Your next big sale could just be your last! What was that? Don’t we all dream of a deal so big that it pays off our mortgage or funds our showroom? Of course we do…but don’t forget that old expression… `if something sounds or looks too good to be true, it usually is’.
I was once asked to prepare a proposal for a very large new home that was being built in a small, exclusive neighborhood where I was well known for installing innovative A/V systems. I really wanted this project, because it would have covered my overhead for the next two years, so I put my best foot forward and prepared the greatest proposal ever, which got me into the inner chamber of my potential client’s office. Once there, I was well received – but upon reviewing my terms, the potential client stated that he would rather give me a small deposit up-front, with-holding the lion-share of the monies until the job was completed.
Now, even though the job would have netted my company well over $100,000.00, I very politely told the potential client that as a small company, I couldn’t afford to comply with his terms. He responded `That’s the way I do business – and if you want the job, those are my terms.’ Well, let me tell you, the hardest thing I ever did was to say `no’ to this potential client – but I knew that regardless of how much I would be netting, I’d still have to front about 50% of the cost of the job (representing about $150,000.00). Then, if at the end of the job (which would have taken 1-2 years) I didn’t receive the entire balance, I could very well have been financially ruined. So, even though I would have had the job if I had agreed to the client’s terms, I politely declined and walked away from the job.
Would you like to know what happened to that job? Well, another custom installation company couldn’t wait to accept the client’s terms, and shortly after the house was completed, that custom company was forced to close their doors. As I understand it, the client never paid the balance, which was probably in excess of $ 200,000.00. It was a sad day for that company, and for all small businesses who succumb to the bait of a high-dollar system, only to end-up hanging on its hook.
In the meantime, everything in life is a lesson learned or a lesson waiting to be learned. You don’t have to be that fish that gets fried, or that company that becomes a statistic. Here are a few simple guidelines that I developed over the years (and which allowed me to stay in business for over 15 years):
Incorporate `leading’ and `qualifying’ questions into your initial pre-proposal meeting. Questions like `Have you been through the building process before?’, `Are you new to the area?’, `Have you had a home theater before?’, `Will you be incorporating the system into your mortgage?’ are all questions that can help you to create a `profile’ of your potential client. NOTE: Not all profiling is prejudicial. In this case, it is critical to make a few rudimentary `inquiries’ that will lead you to an informed and logical conclusion regarding your potential client’s ability and willingness to pay for your services BEFORE you commit yourself.
Pay attention to the demeanor of your potential clients. How do they treat members of their own family? How do they interact with strangers? How do they answer your questions? Do they show you respect? Be attentive to the way they present themselves and the specific language that they use to communicate simple ideas. Are their `visions’ literal or suggestive, definite or vague? If you’re dealing with a husband and wife, is one of them more interested in the system than the other? Do they show interest in what you have to say? Do they talk TO you or AT you?
Call or visit the builder, architect and interior designer BEFORE preparing your proposal. Remember that you’re looking for `unusual’ activities, `problem’ attitudes or `unrealistic’ expectations.
Act on the information you just gathered. For example, if the homeowners tell you that their previous `custom company’ never listened to them or were otherwise inattentive to their needs, PAY ATTENTION, because you could be walking into a no-win (or a no-please) situation. On the other hand, if the builder tells you that the homeowners have already spent their entire budget, you could already be in trouble unless your clients agree to pay you directly.
Force yourself to LISTEN twice as much as you speak, so that you might be able to determine if what a potential client `says’ matches who they appear to `be’. Keep your `investigation’ active until all avenues have been explored and until you are satisfied that your potential clients are honest, credible and solvent.
Incorporate an equitable payment plan into your proposal that allows you to continue doing business, while at the same time minimizing your clients’ `risk’. In my book, `Management in a Bottle’, I outline a 3-phase protocol that divides every system into three `phases’, while dividing the system payment structure into six parts. Before beginning any `phase’, a deposit equal to half of that particular phase is required, with the balance of that phase due upon completion of that phase. That way, no project is even begun without first receiving half of the retail amount of the particular phase, (which should provide most of the cost of your materials). Thereafter, no job would continue if you haven’t first received the balance of that particular phase. By following this protocol, you can take an active role in preventing your company from being `blindsided’ and taking a big (and potentially fatal) hit.
Of course, even if you follow all of these guidelines, there is always that `emotional’ element associated with the prospect of taking on a very large project (and/or representing famous or powerful people). It’s very hard to ignore those `dreams’ of profit, and the possible referrals you could realize, (especially if a prospective client feeds into those aspirations). Still, it’s critical to keep things in perspective. Although large jobs may get you into the Rob Report, they can be extremely problematic, very time-consuming and often net a lower percentage of profit than smaller jobs.
Food for thought: It’s usually easier to manage five `$60,000.00’ jobs, than it is to manage one $ 300,000.00 job. (It’s also usually more profitable.) Does that mean that you never want to do larger jobs? Of course not! But until time, experience and your own subconscious or `gut’ instincts help you to develop a nose for people and situations that aren’t quite what they should be – be very careful, and don’t allow yourself to be overwhelmed, intimidated or falsely impressed by the size of the job.
Just remember that if something sounds or looks too good to be true, check it out – and if it doesn’t feel right, consider walking away.