Contractor Cuts
Join the ProStruct360 team on the Contractor Cuts podcast as we delve into the ins and outs of building and sustaining a thriving contracting business. Gain valuable insights and actionable tips from our experts who have successfully grown their own contracting company from the ground up.
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Contractor Cuts
Navigating Client Dynamics: Identifying Red Flags and Enhancing Partnerships
Our discussion centers on the complexities of identifying red flags and green flags during client interactions. We explore false red flags, the benefits of detailed clients, the importance of clear communication, and risks of improper client control.
• Differentiating between real and false red flags in client behavior
• Importance of mindset and situational awareness when engaging with clients
• Navigating false red flags: misconstrued client queries or demands
• Recognizing that detailed clients often reflect a serious interest in the project
• Understanding how deadline discussions can motivate or signal trouble
• The perils of allowing clients to control aspects of the project management
• A cautionary approach for negotiating without reasoning; knowing your worth
• Building healthy boundaries and clear expectations for successful relationships
If you're aiming to elevate your contracting business, understanding these dynamics is key to thriving in a competitive market.
Struggling to grow your contracting business? The Foundations Program is designed to help contractors break free from the chaos and build a business that runs smoothly. You’ll get a customized training program, 1-on-1 coaching, and access to a full paperwork database—including contracts and the Client Engagement Agreement. Join the Foundations Program today! 🚀
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Welcome to Contractor Cuts, where we cover the good, the bad and the ugly of growing a successful contracting company.
Speaker 2:Welcome back to Contractor Cuts. My name is Clark Turner.
Speaker 1:And I'm James McConnell. Good job, thanks. Thanks for listening this week. All I could keep hearing was and we're back, and we're back, we're back.
Speaker 2:All I could keep hearing was and we're back, and we're back, and we're back. Today we're talking red flags versus green flags. Navigating clients with purpose Such a great title. I wrote it myself so good.
Speaker 2:So today we are listing out, so backing up, when we are talking about clients, how to navigate them, and something that we talk about often when coaching other contractors is we often see false red flags. We see things that clients do and like oh, I'm out, I don't want to work with this person. And you almost get this and I've seen this with project managers internally in our company this negative mindset before we even started that this person is going to be an absolute Karen. I don't like, I don't know, I'm not familiar with the term. Okay, karen, someone similar to the way you act on the norm, right so, but you get this sour attitude about these customers because they're doing certain things that are potential red flags, and it changes the whole attitude and the mindset of the job.
Speaker 2:And so what we want to do is identify a what is actually a red flag, and when am I? If it's a red flag, let's either lay it out up front or say no to the customer, like we don't need this job. I'd rather not take a job than take a job and lose on it. And also, what are the green flags? And we're also going to talk today about false green flags, right? What? What sounds? And we're also going to talk today about false green flags, right? What sounds like? Oh, that's awesome, perfect client. And then all of a sudden, because that flag was being raised, it actually should have been identified as a red flag. So that's a little confusing, but just follow our conversation today on it and I think there's a distinction.
Speaker 1:You kind of went into this, but it's like a red flag and a green flag, A red flag and a green flag. We don't. It's kind of taken out of context when we use it, because red flag, green flag, doesn't mean that there's not questions that need to be asked and things that need to be delved into. It's just hey, this is a red flag because my history says that this creates problems, Yep, and that's all it is. Yeah, and that's all it is. And so you know cutting, you know throwing the baby out of the bath water. It's, you're gonna, you're gonna lose out on some great opportunities because it's requiring more of you and calling you out, Yep.
Speaker 2:Well, and we've talked about the client engagement agreement that if you're in the coaching program you get a copy of and we walk you through making it your own. In the client engagement agreement we have listed out every expectation they should have of us and what we have from them. And that came from the red flags. We saw whether it was before or during, like hey, it seems like customers keep tripping us up on this one thing. So let's write out the expectation ahead of time and talk about before we even start. Yeah, right, so that allows you to kind of ignore some false red flags because hey, I'm going to cover that stuff, I'm going to handle this before we even get started. And it also allows you as a company to say yes to more clients.
Speaker 2:If I can handle the most difficult client, that that had a lot of questions, a lot of a lot of things, that a lot of requirements, if I can handle them, then I can handle anybody. And most contractors don't want that client For me. I'm like I want them because no one else is going to take them. And we can handle it with the processes and the ways that we handle our jobs and our and do what we say we're going to do that client's not going to be a problem for us. So let's talk through some false red flags for us.
Speaker 2:So let's talk through some false red flags, things that most contractors see and like oh this is scary, I don't want to be with this client. First one that actually I think you came up with a client that asks a lot of questions. That is, I give them hey, this is the estimate, here's what's going on. I kind of talk them through it, and then they come back with an email the next day that's three pages long with what about this and how about this? And did you account for this and did you do this? Why would you say that's a false red flag as opposed to this person's going to be a problem?
Speaker 1:I think that's a false red flag, because it's not a bad thing to have a client that is a detail oriented person. There's a lot more heavy lifting on the front end. Um, and that's honestly it's like accountability for you and I think we we run away from it because because of the accountability it's like, oh, this person is going to be on my butt, they're going to be crossing all my T's, dotting all my eyes.
Speaker 1:And I don't work that way and to a certain degree, it's like you know you can get to a point, but this is more of like a theoretical discussion of why is that a red flag for you? Well, I don't want to have to answer all those questions. Well, maybe you need to look at your process, like what are? Why do they have so many questions? And if two of their pages of questions are clearly listed in your scope, okay, doesn't mean it's dead. Have that conversation. Maybe they've never done this before. Maybe they don't even know. Maybe they didn't read the scope because they don't think that that's how it's supposed to go.
Speaker 1:I don't know, that would be silly, but I'm just trying to give an example that it might be cleared up by hey, all of that is in the scope, oh, okay, I'm sorry. Like I was just looking at the bottom line price. You're right, I should have blah, blah, blah. I've got all this stuff going on. Okay, it was like a one-time thing. If that's a consistent thing, that every email you send is responded to with a list of questions that you've already answered or that are clearly listed in the scope of work or the contract that you guys have signed and gone through, then you know that might be an issue, but it's not. Oh, we need to just, uh, we need to just probably plan for this job to go sideways, because they ask a lot of questions.
Speaker 2:Well, and asking a lot of questions means you're probably doing a poor job at answering questions before it hits their client right. So most contractors are flying by the seat of their pants figuring it out. I've done this for 10 years. I've done this for 20 years, so just trust me, it's going to work out.
Speaker 1:Here's a good example you haven't explained. Hey, this part of the estimation process is high level, so explained, hey, this part of the estimation process is high level, so I'm not going to give you this. Is the square footage of a tile that we're looking at. The way it's broken out is doing your backsplash and doing your bathroom floor. I'm doing the tile surround in the primary bathroom, doing the tiles around this, and it's all these numbers. I don't have square footages for all of those, I'm just looking at pictures. I have general ideas, but maybe part of your process isn't putting those numbers in. That's fine If the client knows that, but if their questions are, what's the square footage? This is the grout I want to use.
Speaker 2:Which tile do I have to get? Yeah?
Speaker 1:Do you guys have a catalog? Here's a hard ones that I want Great, that I want great. You haven't told them your process and they are now trying to drive the car and that's the problem yeah, well, it's.
Speaker 2:If you are an unregulated with not a lot of the process is just kind of in my brain how I do things, and you can't explain it. You can't lay out what's going to be coming, what's what's to be expected. Some customers are fine with that because that's how their brain works too. They're like okay, just well. Well, I'm fine with that because that's how their brain works too. They're like okay, just well. I'm fine with having an incomplete circle in my brain on this, because I can just put it on the shelf and pull it out when we talk again Until we get started. Now, other customers I have to have a total understanding before I can even make the next step towards working together. And those are the ones that feel like the this person is going to be a problem, but it's because I haven't communicated most of the time, it's because I didn't give them the right information. I haven't laid out what's next. I've sent them an estimate saying, hey, here's the estimate. I didn't say what's happening next. What, like you said, the, the estimating process is a whittling down to get to the final number where we have a solid quote at the end of this. Today is not that day Today you're not going to have that finalized number. I'm trying to grasp everything and if they understand that then they're usually pretty cool with that, as opposed to asking all these questions about paint color and my brother-in-law says I should use eggshell, but I'm thinking satin. That's not first estimate conversation and let me explain when we cover that stuff and if they have an expectation of when we're going to answer those questions, then they're fine with it. It's more like well, I know all of these things have to be answered before we go forward, so I'm just going to keep asking and keep pepper spraying you with everything that comes into my head. So I think that's it.
Speaker 2:I think going into the second false red flag, which is similar to this, is high detail requirements and that's kind of going into what we're talking about of this phase of my estimate. We do three estimates the desk estimate, the onsite revisions and then the finalized. There might be four or five depending on the size of the project. But explaining to them what the purpose of each estimating phase is what we're going to be doing when the additional detail comes in. Let's talk about a designer. Do you have one? You know there's a heavy level of design and you don't want me picking out your paint colors, that whole conversation. But when someone's coming in requiring high detail of you, it's a huge positive for me, because for me I want every bit of detail on this estimate laid out.
Speaker 2:When people don't care about the details, that's actually the red flag. When they're like, hey, here's an estimate, I give them an estimate, they look at the bottom dollar on it and they say, great, that sounds good. They're assuming everything that we talked about on site is on that estimate. It's a false green flag. It's a false green flag. We'll talk about that next. But but when someone, when I give them an estimate, and says, hey, right here, I don't understand. You said paint main floor, does that include the walls and ceiling and trim, or is that just walls, or is that just the floor? Is that just the main floor? But but again, I want that detail on my estimate. If I'm not putting it in there, I love that they're catching that stuff because I want to make sure their expectations of what we're doing is exactly what we're doing and the cool thing you know, promoting the software.
Speaker 1:If I could please, um, if you have these templates, you can pre-put all that stuff in there and do tbd. So my full interior paint line is color, tbd, sheen, tbd, accurate square footage, tbd, details, tbd. What are we doing? Do you have dental molding? Do you have judges paneling?
Speaker 2:promar 200 is a standard or whatever paint level that you're going to use, so it's already on there.
Speaker 1:So hey, uh, in your paint line item it says quarter round, but we don't have quarter round. Like those are little details that are going to you need to be careful of if you're putting it in your quote. It's part of your pre-built line items but, like, those are little details that are going to you need to be careful of. If you're putting it in your quote, it's part of your pre-built line items but, like, those are the types of details that you can get ahead of. Yeah, once you have these pre-built line items and you can go through, okay, we're not doing quarter round, you take that out where, if you're typing it up in excel, it's going to take you three hours to put that level detail.
Speaker 2:if you're using the the job templates in prostruct, five minutes. You got it built and then I'm going to edit for 10 minutes and it's good to go. Yeah. So I think that's right on. It's not difficult to get that level of detail. You just got to be proactive in making sure that your lines are built the way, your presets are built the way you want them to where. Then I can almost answer what I've loved that you've done with your presets not to rabbit trail on this, but go ahead. What you've done that you're really good at and I'm proud of you oh wow, is you build out? Delete all caps on the top. Delete and questions for your project manager that's going to go on site Cause you're not going on site.
Speaker 2:You're building the desk estimate, talking with the customer and then sending it to your project manager to go on site to refine the estimate. You put questions on there for the PM to find out. So, even though it's in writing on the estimate, these are unanswered questions. Look at this. Check on this. Is this a load-bearing wall? Do we need this?
Speaker 2:Put those questions pre-filled in your line items to, even if I miss it and I'm sitting with my customers. They're like, hey, what's this question on the quote? Oh, that's something. That's where a variable on the pricing is. We don't know if that's load bearing till we open the wall up. I don't think it is. Let me explain why. But I want to keep that on here because that might be a change order if we open up that wall. It helps understand all those details that are just let's go ahead and put that on the quote. So I think you can use those line items and descriptions to give that detail that you can edit as you're building your estimate. All right, another false red flag deadline goals. For me, that's a false red flag because when I hear someone say, hey, I got to get this done by April 1st, um, well, that's actually what was on your list. What do you? Why is that a false red flag for you? Let me hear your side of it.
Speaker 1:I like when people have goals, uh, it's. When there's not a, uh, we're well, we're good. Whenever just you know, uh know, let's just get it started. It's kind of this amorphous blob that you can't really work back from. And for me, I'm already. I'm always going to think, I'm going to work this forward and then find the date when somebody can give me a date doesn't change how I'm going to approach it. I'm still going to to go great, I love having a date. Let me see if that works.
Speaker 1:It's probably going to take me a couple of weeks to actually map out if that's realistic, because I'm not just going to sit down and say, yeah, my guy can do that then, and then right after that someone will do this. I need to know when my sheetrock guy is going to be available. I'm not just going to speak for him, I'm actually going to. Unless that's a guy that's on your payroll, then great, they'll know when he's available. None of my guys are on payroll, so I'm looking at him saying we have to connect with all of these people to see what their calendar looks like. And if it's not going to be, if it's not going to fit, then I might need to find somebody else. But I don't want to just be. I don't want to be beholden to the timeline so that I have to work with random people that I don't know.
Speaker 2:Well, I also think that why it's a false flag and why it's almost a green flag for us is one of the big values that we bring as contractors is game planning, and we bring a Gantt chart before the job starts, and so James is filling out with the exactly what trade is going to be in the house on what day. So it might be an eight-month project and I can say hey, just so you know, our estimated completion date is August 13th and the customer's like whoa, that's a very specific date. So yeah, I mean it's not going to end there. It might come up a couple of days, it might go back a couple of days, we're going to have change orders, we might have stuff that comes off the quote, things that will affect it, but right now, if everything runs smoothly, august 13th is the day that I plan on being done with this job, right, and so us planning that out allows a customer to see OK, this is everything, and also can say listen, let me show you what happens if my sheetrock goes over two days. Yes, because if that happens, then this happens and this happens. Going over two days on sheetrock might end up pushing us a week and a half. And let me show you how that happens. Let me explain that to you. So if August 18th eight months out is going to be a drop dead date for you, we have zero variables. That can happen on this job and still hit that date. So let's talk about timeline.
Speaker 2:Maybe we chopped it. You just did this with the client last week. This job that you have we can't get done by then. What if we chop it into two jobs? We have the front-end job will be done. You can have your graduation party, you can have your house back because this part will be completed, and then the second phase two will happen and we'll start after that party. But I feel comfortable committing to this front-end being done by April 1st for you. But it's going to cost some extra money because I have to have my painters out there twice instead of once. But again, it's not going to be big huge change orders. But let's break this into two jobs and see what that looks like for you.
Speaker 1:And here's like the really positive side. Someone that has a date in mind is really motivated. That's a very hot lead up there. They are going to get this job done, hopefully by this date, by somebody. They're not kicking tires. They've got the money ready to go. They want, they want to get this project done. That's positive, that's great. I want a. I want a motivated person that when I'm like, great, we can slot that in here, but we need a lot of decisions made, great, we're on board. They like that too.
Speaker 1:So it's a good if you're able to back it up and you actually put thoughtful consideration into your timelines. You don't need to be afraid of that conversation. They love if you come back with them and say sorry. You come back with them and say, hey, your April timeline for me is not going to work. I've got this stuff going on. I'm not just going to bring random people out to your job site.
Speaker 1:So if it's going to be me, the best timeline I can give you is going to be the August or whatever. And that kind of builds credibility for you as a contractor when they're like, oh, this guy actually thought through it. He's not telling me what I want to hear, he's telling me what is possible. But, like you said, I always clarify that with them, not in so many words, but this is what I. I'm not fluffing this for you. This is what I think is a reasonable timeline, but the changes that happen throughout the course of a construction project are always cascading, because the sheetrock guy can't get done, which means the painter can't come in, which means we can't do the flooring which means we can't trim everything out at the same time, so everything moves back.
Speaker 1:And then if one guy has something ahead of that schedule, that might push us even further, especially if he's already done work. I can't just bring this other person in to fix it to do his job Like, especially if it's a trade like electrician, plumber or HVAC. Yeah, we can't split that up, that's a big no-no.
Speaker 2:Once you start, you got to finish with the same guy usually. So I think that also we have another false red flag, but I think that goes into one of the true red flags we should talk about. Which is a real red flag, along with deadline goals, is unmovable deadlines, which is also like requirements that can allow variables. So one of the real red flags is for us when there is an unmovable deadline. This addition has to be done by October 1st, because I'm being induced into having a baby October 2nd and I look at my and I said there's no way we could like maybe, maybe I can get it done by October 1st. Well, let's go ahead and get it done. We're easy. Yeah, that's I'm sure. If you got to clean up once a baby, we can just take a week and then y'all can come back and get it. If we could at least.
Speaker 2:That is a huge red flag for me, along with the requirements that can't allow variables. So a good example of that is an investor that you're working with and they say hey, listen, this bid that you gave me is $100,000 to do everything we need to do. That's great, I've got. I'm too far into this house already, but you're the cheapest out of everybody which is already a flag. You're the cheapest out of everybody, but $100,000 gets all this done. I'm happy, but just so you know, I'm making about $5,000 on this flip because I messed up financially.
Speaker 1:Made some bad decisions and I'd like you to cover them.
Speaker 2:I've got, like that's exactly what it is. I can't go a dollar over 100 grand on this. I won't recover from this financially, financially. But when they're like I've got 10 grand, I'm making on this flip, 100 grand is going to you getting it done, but I need to get out of this house. For me that's a flag saying there's no variables here to where.
Speaker 2:If you were making 80 grand on this flip, then if termites show up and we have to spend extra money on doing some stuff, you've got the buffer in there for it. If there's no buffer, if you're doing a loan, like a VA loan, and there's not a single dollar out of your pocket, you can put into this and that loan is maxed out at a certain number and we've spent that entire budget and you can't get your budget lower than that. And we've spent that entire budget and you can't get your budget lower than that. Like if the VA loan is $100,000, I want to be at $85,000 to $90,000 on my bid. So I've got some buffer, some extra space, some cushion for change orders, for whatever comes up. But if we're maxed out on your total budget and there's no additional moving room, that's a recipe for disaster. I open a wall up, there's termites in the wall.
Speaker 1:Who's paying for this now? Yeah, because I'm halfway through the job and I'm committed at this time. You've put us in a position to where or we've both put us in this position because you asked me to do it and I've agreed. Yeah, but I have to be perfect and nothing out of my control can go awry. Yep, yeah, for this to be successful for you and and if anything does go wrong, you're not going to use me again and you're going to be a pain in my side for the entire project, because your money, your livelihood is attached to me executing something that's not going to be executed.
Speaker 2:I think using those during your client engagement agreement meetings, the two things like if we, if something were to go wrong here, I care more about quality and giving you good product than hitting a timeline. And so if I've got to pull guys for a week to fix something that I didn't like in the job, and we go a week over, two weeks over, three weeks over, something crazy happens we get a stop order from the city. What's that going to affect?
Speaker 1:for you.
Speaker 2:Well, I can't like. I need to know if we go over. I'm not budgeting for that, I'm not helping for that, but I need to know is that going to affect anything for you? Number two if we open up the wall and there's termites, if we get into the and the city requires something additional that's going to cost 10 grand extra, what are we going to do in the job Like, is that doable? Is there space for that? I'm hoping for no change orders. My goal is zero change orders on a job, but I don't know the unforeseen stuff that could happen.
Speaker 1:This is. This is probably kind of a rabbit trail, but they're used to it. I'm not going to use the name, cause it's like an organization, but like there's an organization that we used to get a lot of leads from, not because we were marketing towards them, but because it was just, uh, we just ended up getting a lot of these leads. They would always ask me um, if you, if you finish, can we set up some type of thing to where, if you finish beyond your deadline, that you pay me per whatever, like we're paying them if we go over time? Yeah, and I had.
Speaker 1:I've used this conversation several times since then because and it's been mostly well received and understood I've never worked with those people, though, because they'll find people that agree to it, yeah, but I say I understand you wanting me to be financially invested in the timeline, but I already am financially invested in the timeline. If I can finish this quicker, I'm going to make more money. If it takes me longer, I'm going to lose money. So you, at the end of this, have an asset that you can sell. So your, your investment is is a gamble. It's a risk by its nature. Mine is not, nor will I ever allow it to be, because I'm going to make sure that we're we're going to make our money, cause it's a service this isn't. We're not. If you want to cut me in on the percentage of that job, of like what you get at the end, let's talk about that, but I'm not going to put my money up against the timeline that I actually don't have full control over.
Speaker 2:That's silly. My line on it of if you're hiring Clark to put paint on the wall, then I can guarantee that You're hiring Clark to bring in the paint crew that I know that I've used that is great. That will show up and put paint on the wall. If something happens to my paint crew on the way there and they get a flat tire, they get pulled over and someone gets arrested, something happens, the paint police, the paint police show up. I can't control that, and so if I have to hit your timeline, you want me to go to Home Depot and pick up a crew off the side of the road, or do you want me to wait a week to get that crew back out there to make sure we do a really good job? Do you care about quality or hitting the timeline? Because if you don't care about quality, that's fine.
Speaker 2:I'm going to put that in writing, that you don't. I'm going to use the guy from Home Depot parking lot to paint this house because I have to get it done this week, and so for me, I would rather take an extra second to get the right crew out there, or I see someone doing something they shouldn't. I'm going to pull them out and replace them. That's going to take some time. But like you were saying in the beginning, james, I don't get paid more for being here for three weeks longer, unless you want to pay me daily and we go to that type of rate. Then we can talk about going beyond. But I have two more jobs. I've got to start right when this is done and if I'm still here I'm hurting financially because I'm not starting the next and I can't invoice you any more for being here. So I am being penalized going over the timeline financially strongly.
Speaker 2:And my other question is if I finish a week early, are you going to pay me a bonus? That doesn't seem fair either. Yeah, because if you want to do that, then my timeline is now, instead of eight months, it's going to be 12 months.
Speaker 1:Yeah, and you're going to be asking me now to fluff my numbers, everything so every conversation I have with you now is going to have this secret, unspoken context of I'm fluffing this as much as I reasonably can because I don't want to be on the hook for money.
Speaker 2:Yeah, I need three weeks to paint this bathroom.
Speaker 1:That seems excessive. Well, we have a weird agreement.
Speaker 2:Yeah All right the other, the other false red flag that we wrote down is longer dating period to check you out. Um, when you're with a new client and you've got the first engagement, they start checking you out. They want to look, they want to come and do, they want to references. That, all that, all that's normal. I want references, I want to sit down, I want to understand, I want to look at your Facebook, I want to look at your Instagram and what you know.
Speaker 1:Check you out, make sure you're good and side note, those people are the people that are probably going to review you without you asking yeah, that's true. Which is like great, like how you have to like track down people like, hey, we just finished, you were super happy, can you give us a review? Hey, three weeks later, just checking in, I hope everything's good, you might give us a review, yep. But the people that are asking I want to talk with references, I want to see some pictures. I value reviews.
Speaker 2:I value that I'm going to give a review, yeah. But a lot of times it's like, oh, this person will never commit. They just keep dragging their feet. I've seen guys internally the more that they get that resistance, the more that they're putting that customer on a back burner and I'm like, no, this is them, this is how we land them, this is the time to go. Just because they want to do due diligence on you, doesn't it is almost more of proof that they're going to use you as opposed to a challenge to get started with them and so double down on that. But then it also goes into one of our negatives, which is, you know, if they drag their feet too long, like I'm going to call it out, I'm going to say to them and sit down with the customer. But hey, listen, absolutely. If you want to come walk another job site with me and talk to another customer, we can do that. I feel like there's an unanswered question in your head. Help me understand that, because I want to get those questions answered.
Speaker 1:What makes you nervous to to to move forward with us? Did you read a review?
Speaker 2:that you didn't like. Can I shed light on that review? Yes, and so instead of allowing them to hunt for three weeks to figure out the answer to what the questions in their head call them out on it and bring it up and say, listen, I'm not scared of the hard conversation, like I've had a negative review and I'll talk about it and I'll tell you exactly what I did wrong and what the customer did wrong, like that's what this client engagement agreement came from is I made mistakes on that job and I'll tell you what I've learned from that. I can't promise you I'm not going to make mistakes. What I can promise you is that I'm going to be here until the mistakes are fixed.
Speaker 1:Actually, I can promise you I'm going to make mistakes. The question is can I fix it quick enough before you know there's a mistake?
Speaker 2:Yeah, or I'm going to stand behind it. You call me and something messed up. I'm going to be out here and I'm going to be out here every single day until it gets right. So a lot of times when they're dragging their feet, it's that, it's. You know, I read that they screwed this client. I want to talk to people. I really like their quote.
Speaker 2:I really like the guys I'm working with, but this is really one-star reviews stuck in my. Let's talk about it. Put it on the table. So again, that's not a red flag to me. To me it's. I understand you've probably been burnt by a contractor. The experience that you had 10 years ago doing your basement. You were ready to pick us. You read a review and it's confirmed. The experience you had last time with another GC is going to happen again this time and that's your concern. So let's talk about it. Let me. Let me walk you through it. Um, true red flags. For us, those are all kind of the false ones. True red flags. The third time I have to explain something, the same thing, to a customer, when I have to say the same conversation for a third time to me, it's like, oh no, this person isn't listening, this person doesn't have reason. They are just trying to get something from me. Right? We can go through probably a long list of customers that we can identify that we've worked with.
Speaker 1:That'll be fun. Let's do it, let's do it. We'll send this to them. Let's do it, let's do it.
Speaker 2:We'll send this to them, but going through and saying, yes, I understand that you don't want to pay that extra money, but that wasn't part of the original quote. So if you want to move forward with us, we need to add the $2,000 onto this quote, because I didn't realize you wanted X, y and Z Okay, great. And then I talked to them again but can we just not pay this? Like that was kind of what we talked about. Well, remember, we talked about a second time. I'm saying, if they ask a third time about that line item, I don't want to work with that person because they're not reasonable, they don't understand that, they're not listening, they have an agenda, and so for me that's a red flag If I'm saying something for the third time to them. Another true red flag for us is negotiating the price without reasoning. Speak on that one, because that was one that you had brought up.
Speaker 1:All right, well let's role play it. Okay, great, so we just left contract. Wait, who am I? You're the client.
Speaker 2:Female or male? No, you're me, I'm James. Yes, you're me. Hey guys, great, great, hey. Hey how.
Speaker 1:Great, great, hey. Hey, how's it going? And I'll be the client, okay, okay, we just here's the context. We just finished our CEA. Okay, I signed the contract.
Speaker 2:Yes, we're ready to go, james, I'm excited getting started with you. No, no, no, you're me Okay to go, james, I'm excited getting started with you, you're me Okay. What's your client name? Peter? No, chim. Chim Richards. Chim Richards. Yeah, chim, I'm excited you came and did this meeting with us. I think your kitchen's going to be beautiful. I'm excited to get started with you.
Speaker 1:You have amazing eyes.
Speaker 2:Thank you. I'm a little short for my age, but you seem tall. You seem tall of heart, I'm not. I'm not. This is fun being you, all right. So, jim, yes, any other questions before we get rolling?
Speaker 1:Yes, would you take 10% off of your total?
Speaker 2:I can't. What line item are you talking about? What part?
Speaker 1:I just feel as though this is a good size project. It's going to be a beautiful finish, some type of crown jewel for your company. I think it might be the largest job you guys have ever done, so I feel like it would be a good show of partnership to give me 10% off.
Speaker 2:Well, jim, if I had 10% to just chop off of this job, I'd be ripping you off sitting here with what we just signed. So I don't have that type of margin in my numbers. I can't just chop dollars off, because every dollar that I have on here is already is already spent to what I need to make the product that me and you discussed a reality. Yeah, so five percent, are we doing this? Yeah, I think that's it. I mean, it's the when people don't have a reason for lowering your dollar. That's a real conversation. That's a real conversation. What he just had is a customer that we won't name, but we both laughed about when we brought the name, because that's literally. He signed the document and immediately asked for 10 percent off a six figure job. What?
Speaker 1:Yeah, there's nothing.
Speaker 2:I think part of that to negotiating price without reason is like hey, you know, I got another guy, I'll do that paint for two thousand dollars. Ok, yeah, I'm at four. And this is like how do you get there? You know, I don't mind you trying to push back on dollars when you know a great example of not a red flag negotiating prices. Hey, clark, I'm looking at the estimate. It looks like the flooring budget that you have is $10 a square foot and I did these hardwoods probably eight years ago and it was like $5 square foot. Is there a? Why is it so much higher? Like, tell me, help me understand the variance.
Speaker 2:If a customer comes at me like that, I can explain the per square footage pricing, how we came up with it, what's included in it, how many square feet they have, how we're budgeting for that. That's fine. And if we want to talk per square footage, we want to lower the quality of the material we're using. You don't want to do this. Let's go to LVP instead of wood. We can have those conversations. But when it's just a hey, can you knock five grand off? Hey, can you do this? This price seems high. Oh, interesting, I thought it seemed low. Well, that's not what.
Speaker 2:I think, Wow, so that's again. That's one of our red flags negotiating price without reason, without unforeseen. When I give a round number and they start negotiating that before I've been on site. This is this podcast. Is the false green flags, Things that guys see as red flat or as green flags like oh, this client's going to be great, but actually you should. You should have a little more caution when entering when this stuff's happening. So when a customer doesn't care about the details, right, you give them a quote. They look at it like, hey, looks good, Can y'all get rolling? For me, or for the average contractor, it's like heck, yeah, we're ready to go, yeah.
Speaker 1:Money's not a problem. This looks fine, let's go.
Speaker 2:Just get it done. Yeah, front end, that's a problem because they don't know what exactly they're. They're guaranteed that we're doing. I might've walked the job with you and we walked it as our customer and I'm like I'm taking notes, writing things down, and you're like, hey, also, I need a new roof. And then we keep talking.
Speaker 2:I forgot to write that down. I didn't know that you needed a new roof. I missed it when you said it. I give you a quote back. You don't read the quote, you don't. You're not into the details, you're not caring about it. You just see the bottom dollar in your head.
Speaker 2:We're doing a roof because we talked about it In my head. I didn't put it on the quote. We're not budgeting for it and it's not there. So you're not getting a roof. But because you as a customer are ready to just sign it and go and let's go. That price looks good.
Speaker 2:We talked through what we talked about. I need you as a customer to dive into the details of this quote and it's not on here. You're not getting it. So for me, I'm pumping the brakes. When someone's ready to go that fast and also with change orders, money's not a problem. Just get it done Kind of. You said that on the front, but I think that also happens a lot mid job of like, hey, the tile you selected wasn't there. What if we do this? Also? I was thinking about doing this yeah, that's fine, just get it done. Well, I want to tell you you got a $5,000 change order, but you're not even. That's fine, just get it done. Contractors get stuck in that all the time and there's miscommunication about who's paying what at the end of the show.
Speaker 1:We'll get it figured out.
Speaker 2:Yeah, we're not going to get it figured out later, we're going to figure it out today, before we move forward with anything. And so my job as a contractor is to not just take the blank check that he's given me, because nobody is going to sign that blank check. They're making you think just get it done, but at the end of the job you're not getting paid for that stuff. So you need to have caution when they're just blank checking you on stuff like that. Another false green flag is when customers start building themselves up as easy, I'm easy man, it's easy to work with me, I'm cool, I'm good, everyone's like cool. This person's going to be easy. If you're going to be easy, don't tell me, show me Right. I mean that's that's kind of a standard one. Yeah, I prefer.
Speaker 1:I and this isn't just lip service I really really like when somebody is like I'm picky, yeah, I'm picky, yeah, because then I can say, great, what are you picky on? Let's we're in your home. What looks good, what looks bad? Because if you, the sheetrock in here looks pretty darn good, I don't really see any issues. And if they're like, yeah, this looks good to me too Great, that's what I have. You pretty much budgeted for this level of sheetrock. If they're getting up against the sheetrock, there's a little divot and there's a little divot. Uh, down here I see some no, pops no pops, this one looks.
Speaker 1:You know this, I can kind of see a wave here. Okay, I need to get a, I need to get somebody more. Uh, I need to get a level five in here, not a level four. Yeah, and I actually need to take this sheetrock off the wall because that's a two by four. You have a boat two by four, so we need to replace that two by four. Well, how much? How much is that going to be? I don't know. I got to figure that out. Well, I don't know if it's worth that. Well, we've identified that you're very picky on the sheetrock. So when we finish the job and there's still a wave there, are you going to be okay with that?
Speaker 1:Yeah, and it might get down to a they're not willing to pay the product that they want, and you, as the GC, need to help them identify that blind spot, because, if not, it's going to be your problem. No doubt it will be your problem.
Speaker 2:Well, if someone, if you, were to say, clark, I'm easy, I'd say, well, I need you to be a little tougher, like I need you to be harder, because I need guidance of what you want and what you expect for the finished product. Because if we don't talk about that now, the product I give you is what I'm assuming you want and that's what you're going to take. If you're just going to be easy, right, and I don't want you to be easy. I want you to be hard. I want you to be a great client that has good feedback and we're detailed together and we're I'm your advocate here, but I need to know what and how I'm advocating for you. So speak up, don't just sit back in the backseat. Sit in the passenger seat with me, get involved and help navigate the way we're going. Yeah, I think that's good.
Speaker 2:And the last one we have is a false green flag, is when clients start doing stuff to take over what a project manager should be doing, and sometimes this is gradual and a lot of times this happens when that trust is being lost. The more trust that they lose in you, the more they get and grab what I always call like I want to sit in the driver's seat holding the steering wheel. I want my customer to sit in the passenger seat helping navigate. When your customer, especially up front, is setting themselves up to sit in the driver's seat, that is going to go wrong.
Speaker 2:Now to someone unorganized. When a customer brings organization and their own Gantt chart and all that stuff, if I'm not organized, great, we'll use your organization. That is never going to work because now they're the project manager and they are in charge of how this job runs. So when a customer wants to procure their own materials, they can do that. But let me explain what that means, how that happens. Why are you wanting to do that? You're trying to save $1,800 on this six figure job.
Speaker 1:And that doesn't change the fact that I need to know what those materials are before we start, because if you're getting something from Timu, uh, I don't know yeah, I don't know if the installation is going to be the same. We don't even know what the sizing like.
Speaker 2:You gotta know what it is when we were looking at it, that you had a materials budget in the description for, let's say, $1,000. And then the line item was for $1,150. And they're like aren't customers like no, I'm not paying you $150 for this material? Like that's why? Why is this your marketing materials? I'll just buy them myself. And and our answer to that every single time is like listen, that's, that's not. If you want to take that off there, that's no problem.
Speaker 2:That $150 is covering the taxes we're going to have to pay when I go buy that tile and bring it back. If there's a cracked tile, I now have to take a second trip to Home Depot and spend another two hours on this job. If my electrician opens up the box and it's broken, we handle it, we're going to take care of it. If you're buying the materials and I open up the tile box and there's a cracked tile, I'm going to call you and say, hey, you got to pay for my tile. Guy sitting here, I need you to run to home Depot and buy a replacement tile for us because you're in charge of materials. I'm not getting paid to do this.
Speaker 1:I don't have time, but I had to go to a random. I got make a couple of calls. Yeah, You're that's, you're losing, you're losing days on this.
Speaker 2:I like I'm breaking even at a 15% markup on this, because seven to 8% is on is on taxes and the other seven to 8% is me running around procuring everything Right and so you just need to stop using that.
Speaker 2:I'm going to start saying gathering, gathering the material procuring, but, but again it's, I can. I'm going to start saying gathering, gathering, the material Procurring, but again, I'm going to show it to the customer, I'm going to be transparent with my pricing and I'm going to say if you want to buy your own materials, no problem. This is when the change orders are going to hit you hard, because I've got to pay my electrician, who's standing there waiting for that light fixture that you forgot to deliver, and so who's paying them that day? You messed up, you. And so who's paying them that day? Right, you messed up, you've got to pay that change order for an electrician for a day. So you start explaining that and they're like oh no, you can buy the materials. That's fine, right. And so that again that's an example of them taking over. It's not always, it's not a terrible thing, but it's a flag for me of like OK, you're going to get the materials. You care more about a hundred extra dollars in your pocket than me handling the whole thing.
Speaker 2:You're starting to take the wheel. What else is happening? They want to run a crew. Hey, I've got my cousin that does painting. I'm going to have him come in and I'm going to make sure the painting gets done in the middle of your job. No, I don't want that. Like, let me handle your cousin. I'm going to mark it up and we're going to let me make sure that I handle that communication, them wanting to be in the driver's seat and not understanding. I'm driving and you're my navigator.
Speaker 1:You're paying for the gas to get us there, but I've driven these roads before and I will get us there safely. And what would you do if you were driving somewhere, some destination, and your wife reaches over and grabs the wheel? Honey, I love you, but I'm gonna bite you.
Speaker 2:That's. That's exactly what James says to customers, and it's perfect.
Speaker 1:So and they love it. They love it, it's charming.
Speaker 2:They love it, it's their favorite. So again, that's kind of red flag, green flags that we like to navigate. It's understanding when there's a red flag popping up in your head, why? Why is this a red flag? Is it because I am flying by the seat of my pants, I am not organized, I don't have processes, or is it a customer that is going to be a problem, a customer that is going to be long term? I'm going to lose on this job. So understanding that and having your processes in place allow you to kind of weed out the customers you do and don't want to work with.
Speaker 1:Let me try and boil it down a little bit Just because we've said a lot of. We've said flag a lot. We've thrown colors out there. I've said procurement a lot. You've said procurement wonderfully so many times At the end of the day.
Speaker 1:Red flags, green flags, it's just information. It's just information from your experience in this industry, and it doesn't mean that a green flag means this is great or a red flag means this is terrible. Get in, get out. It means okay. What are the questions that I need to ask because of this? Yes, new information. There's questions that I need to ask, there's things I need to lean into and then, once those things have been satisfied, you can make a decision. Are we a good fit? My dad's a contractor. I really just need someone to blah, blah, blah. Oh boy, okay, let's have some coverage. Your dad's not allowed on site because you're going to take his opinion and then hold it against me. And it's just an opinion. I could bring three other people in here and have three other opinions. You know what they say about opinions, you know. Yeah, yeah, but it's just information. So it's not don't throw the baby out the bathwater. It's more about what are you going to do with that information?
Speaker 2:Yeah, I agree. I think for me, one takeaway from this podcast would be if you're feeling like the hairs on your neck are starting to stand up, you're starting to get the feeling of like this client might be bad, or they might be a ghost, might be a werewolf, we don't know. But if you start getting like the red flags starting to happen in your head, lean into that customer and figure it out. A lot of times, guys back off and I'm going to put that customer on the shelf in case I need them, and then if these other customers don't work out, then I'm going to go back to them. That's only going to hurt your reputation, that's only going to make it worse and you'll probably end up saying yes to that job anyways. And now all they felt is distancing from them and them hunting you down for answers.
Speaker 2:So lean into those red flag customers, start navigating the questions, lay out the process that's going to follow. Have a client engagement agreement. Come to us, we'll give you ours. But have a client engagement agreement that tells them exactly what the process, what I expect out of them, what they expect out of me. That tells them exactly what the process, what I expect out of them what they expect out of me and go down the path and make sure that they are a reasonable person that we can work and be partners with in this renovation. At that point if they're not, then they're not, it's okay and say, listen, we're booked up for the next eight months, so I don't think we're going to be good for you. Right, get rid of them in a kind way. It's okay to move on from a customer. If it's not going to work, that's okay, that's okay. But don't leave them hanging, don't just kind of back burner them, but lean into those red flags. Yeah, all right, thanks for listening. We'll talk to you next time.
