Think about the last time you had a conversation with a group of other shop owners at a meeting, training session, or some other kind of industry get-together.
What was the “shop talk” like?
Ok, so that’s a rhetorical question because unless you were at one of my training sessions, I KNOW what the shop talk was like.
“It’s hard to make a buck anymore with so much competition out there.”
“My margins are garbage! It seems like you have to beat everyone in town’s price just to get a customer to say ‘yes’ these days.”
I’ve heard it all before… and so have you.
Over the last couple of decades, the contracting game has changed. A lot of owners have found it much more difficult to keep their heads above water – let alone grow their businesses and enjoy healthy margins.
The bottom line is that for most, it’s harder than it used to be, and a lot of owners are financially struggling as a result.
If you asked your average owner what they thought the cause was, most would tell you that it’s because of an increase in competition.
That sounds like a logical reason, right? Let me tell you why I flat out reject that excuse.
Why Competition Isn’t the Culprit
Now, I’m not going to say there isn’t more competition out there than there used to be… because there is. No doubt about it.
Today’s employee may be tomorrow’s competitor. It happens all the time. I know one contractor who has over 25 former employees who are now competing for the same customers that he is.
So yes, competition is heavier. Has that made life more challenging for us? Well, sure. To a degree. But I promise you it’s NOT the main reason so many shops are struggling so badly.
Competition isn’t a bad thing. In fact, in a lot of situations, it can be a very good thing.
When several companies are getting the word out about why particular products and services are good for consumers, that creates awareness… and can even drive demand for those products and services higher.
Plus, we can all name contractors who are absolutely killing it in highly competitive markets.
So if it’s not increased competition that’s making your life miserable, what is it? What has changed over the last couple of decades to make this industry that was once so profitable and enjoyable for you so difficult to be profitable in today?
Is it the increase in government oversight? More complicated equipment? Higher costs for things like materials, fuel, and insurance?
All those things are real… but again, none of them are the real cause of the dramatically reduced incomes and other financial struggles that are so common among contractors today.
Since I’ve just shot down all the usual, logical reasons that everyone talks about when they get together at the conventions and meetings – it’s time I told you what’s really killing your bottom line.
A Dozen Eggs and a Gallon of Gas
The real villain in this story is non-differentiation.
Copying the competition… or them copying you. It makes no difference who came first because either way, it creates a market full of damn near identical choices. You can see it in virtually any market you can name.
Think about your competitors within a 5 or 10-mile radius of you. Where do you think they learned what they know about selling their products and services? From their old boss. Maybe that’s you… or someone like you. Or they learned from the same equipment manufacturers who taught the same exact things to everyone else.
And when that happens, all your competitors (and you) wind up using the exact same philosophies and strategies to run your businesses – and the end result is an entire market jam-packed with virtually identical choices.
Same pricing style, same selling strategies, same everything.
In the eyes of a consumer, the only difference between you and your competitor becomes the color of your trucks.
Your services become commodities – just like gasoline, eggs, or orange juice.
The problem with commodities is that the market gets to set the value of the product… NOT the seller.
Would you pay $5 for a carton of eggs? Would you drive an extra mile to buy gasoline that’s $1 more per gallon than it is right across the street? Of course not. And neither will your customers.
If there’s no difference in what you’ll get, no extra benefit or value… why would you go to any effort to do anything other than pick the cheapest possible provider of that commodity?
If there’s absolutely no difference, why would you ever become loyal to a provider of one of those commodities?
You wouldn’t. And again – neither will your customers.
Non-Differentiation and Commoditization…
THAT’S why all the owners sit around bitching to each other at the meetings. THAT’S what’s killing your bottom line… and THAT’S what you need to change if you want to stand out above the sea of sameness and start thriving again in this industry.
Let’s talk about how you stop being a commodity in your market.
The First Step to Fixing it
If you’ve been reading through this article and thought, “Oh, no. That’s me he’s talking about. I’ve become a commodity!” – don’t worry. I have good news. You don’t have to stay stuck in that position, and I’ll show you how to get started making the change.
The first crucial step is to change your mindset.
You need to realize that you are NOT a commodity.
You don’t sell compressors, breakers, furnaces, or sewer pipe. You sell a personalized, unique service experience… and all those other things are the pieces, components, and parts that help you do it.
You need to do something different from all the other clones in your market.
And if you know and believe that… then you’re already on the path to growth and profitability.
In my next article, I’m going to give you more details on how to sell world class service and set yourself apart from all the part-selling competitors in your market.
Until then, I encourage you to take a hard look at our Total Immersion Program – our flagship training and coaching program that has transformed hundreds of contractors from also-ran’s to market leaders.
It’s a complete contractors business-building and sales system to set you apart from your competition, grow your business, and finally enjoy the kind of margins you’ve been dreaming of.
Now I want to know what you think…
Have you experienced the kind of heavy competition I talked about in this article?
Has your market and your business become commoditized?
Tell me about your experiences in the comments…