We recently asked 18 custom home builders and remodelers to help us settle a debate by answering the following question:
If given the choice, which of the following would you prefer for your business?
1. To generate as many leads as possible
or,
2. To generate fewer leads, but better qualified
We had assumed the answers would be pretty evenly split, so we were honestly surprised when there wasn’t one person who said that they would prefer to generate as many leads as possible.
It was surprising because of how standard it is for construction companies to spend thousands of dollars per year on home service marketplaces like Houzz and HomeAdvisor to generate leads. The same marketplaces that by design, commoditize construction by driving homeowners to put their projects out for bid leaving them to evaluate contractors by their lowest common denominator — price.
Given what we heard, it seemed that generating a bunch of leads who only cared about who had the lowest bid wasn’t aligned with their preference of quality over quantity.
If the project and client are not a good fit, there isn’t a budget big enough that will change that.
Looking a bit deeper, we discovered that regardless of where the lead came from what contractors really wanted was profitable projects that run smoothly — and that starts by finding the right clients to work with.
While “the right client” can be different for every business, there is a certain set of criteria that applies to everyone across the board. The biggest difference is how much each contractor weighs one criteria over another.
Whether you’re building custom homes or remodeling kitchens, the qualifying criteria can be broken down into three main categories:
1. Project
2. Client
3. Budget
To help you find the right clients for your business, we’ve outlined below the questions you should consider to determine whether a potential client and project is right for you:
This is the first fundamental question you should be asking yourself. But, don’t just think of this as a simple question around whether this type of project is right for you. There are several questions that you should consider when evaluating a potential project:
1. Is the size and scope of the project within your ideal range?
Ask yourself whether you truly want to take on a project that is either too small or beyond your existing capabilities.
2. Will the project be something you’d add to your portfolio?
Consider whether or not the style of home or remodel aligns with the type of work you want to represent your company.
3. Does the project excite or inspire you in any way?
The more passionate you are about a project, the better it is for you, your team and client. But, be careful not to let your excitement cloud your judgement over other criteria.
A qualified project can quickly turn into a nightmare if you don’t take the time to properly qualify your client as well. The client has the power to drag out a schedule and financially hold you hostage if they chose, so it’s very important that you consider some questions before taking on any project (even if the project meets your standards):
1. Does the client see this project as a partnership or a business relationship?
You need to understand how involved and emotionally invested your client is going to be in this project, along with how they view your role.
2. What is their biggest motivating factor for choosing you?
Why did they choose you? Were they inspired by your previous work? Were you the cheapest option? Know where their motivations lie.
3. What’s the personality type of the client?
You don’t need to administer a Myers-Briggs test to get a sense of your clients personality. Try to pick up clues during conversations and determine if this is someone you feel you can work with?
4. Will the client be around during the project?
It can be hard for you and your team to get your job done with a client breathing down your neck. It’s better to know and address this ahead of time to avoid any potential issues.
5. Does the client have a vision of what they want?
You need to be sure that what the client wants is in line with their budget and time expectations. And more importantly, that you’re confident you can deliver on it.
The budget should be the last thing for you to qualify for an important reason: If the project and client are not a good fit, there isn’t a budget big enough that will change that.
If the client is amazing and the project is in your wheelhouse, you might willingly want to consider working with a smaller budget. However, if you let the temptation of a big budget overlook an unqualified project or client, you’re bound to have issues.
When it comes to the budget, these are the questions you should consider:
1. Is the expected cost aligned with the expected result?
Clients generally don’t understand all of the costs factored into a project, so they might have a major difference in perspective when it comes to what they can get for the budget they have set aside.
2. Is the client financially sound?
Simply put, you need to make sure the client has the means to pay you when the time comes. Is there a loan in escrow or a funded account to draw from? Are there any liens on the property? Ask the right questions and do your due diligence.
3. Does the budget account for unexpected costs?
When problems come up — which they often do — you don’t want those problems to come at the expense of your profit. Make sure there is a buffer in place to account for these scenarios.
4. How are payments going to be handled?
Make sure you won’t have any issues when it comes time to getting paid so you don’t spend your time chasing down payments or shutting down progress.
5. Is this going to be profitable?
It goes without saying, but important to remember nonetheless. You won’t survive as a business without growing your bottom line, so make sure every project is worth your time.
Answering the questions outlined above is only half of the equation to determining whether a potential project is ideal for your individual business. The other half is deciding how important one criteria is (to you) over another.
Maybe you care a more about working with friendly clients and less about how interesting the project is. If that’s the case, your client’s personality should outweigh the project in terms of qualification.
To make this process super simple, we’ve created a free and easy-to-use construction calculator to help you quickly answer each qualifying question and decide how important each one is for your business. Based on your answers, the calculator will return a score and tell you if the potential project meets your qualification requirements or not.
To access this free project qualification calculator, just fill out the form below and we'll send it right over.
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