One of the things I get asked quite often is: what are the trends and what are of some of things that I see with companies going into liquidation and the reason behind it. Over the years I have done quite a lot of liquidations associated with builders. One of the things I see time and time again is that with a small builder, they tend to try and compete on price thinking that that’s the issue. And of course when they compete on price they haven’t got the money to do the job because they have got a cut the dollars and cut the corners so they make the living and it reminds me of the time when with my first wife.
She was looking for something to do and she went across, we were living in Sydney at the time, she went across to a community center that had different projects and different things that they could do and she wanted to do lace making. She went to do the course and the lace making course was full, so she was looking around for something else and she choose to do calligraphy. Now she’s very fastidious and was quite a good calligrapher and she did the course and then was making some money from doing the course and she was doing a lot of wedding invitations and those types of things. And because she was so, she wanted to do it so right, she would do it again and again and again to get it right and she would sit up all hours of the night doing it. And one day she actually got completely frustrated with this and said, “I can’t do this for thirteen dollars an hour”, because that’s what she was charging. “I can’t do this for thirteen dollars an hour I’m just going to do what the other girls do”. One of the other girls who was very good at it she was charging twenty-five dollars an hour and she says, “I’m just gonna charge twenty-five an hour and if I get the job, I’m getting paid to do a good job and it’s worth it to me and I’m not wasting time and my effort for very small amounts of money”.
Now the interesting thing for me out of that was that over the next few months. She started to getting a lot more work not less but more work and quite often I think we undersell ourselves and instead of charging something to make a reasonable dollar, we get involved in trying to cut dollars because we either lack the selling skills or we are not able to show our value.
Now you take that a step forward and some years later about 10 years ago, I’m building a house. And I fell into the same trap with the builder that the builder started saying. “Well we can do this at this price”, and the end result is, what I realized was that in building a house the only discounts available are for like a toilet that you get a certain size toilet and a certain model and may be you can buy that cheaper but if you start getting cheaper workmanship, there’s only one of two things that happen. Either you get a tradesmen that isn’t as good, so he can’t charge as much. Or you get a good tradesmen that’s quiet and when he gets busy he leaves your job because he is not getting paid much and he’ll get back to it when he can to go to the good job.
So quite often it’s not the price that is the important thing as far as the quality of work. And you go through to and again I’m referring to builders, but you go through to builders these days and what happens is, they are competing against the big guys. And the big guys can buy cheaper, they can do cheaper, they’ve got tradesmen that are working for them all the time. And so they can sell it at a cheaper price. So for the small builder, what he needs to do is either learn to or employee someone that can sell on the quality of work that he does not on the price and then he can make a dollar and everyone can make a dollar and that’s one of the biggest things I’ve seen in the building industry with liquidations. So if you’re selling a product or a service, and you’re good at it, don’t be afraid to charge a reasonable price and sell on quality, not on discount.