Imagine if you could sit down for a quiet chat with James Stroud, founder of Stroud Homes and ‘The Worlds #1 Business Coach’ Brad Sugars, owner and founder of the worlds largest business coaching organisation. What would they be able to tell you to ensure your success as you start your Stroud Homes business?
This article is a combination of thoughts on startup business from Brad Sugars, and comments from James Stroud on how each of Brad’s comments apply to what we do here at Stroud Homes, the retail new home building game.
If starting a business were easy, everyone would do it. But they don’t. Only those of you who know deep down inside you’re entrepreneurs at heart will ever take these steps – even if you’ve denied that entrepreneurial spirit burning inside you for a long time. Using that burning desire to grow your business, however, is a far different task from simply lighting it. Most people start with the odds stacked so much against them that it’s difficult for them to fan the fire beyond the first few months or years.
Here are 11 tips from Brad and a few pieces of advice from James to help you keep your new business growing in size and profit:
1. Place high urgency in everything you do
Always do everything you can today. When I started each of my businesses, I’d work constantly until I just had to go eat and sleep. Too many people treat their businesses as nine-to-five jobs. Never put something off until tomorrow if you can do it right now.
Have you ever pushed a car that has run out of fuel? It takes a huge shove to get it rolling, but once it is going it takes reasonable effort to keep it going. You should expect to give your business the hardest shove you can possibly muster to get it through the ‘awkward phase’ (learn about the awkward phase in my article titled ‘The Six Cylinder Engine‘).
The harder the shove, the quicker you can expect your business to get through the awkward phase. Have you ever driven a waterski boat? It takes the full power of the engine to get the boat up out of the water, but once at a plane you can pull the throttle back.
To be blunt, the Stroud Homes system is very good, but not good enough to carry a ‘nine to fiver’ to success. I can tell you, I did exactly what Brad alludes to – I worked until I just had to go eat and sleep- because I understood how life would change when I got my business past the ‘awkward stage’.
2. Never spend a dollar you don’t have to
You don’t need a new desk, you need a cheap desk. Too many new business owners go and buy the best stuff because they think image is important. Listen, when you get profitable, you can have a big mahogany desk. Right now, just get a desk.
The customer section of your office and your first ‘company car’ are the only things that need to be presentable.
The back of your office should absolutely look like a university students’ office for the first 12 months. For example, I made my first desk by cutting a standing internal door in half to form legs for another internal door acting as the desktop.
I bought my first printer from ebay. It is OK to be very frugal in the back office.
Suppliers normally come to the party in contributing to your office fit-out, after all you are selling their goods for them. Now is the time to learn how to ‘make a deal’. Write out basic agreements to purchase their goods for the first 12 months in exchange for a contribution to their office (and get a reputation for honouring your agreements, whether handshake or written).
As for the car – do not use the event of starting your business as an excuse to go buy a new car, rather find a white car, less than 4 years old that is just presentable enough to survive the first 18 months for 10k or less.
Most of all, take pride in running a lean ship (don’t take pride in a bunch of stuff you can’t afford yet).
3. Learn to sell
There’s nothing worse than a business owner who isn’t willing to sell – or even learn to sell. No company makes money unless someone sells something, and you can’t just rely on people you hire to do the selling for you. If you want to grow a profitable business you’ve got to learn sales yourself.
We grow new offices at Stroud Homes, we don’t start them.
It follows that every new franchisee will spend at least 3 months completing their own sales. Even if there was another option (say the franchisee could afford to fund a salesperson from day 1), I wouldn’t allow it.
By spending some time successfully making sales, you will learn volumes about what you need to do to support your sales team.
You’ll understand just how tough sales is and how much you can help your salespeople by continually improving the tools and environment for sales.
4. Make decisions quickly
New companies don’t have the time or resources to stand still. General H. Norman Schwarzkopf once said to me: “When placed in command, take charge.” He also believes it’s better to make a decision and move than it is to stand still.
If you don’t know how to make quick decisions, your customers will!
If you want to win a family’s building contract, work out your offer and get it to them sooner rather than later. Many, many building contracts came my way over the years simply because we got an offer back to the client first.
Tip: Speed trumps perfection. Stop stuffing about with that quote and get it off to your prospect asap!
5. Get customers coming back
The road to profitability is through repeat business. Too few business owners set themselves up for long-term success. Your business grows when you add regular new customers on top of existing regular customers. Think of it this way: What if every customer you ever got stayed for life? How many regular buyers would you have?
Yes, repeat business does happen in the new home building business, it just looks a little different than a business with a smaller, more frequent transaction.
Tip: Try to become a family builder, much the way that people have a family doctor. It’s great if your customers can sort of take ownership of you and your team as the ‘go to’ source of info for their family.
6. Deliver more than you promise
If you tell a customer it’ll be three days, deliver in two. If you think it’ll be two hours, say three hours and surprise them. This is the best marketing ever.
‘Under promise and over deliver’, will be a constant mantra in your business.
Build trust by making small promises and keeping them.
7. Price yourself for profit
Don’t ever be the cheapest. You’re the little guy; you don’t have economies of scale. Big companies can make up in volume what they lack in margin. You can’t.
Don’t let the big building companies intimidate you – they have many weak points (learn more about their weak points by reading my article titled ‘The Snake and the Mouse’).
When your clients ask for a discount, politely decline and re-affirm your undivided devotion as their builder. After all, your job is to build great homes, not free homes.
You actually build credibility by knocking back discount requests. If you agree to discount, it causes your client to question where the ‘floor’ actually is with your prices – and from that point on they will question everything you say.
Don’t discount – you just can’t.
8. Set a big vision
‘Start Small, Finish Big’ should be the title of your book. Don’t aim to be the best dog trainer in Montana – aim to be the best in the country. Remember, building a business is a 10-year plan, not a one-year plan.
Stroud Homes has set a goal to become the #1 new home building team in AUS/NZ by re-inventing the builder/customer relationship.
Your business is part of that dream:
- your first goal is to win the largest share of the market in your exclusive area within 2 years of launching your Stroud Homes business
- your second goal is to grow your market share each year
- your third goal is to achieve the largest market share within your exclusive area in the Stroud Homes group.
It is OK to ignore your local competition. Focus on your customer and compete with yourself. Better your personal best every month for sales, quality and customer service.
9. Marketing is math
Don’t ever let an advertising sales rep teach you anything about marketing. Reps will say dumb things like: “Half your advertising works and half doesn’t – and you’ll never know which half.” Rubbish. If an ad that costs $100 makes you $100 back in profit, it’s a good ad.
Work with us on your LAM (local area marketing) spending. At Stroud Homes head office, testing and measuring marketing is daily work.
The world is changing quickly. Local newspapers, TV and radio are quickly being made obsolete by online marketing. Be prepared to try some of the new stuff, you might be surprised!
10. It’s simpler than you think
Before most people even go into business, they work it up to be far more complex than it really is. Business is very simple: Sell at a profit and keep at it. Over-complicating the process won’t help anyone. If your business seems too complex, it probably is – so make it simple and watch yourself succeed. Remember, you have a lot to learn – and that’s a good thing. You’ll make mistakes. Just try to make them small ones at the start. Never bet the ranch on one deal.
As you become more established with a better reputation, you will attract a better quality client.
- Unfortunately though, when you start up as a new building firm in your area, it is not unusual to attract prospective clients who have been rejected by the other local firms because of their unreasonable expectations. Watch out for this effect and don’t be too crushed if you get a couple of these early in the piece.
This is all the more reason to get through the ‘awkward phase’ as quickly as possible. You’ll find a big change in your prospect’s attitude when you have completed your first home – you may be a competent builder but are an understandable risk in their eyes until they can see something you’ve built.
Push to get that first home started as soon as possible – you’ll be amazed at the difference it makes!
Also watch out for the super complicated, custom designed, luxury home trap. These homes tend to be poorly thought out prototypes with many one off products, huge contract sums and highly demanding clients. The challenges suck up your time and the contract sums suck up your working capital – not what you want in the early stages of your business. Don’t miss out on simple local builds because your time got sucked into a big complicated build.
- Stroud Homes are designed for maximum customer appeal and minimum build complexity. The less time we spend on overly complex builds, the more time we have to deliver great customer service – and that, my friend, is where the money is.
- You should choose your jobs by net profit potential, not ego building potential.
11. Hire people who are better at the job than you are
It’s a fact that companies are built by people, and the best people build the best and most profitable companies. Put simply, great employees may cost you 20 to 30 percent more in wages, but they can be twice as productive as mediocre employees. Invest in good people.
Always hire for attitude first and skills second.
When you start your business, you have a once in a lifetime opportunity to grow your staff. If you hire a young admin worker with a great attitude before you have any contracts, you often find they will grow with the business and become your first contract admin.
Later on when your business is in full swing, you do not have this option to ‘grow’ a part of your team but must find experienced people. In this case I recommend considering recruiting firms, as they seem to have better access to top quality staff. The interview costs normally nothing, and if the quality of the candidates turns out to be considerably higher, then the recruiters fees are justified.
If you’d like to find out more about buying a Stroud Homes franchise, and the training, support, innovative designs and proven management systems that come with joining the Stroud team, contact us for a Franchise Information Pack.