Should you add another trade?
Well, that’s the second question you should be asking yourself. The first question you need to ask (and answer) is, “Are we paying attention to changing market conditions and monitoring how well our company is functioning with the trade or trades we already do?”
One of my clients was debating the value of whether to add weatherization products and services to the work they already did. They were in an enviable situation because the work we did together had them already doing a great job of selling and doing home energy audits and heating and cooling work. The thing was that the home energy audits they did were so great it also showed that there was a great need to improve their customers’ homes with much better weatherization products such as home insulation and more.
He had been subbing out this work which was okay but it was always a problem when the subs were too busy to respond and they did it the way they wanted to and not the way my client really wanted to do it. Yes, the subs were okay but, pardon the pun, ”That came with a cost.” This all caused my client to wonder whether there was a potential for making more money and having more control of the outcome if he brought the weatherization trade in-house.
Before making any decision, I recommended him to do the “Daily Business Meditation” I had taught him to do when we started our work together. FYI, the “Daily Business Meditation” is where you ask yourself the following set of questions and spend time thinking about it:
- What business am I really in?
- What business should I be exiting?
- What business should I be going into?
Once those things are clear in your mind, it’s time to ask yourself the next three questions and answer them as honestly as you can, making sure to remove your ego from the equation.
- Will we make more money or less money by continuing to sub the work out?
- Does subbing the work out keep us from being distracted from the work we should be focusing on?
- Would we do a better job if we did the work ourselves and could we charge for the value for doing this ourselves?
Next, it’s time to answer the following two, bigger questions:
- Are you already on top of how to deliver on sales and install work done in the trades your company does today?
- Are you the company people think about when they want top notch work in the trade or trades your company does?
If you said yes to these two questions, it’s time to think about expanding into another sector or just growing your service area.
If you said no to one or both, it’s best to stay focused on the trade you have and make this a reality first. Then go back and re-examine how this next piece you want to add would fit into a profitable model.
My family would ask ourselves these very same questions as it related to our own company before we branched out from only selling and servicing fuel oil heating. We decided that we could bring a value proposition to our customers by adding plumbing, gas heating, cooling and electrical trades.
We knew we wanted to “Own the Basement” and keep our competitors out who were beginning to steal away our customers. Plus, we had learned the secret to successfully adding new trades and that is the creation of documented policies and procedures in writing called Operating Manuals coupled with a working Hands-On Training Center and a Trade Course Curriculum. We knew that we could make the commitment to buy all the tools and equipment and provide the best training in-house primarily that it would take to do this new trade the right way.
All of this is a must!
Fortunately for us, our company also knew what trades we didn’t want to do. And one trade we never wanted to do was home security. That’s why we found a really good home security company that we could be allies with and we worked out a “Stand-Still Agreement” that benefited us both. A quick explanation of a “Stand-Still Agreement” is that it’s an agreement where both parties agree not to enter each other’s business or take one another’s clients. Know that this type of agreement can vary.
Once you are philosophically onboard about adding this new trade to your company, you must do a brutally honest financial projection. The numbers have to be there. If they aren’t, don’t pursue it!
If you do decide to add a trade, there are a couple of ways to proceed, either by acquisition or by growing it organically through marketing.
Either way, you will have to create a way to be able to train your existing and future staff on that trade. There are four basic steps to this.
- Step #1: Write a trade manual for that new trade containing 80% of what they need to know (not the 20% weird).
- Step #2: Break that trade manual into chunks to create a training curriculum and set up the training classes.
- Step #3: Add a module covering that trade to your hands-on training center. (Reach out to your manufacturer and see if they’ll provide it to you at low or no cost.)
- Step #4: Begin the process of cross training your existing staff.
Cross training is critical. You have to make it clear that this new trade is part of what we all do. Otherwise, it will create division, i.e., “We’d make money if we didn’t have to drag you along.” Also, what if the new people get sick, die, or quit? All of a sudden, you’re out of that trade you took on.
Careful consideration and reflection, honest financial projections, along with manuals and training, are what will allow you to add a new trade—successfully.