Home improvement contractors continually must balance the ability to win bids with the ability to earn a profit. Commonly, other area home improvement contractors make the rounds, issuing insanely low bids that would sink your company to match, let alone undercut. Here are some strategies for winning those contract bids without sending your workers (and yourself) to the unemployment lines.
Submit Bids for Quality, Not the Lowest Cost
There are two kinds of customers: those willing to pay for quality work and those who will always go for the lowest bid. Don’t try to win the second type. According to Forbes.com, customers should be getting at least three bids on their proposed project. Focus on bidding for a quality job that includes extras and incidentals and accounts for quality materials, insured and bonded laborers, and up-to-code plans and building processes. Many general contractors report that the tighter a customer pinches pennies, the harder they are to work with. People who are willing to pay for quality work are often the same who understand things like delays in the permitting process, weather interruptions, supply snags, and other happenstances that tend to occur during significant home improvement projects.
Understand Your Competition’s Weaknesses
Where is your undercutting competition saving enough to bid so low? Perhaps they’re using subpar materials. They could be cheating their workers with low pay, a lack of worker’s comp, and other stingy practices. Often, they lack essential training. Find out what your competition is lacking and hammer those points home when proffering your bids. Most customers understand these principles and don’t want to risk hiring a contractor who cuts corners.
Don’t Go After Every Job
In the long run, profit margins are higher with larger jobs than with smaller ones. Many contractors find they earn more with a single major home renovation than they do on multiple smaller jobs. Bid on the major remodels, especially complete kitchen renovations, total bathroom overhauls, and new room additions. Steer clear of the half-day and one-day jobs that mean relocating your entire crew and all your equipment for a scant profit.
Offer Trustworthy Financing
Often, the one thing that sets you apart from your competitors is the ability to help your customers get financing. If your competitor requires them to go to the bank, apply for a tricky home equity loan, fill out scads of paperwork, and go through the whole home appraisal process, then they’re losing a lot of business before they can even win the bid. HFS Financial partners with home improvement contractors and general contractors to provide a hassle-free financing system for their customers. Partner with HFS Financial to start outperforming the competition consistently.
Sometimes, it’s not just about the bids you win, but the ones you don’t. Start focusing on higher-quality bids for bigger projects and better clients. Then incorporate these other strategies for a thriving business. The rest of the success will fall into place!