Hiring Your Next Competitor?

By: Dave Wright, Craftsman Republic®

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One of the most frustrating things in our business is that every helper we hire is a potential competitor. There is no barrier to prevent one of our employees from entering the marketplace. Often, he or she has been to trade school, has skills, and can teach us a few things, making us even more concerned.

Sometimes we may try to hold them back, hide facts that will make them better, not show them the business’ books, or leave some of the nasty details out of the work that is assigned, so that everything needed is not learned.

You Better Teach Them Well

Well, if you have done any of these things, I promise you, it has worked against you. If they leave you before they are ready and do not understand the business, they will cost you Customers and reputation. If you teach them correctly, they will compete from a level understanding of the business. If you keep feeding them information though planned training, they may just stay with you and help you to train others. Most of us compete in a small segment of our total trade, either by choice or coincidence. Teaching those who work for you is part of the tradition of the trades.

Competition is Forever and Yet Not

I have learned that competition will never go away, and the better they are, the better off you will be. That is not to say they can’t be too good. Shop them and learn from them. Some of us have trained many competitors and have had many competitors train us. Look for good ideas and best practices. Most of us need to be reminded of these.

Nothing is worse than going to see a Consumer and realizing that your competitor has bid the job at such a low price that he will not make money. You cannot explain the difference between his price and yours in any way. You might even end up feeling sorry for the Consumer and underpricing the job yourself. You may be tempted to take one of these jobs just to offset costs.

Don’t do it. Let your competition book themselves up, with low profit jobs. Don’t join the underprice club. Bad businessmen will not take over the business.

The true solution is to hire the best person you can find, train them, and train their replacement as well. Make sure they understand cash flows and business plans. You will know that you have done a great job if they do not want to leave. Once they understand the true effort and risks it takes to be in the contracting business, they will be slower to leave, and when they do, they will bid jobs just like you, and with any luck, they will knock someone worse off the market.

Your true enemy is a bad businessman in your area.

One of my friends had a worker tell him, after a year in business, that he had not made his hourly wage after going out on his own. He made more in wages doing less work at my friend’s shop. I told my friend he should never have let that happen. Either he did not teach him well, or did not work him well. By the way, he is still my friend.

Be sure and have them deliver a few big payments to your suppliers just to assure their orientation into the pain of the contracting world. Make sure and mention that for every hundred dollars you touch you only get to keep eight (or whatever the margin is) after deducting your pay. Remember to always tell them the net profit, not what you earned along with the profit, give them the real picture.

I was once horrified to drop off an insurance payment, that was almost late, on the way to a job. I worked for a large company, and looking at the huge check, more than a year’s pay for me, was staggering.

Keep in mind that all this work may be negated if you are taking them out on your yacht every other weekend, unless you can tell them that you inherited it. I also know several, not just one, Contractors who had to sell everything when short on cash, but could not sell the boat. Living on cramped quarters that represent a massive debt is more than painful. Both recovered and sold the boats. Cash flow management is king.

Craftsman Republic® does not care if you earn a Yacht. We want you to sign up and fill your schedule and the schedule of that damn trade school genius you hired.