Business Ownership & Management

[Jelectric]

With competitors seriously undercutting us on bids, how low do you cut your price? I need to make profit and keep my guys working. But, when do you just walk away?

[crb225]

Try and stay with established clientele. Set a limit on percentage below typical pricing, and keep an opened communication
with your project managers to that effect. At a certain point it is best to validate your own business by letting the extremely low bidder go forth with your client. They get to see what poor service is and how it will affect their operations.

[Ragingbull83]

 I have a Concrete Cutting Business in St Louis and I hear you brother, The price has been under cut so much have to do two or three jobs just to pay for the Blade on my Ring Saw.

[DanRooks]

Ten keys to surviving and prospering in a market where competitors underbid you

1.    Know your Bid/Win Ratio. This will vary but it is important to know and track.. If you are in a business where it takes 5 or 10 bids to win one, be glad you are not in a business like the drywall business where it often takes 30 or more bids to win one.
2.    Stop guessing about cost. When you know your true cost, you know how low it is safe to go.
3.    Focus on and measure (count) Quality. Lean about what "Quality in Construction" really means.
4.    Work at reducing your cost. A $1,00.00 cost savings is equal to a $10,000.00 increase in sales (If you operate at a net profit of 10%).
5.    Quit worrying about being the cheapest bid. Become the "Low Cost Producer". Study "Lean Construction".
6.    Specialize and a find a niche. Specialist generally have less competition. They can ask and get premium fees. At the same time reduce cost.
7.    Partner with larger contractors based on your true machine cost plus.
8.    Track each of your competitors. They like you, have a limited number of machines, operators and supervisors. Let them fill up with below cost work.
9.    Work at being the best, not the cheapest.. Remember, like you, every Caterpillar (and other brand) salesperson is faced with competitive pressures based on price only. You do not see CAT going out of business.
10.   Know your real cost per Hour on each job, for your machines. (Do not even consider using other company's cost, prices or Historic Accounting records. Use Dynamic (changing) Life Cycle Owning and Operation Cost. This must include budgets for all heavy equipment repair and maintenance cost. For more help with any of these, contact me at www.DecisiveCost.com

(Feel free to pass this on to others or newsletters)

[DRCXINC]

I don't know about you but in my area, the companies that keep getting all the jobs due to their extremely low bids are dropping like flies, my look on this is let them do 10 low paying jobs and wear out their equipment while I focus on just a couple jobs that pay for quality, they are out their but you wont find them looking in the same places as your cheap competitors. As mike row said "work hard and smart" that's what has lifted my company out of the dark, even in this bad economy their are many builders and general contractors that are bearly making it, see if you can offer them something new in a partnership that will make it just a little better for them and naturally you will do better yourself. About 7 months ago I landed a new customer and I wasn't the low bidder, stream line your equipment and manpower and focus like a laser beam on that one new client and let them know you are happy do be their. So, give up a few low bids and focus on those better opportunities, remember, if your busy doing jobs for nothing, you wont be able to find those better jobs, only you can determine how low to go and how many low paying jobs you can do. and remebmber dont pay to do a job, it dont work, i say that because i see numerous companies doing that "just to keep my guys busy", and then they are out of business.

[daffodil1003]

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DRCXINC wrote:

I don't know about you but in my area, the companies that keep getting all the jobs due to their extremely low bids are dropping like flies, my look on this is let them do 10 low paying jobs and wear out their equipment while I focus on just a couple jobs that pay for quality, they are out their but you wont find them looking in the same places as your cheap competitors. As mike row said "work hard and smart" that's what has lifted my company out of the dark, even in this bad economy their are many builders and general contractors that are bearly making it, see if you can offer them something new in a partnership that will make it just a little better for them and naturally you will do better yourself. About 7 months ago I landed a new customer and I wasn't the low bidder, stream line your equipment and manpower and focus like a laser beam on that one new client and let them know you are happy do be their. So, give up a few low bids and focus on those better opportunities, remember, if your busy doing jobs for nothing, you wont be able to find those better jobs, only you can determine how low to go and how many low paying jobs you can do. and remebmber dont pay to do a job, it dont work, i say that because i see numerous companies doing that "just to keep my guys busy", and then they are out of business.

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Thanks you for the post.
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