As a supplier, we have the opportunity to observe the inner workings of thousands of our customers' businesses, allowing us to witness both their successes and failures. The COVID-19 pandemic had a significant impact on our industry, and it is important that we take caution as the economy recovers. Please be careful, because as the economy starts to revive, and people become busier, it’s easy for your business to get into trouble.
The important thing in a recovering economy is to keep your eye on the details. As your volume begins to increase, so can your errors and omissions.
Your job is to build new business on a solid footing. The number one area in which we see problems that could be avoided is that of contracts. Too often, what wasn’t clearly spelled out at the beginning of a job, de-rails the job later and leads to an unhappy ending. The great majority of the time, a job goes bad because of mis-matched expectations between the builder and client.
Let’s face it. To some extent, we all hear what we want to hear. Spelling out the scope of work, completion date, job cost, payment terms, and change orders is really one of the most important part of a successful job. Remember, we do this every day. A homeowner is only involved in a building project once in a while. For them, this can be a somewhat confusing foreign language and just because someone is nodding their head “yes” doesn’t mean they understand what we’re saying or agree with it.
Remember, they could be stressed out by the decision making, they could be in denial because of budget concerns, or they could be embarrassed to admit they aren’t sure what you’re telling them. These are all elements of human nature and it’s our job to prevent this disconnect. After all….”We get what we inspect, not what we expect” said W. Edwards Deming, the famous management and production consultant.
Think of spelling out expectations for your clients as the most important part of your tool kit.
Your contract is the framework for all that follows. It’s what keeps the job on track, and what ultimately helps you get paid. If you appear before a judge, trying to collect, without a proper contract, it just becomes your word against your client’s, and because you are the professional, more is expected from you and the case most likely won’t go well. Even worse, a judge can look at the lack of a clearly spelled out contract as a strategy on the part of a contractor to confuse and mislead a poor “innocent” homeowner.
If your contract is clear, you take away all excuses not to pay. Set yourself up to succeed and make sure you get paid for what you do. Use your contract to protect you and your customer. By the way, if they don’t want to sign one, that should be your warning.
Here’s an image to remember. A favorite story of ours is about parachute packing. We use it here often to illustrate the importance of doing it right, every time. In the military, parachute packers can be told to grab a parachute from the line, and then jump out of the plane with it. They won’t know if they packed it or someone else packed it, but one thing is sure, it better be right. How good is their quality control? How good are their procedures for parachute packing?
With that in mind, how good is your contract? You want to make sure it works when you need it!