1 . Know Regional Job and Permit Growth
Phoenix, Washington DC, Orlando, and Texas saw an increase in jobs, while Chicago and Las Vegas have been shedding jobs. You definitely have to worry less in case you are in “Job Growth Areas” because jobs fuel home improvement spending. Following graph shows the states which are expected to perform well in April. This ratio takes care of employment forecasts, permits, and market size. This data is available at Metropolitan level. Since larger markets generally have more permits, we tried to neutralize that effect by dividing EP ratio by Market Size (S). Higher the ratio, the better the market.
2. Know Investor Activity in their Market
More than one-third of all sales are happening in the former bubble markets such as Phoenix, Orlando, Las Vegas, and Atlanta. This means that distressed properties are being bought and less debt is being put on these properties. This should reduce supply of existing properties and help prices within these regions.
3. Lag between Job Growth and New Construction Spending
Obviously, homeowners (who foreclosed their houses because of unemployment) will not buy a house as soon as they get a job. They will likely stay in a rental property until they save money for down payment, plus additional emergency savings. Based upon average US salary, this should take about 8 – 13 months depending upon whether spouse is working or not. Contractors should expect growth in their business 13 months after job market improves. Recent figures from census indicate 8.3% Unemployment rate in USA
4. Check Material Inflation
Most of the Wall Street is anticipating raw material inflation. On one hand, it is difficult to get any money out of homeowners’ pockets, and on the other hand, inflation has kept its wide mouth open. Higher cost of roofing material or paint material will definitely not let demand reach its potential. A local contractor must know what inflation risk his/her business is facing or he/she should work to find this out, as it could impact bottom line.
5. Check Tool Inflation
Material Inflation will have direct impact on the cost of tools, too. Specifically, according to estimates, power tools will see a price increase in near future. More the number of power tools you use, the more tool inflation risk you face. You will probably notice it at major stores selling tools over next one year.
6. Meet Deadlines
When there is huge supply and everyone has similar skills, the only way you can differentiate yourself is by providing high quality services. Not only this keeps the homeowner you have served loyal to you, but it also increases the chance of being referred to someone else. In addition, a small gift after you finish the job goes a long way in keeping your customers with you. In summary, finish on time, deliver quality, and give a small gift.
7. Provide Free Estimates
Well, let’s face it! Majority of the income is earned by doing actual job and not by providing estimates. Many local contractors reduce their chance of being hired by charging customers for estimates. It is a tricky area because you have to provide something for free and you have to be close to perfect.
8. Network with contractors in other trades
This can go a long way. A survey suggested that contractors got 20-25% of their jobs by networking with other contractors. You can imagine how this works. A plumbing contractor fixes a leaking tap and the homeowner asks for a reference from him for a roofer who can fix leaking roof. This happens all the time in the industry. One must expand his/her network and network with contractors from other trades as well.
9. Advertising
A recent survey showed that a lot more customers are looking for discounts before purchasing anything. Even if you are able to provide a small service discount, it may be a good idea to use mail advertising and put your offer in front of your potential customers. Many homeowners are not throwing those in garbage anymore. You can also add offers on your profile on Genie Bazaar.
10. Payment and Legal Terms
Especially for expensive jobs such as replacing roof of the entire house, it is possible to get delayed payment from the customer. Many contractors are using escrow services and partial advance payment for avoiding this delay. It may not be a bad idea to use escrow services for lengthy projects and get piece of mind and improved cash flow. Each day’s delay reduces cash flow for other functions of the business. E.g. One day’s delay in marketing dollars can cost you customers!
Liked the post? Share it with friends!
Genie Bazaar Team
Talk Contracts, Talk Genie!
Join GenieBazaar.com and market your local business for free.