiting for the phone to ring, I started preparing for the down turn months ago, I added advertising, and increased the coverage area, shifted some of the work to maint type work, which i scheduled, months before the market reacted.
 
BryanMD said:
Yes. But the size of the pie is objectively a given size at any given time.
And that size will objectively expand and contract at all times.

These last comments were following points about the concerns of an upcoming (current?) recession and a time of contracting pies.

When times are good there is room for less efficient management but when times turn bad is when you find out who actually can manage.

A few quotes of what I had with my coffee this morning:
"Manufacturers, construction companies, financial services all cut jobs in December -- casualties of the housing slump. Retailers also sliced jobs."

"The government added 31,000 jobs in December, while private employers actually cut payrolls by 13,000, underscoring the weakness."

"The big worry is that people will clamp down on their spending and businesses will put a lid on investment and hiring, throwing the economy into a tailspin"

http://www.baltimoresun.com/business/bal-econ0104,0,3766288.story



With all these references to pie I'm surprised Celtic hasn't popped in.
The one thing I have seen throughout the years no matter the economy when people are sick they will they will sometimes put off going to the doctor or if the car is making a funny noise they will put off going to the mechanic but you let the lights go out and they will call an electrician.
 
Rewire said:
The one thing I have seen throughout the years no matter the economy when people are sick they will they will sometimes put off going to the doctor or if the car is making a funny noise they will put off going to the mechanic but you let the lights go out and they will call an electrician.

PERFECT example of the *need* I referred to earlier.

Your advertising didn't make that circuit fail.
Your advertising *might* get him to call you to fix it though.
(As opposed to the other 200? EC's in the YP when he looks for a name)
 
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