Latest / Contractor Business Builder Podcast / Don’t Get Burned: How to Screen Clients and Lead With Clarity

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Don’t Get Burned: How to Screen Clients and Lead With Clarity · Contractor Business Builder Podcast

0:00
Ever taken on a job that seemed great?
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Yeah, turned into a complete massive change orders, upside
0:06
clients, and unpaid invoices. In this video, I'll show you how
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to avoid client fires that drain your time, stress out your team,
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and steal your focus by setting up clear systems that protect
0:18
you before, during, and after the job.
0:21
From qualifying smarter, communicating better, you'll
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learn how to lead every project without being dragged into chaos
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every week. The fastest way to avoid a
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nightmare project is to qualify the client before you ever give
0:36
a number and go into the the full estimating.
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So you want to qualify and look for red flags and make sure that
0:43
it's a good fit for you and the client to be working together,
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that the project is going to be feasible from what you can tell
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before you know, spending a whole bunch of time with them.
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So typically speaking, when you get a new lead, they if, if it's
0:58
just someone who's reached out to you, then you're going to
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want to go through a bunch of qualifying questions.
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Essentially, when do they want to start?
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What's their budget? What do they, what are they
1:08
planning? Do they already have plans?
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So you're going to collect all this information and get an idea
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of is this someone and is this a project that is going to be
1:16
worthwhile long term? You don't want to discredit
1:19
people too soon, but at the same time, if it's clearly not a
1:23
project or or client that's aligned with you for whatever
1:26
reason, you're too far away. Budgets way out of whack.
1:28
Whatever, not the type of service you do, move on to the
1:33
next thing. But after qualifying the client
1:37
client and doing kind of a questionnaire, you're going to
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do more typically like home console or something a little
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more in depth, you're going to provide a free consultation and
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a ballpark budget. So the ballpark budget is, is
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just rough kind of numbers, usually square footage take off
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as far as like they want to build a 3000 square foot home
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building costs, you know, couple $100 per square foot, whatever
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it may be. And and you're going to give
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them kind of this range of ballpark to right away.
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See, is this in their in their range of feasibility for them?
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Or do we need to maybe go back to the drawing board or just
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give them a little clarity check as far as what's more than
2:19
likely feasible given their budget as far as red flags that
2:23
you want to be looking for. If they're very overly budget
2:26
conscious or they tell you we want the, the cheapest thing
2:29
possible and that's it, red flag should be going up right away.
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And you should be letting them know that, you know, yes, you
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can do an economical build if, if that's in your wheelhouse,
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but from your experience, just going with the cheapest option
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is usually not not going to be their best option long term.
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So, and the, the reason that these kind of clients are
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difficult or can be difficult is because if they're going for the
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cheapest option, they are probably going to try to
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negotiate discounts. They're going to cheap out on
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everything, which makes the build harder.
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And they're probably shopping around 3-5 other contractors to
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find that lowest price, right? So keep that in mind.
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Definitely a red flag if they're just looking for the lowest
3:11
price possible. If they've been bad mouthing
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other contractors, this is often a red flag for me too.
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It's like, you know, and one of the questions you want to do in
3:19
qualifying is have you ever done a new home build?
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Have or have you ever done a remodel?
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You know, depending on what they're asking and what your
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service is and if they're like, yeah, you know, we did one last
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year and the contractor was a complete asshole and totally,
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you know, messed up the entire project.
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And we, you know, ended up having these disputes and all
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this kind of stuff. Yes, there are bad contractors
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and projects do go sideways. But if they have a track record
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of having difficulties with contractors, then you can just
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expect that that could be the same, you know, instance for
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you. Obviously, hopefully you're,
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you're better than the previous contractor they had, but it's
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something to consider. And too many of these red flags
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is maybe a reason to be a little bit cautious or even just bump
4:04
up your, your price and your margins a bit and realize that
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if you don't get this project, maybe you're dodging a bullet.
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If, if they, if there's serious concerns about the client.
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Another red flag is when they're super like overly detailed.
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Like, yes, detail is good. And there are these people that
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are very detail oriented and you need to provide details.
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And that's, that can be a benefit because at least there's
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clarity there. But if they're getting into the
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minutia of like all your little bits of pricing or exactly like
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need to need to know constantly every single little thing that's
4:40
going on. Then again, just expect when you
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get into the build that that's more or less going to continue
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and they're probably going to want like daily or regular
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updates and be very like involved with every little
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decision that's going on. So again, praise accordingly.
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Bad vibes. This is more of a gut thing,
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like if you're getting a little bit bad vibes from them or
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they're just like really pessimistic or you like just
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something is like off again, you know, see, trying to look at it
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clearly, but at the same time, often you get gut feelings about
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people and if you can tell like personality wise or something is
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a little bit off. Just another thing that if too
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many of these crop up, maybe you need to move on to the next
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project, especially if you're busy.
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Another one is indecisiveness. I like to early on in a working
5:33
relationship, you want to kind of give them a few things that
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they need to decide on potentially and you'll, you'll,
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there's a lot right when you especially in the pre
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construction phase. But if they're super slow at
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decisions and can make up their mind and it's like a husband and
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wife thing or like there's a partner as far as like a
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business partner, if you do commercial or something and it's
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like it's just like molasses as far as like getting decisions,
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take that into account. Another kind of red flag put
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this one out there, lawyers. I worked for a lawyer and we did
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a great job. Terrific guy, no regrets as as
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far as that goes. But at the same time, there were
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small things that came up and he used his negotiating power and
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his ability as a lawyer to kind of get his way on some things.
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We ended up still, you know, making a tidy profit on the
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project and it went well and we had a great relationship.
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But just keep that in mind that if you're dealing with very
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professional types of, you know, kind of lawyers or negotiators,
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business people that they are used to negotiation, they're not
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going to be feel bad about stepping on your toes and, and
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things like that. Potentially.
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Again, everyone's different, but take that into account that they
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are well versed and experienced in the legal or, you know,
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documentation side of business or or builds or whatever, and
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that, you know, you may be a little bit of a disadvantage
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there. The last song to mention as far
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as red flags go is a challenging build or location.
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So if especially on like a remodel, if they're like piece
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mealing, like, yeah, we want this upgraded and then we want
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new flooring here, We want some new, you know, curtains here and
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we've got this. And it's like, you know, like,
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like let them know we do full home remodels or we're like,
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we're we're not about to come replace your toilet, you know,
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call plumber or someone like we're going to we're going to
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gut and read and do your bathroom right?
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Like, so don't be like afraid to suggest, like, you know, do it
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in a nice way. But if they're trying to like
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piece meal, all these little things or just like, or on a
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home build, often it's like, yeah, I've got, you know, my
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cousin or my neighbor, they know how to frame a house or they do
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concrete and they want to like bring in their own Subs and
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stuff like that. Red flag should be going up
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left, right and centre because that's typically a recipe for
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disaster. If you can make it work and you,
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you know, you're struggling, then you know, work is work.
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But at the same time, realize that you should probably price
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accordingly and you're and you're going to be hitting those
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headaches if you're dealing with someone who's like trying to do
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their own project management or bring in the other people and
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stuff like that. So those are red flags.
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This is a big one on the first because if you can avoid this
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and get a real clear picture of who the client is and and what
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the working relationship is gonna be like, then you are in a
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good place. And that brings us to like the
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next part of avoiding like these these fires that you gotta put
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in these, these upsets, you know, difficult clients, if you
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will. So great projects are not one in
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the build, they're one in preconstruction by building
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trust, clarity, alignment before the 1st day on site.
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So the preconstruction process, if you don't have one in your
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business, get one now. It doesn't really matter how
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built out it is. You don't have to do full design
8:48
build, you know, pre construction type work at this
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stage. It it's a good place to go.
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But that said, you should have some sort of preconstruction
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process because you already do if you're a builder, but you
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need to formalize it and and realize like during that
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estimating, you're going to be doing scheduling.
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There's going to be a number of decisions for selections and
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things that the client needs to do.
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This is a great place to see, like how incisive are they?
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What is every working relationship like?
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Are they already getting upset about things?
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Are they already hard to communicate with?
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Are they already not, you know, having a good time as far as
9:21
like working with you and stuff like that and realizing, you
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know, that it's hard to let go of work and there's probably not
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a lot of instances where you'd really need to.
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But if you are super busy and it's like extremely difficult,
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again, price accordingly. Maybe price yourself out of the
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job. You don't want to like upset
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people with being ridiculous, but that is 1 strategy.
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Other strategy is just to let them know, hey, we are like
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crazy busy. I feel like your project isn't
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really what we are best geared towards.
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If that's the case, like, you know, it's like something kind
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of off to the side of your services when you're more geared
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towards, you know, higher end luxury or, or you know, full
10:02
home remodels and they're asking for something smaller or
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whatever, right? So that pre destruction is as
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gold as far as figuring out is this going to be a good working
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relationship? And so that's to avoid the bad
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ones. But in this video, we're also
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going to be talking about how to ensure that you're building a
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lot of trust with your clients so that later on when you're in
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the build, you you you kind of have this bank account set up as
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far as like the Trust Bank account, you know, you want to
10:30
be putting deposits in that Trust Bank account where you
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like you stayed state traded you true to your word, you've done a
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good job communicated with them. You've got that kind of report
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going back and forth. When you've got that set up and
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you've built that trust now a little things or difficulties or
10:48
problems that come up in the build, it's a lot easier to kind
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of smooth those out and they're going to be a lot more receptive
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to them. If they've already had a bad
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experience in the preconstruction and now they're
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getting like a, you know, a bad experience in the, in the job.
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That's where things lead to them.
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Like having regrets as far as like maybe I picked the wrong
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contractor, maybe this isn't working out.
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Once that trust is broken, it's it's very hard to have a project
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go well from that point. You'll be talking about how to
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mitigate that and even like save projects when things have gone
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sideways in a bit. But just realize that in the
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preconstruction, if you've got a good budget, you've been
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budgeting with them, you've done the selections with them, you've
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done the schedules and you've done the pre planning to get the
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to the to the project. You've already kind of set the
11:35
project up for success and you worked with the client long
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enough that the rest of the project should again, should
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constructions, crazy things happen, you should be able to
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then carry on the project and have a really high level of
11:48
service for the client. Even if things go wrong, even if
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you know stuff doesn't go as planned, at least you've got you
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know that you've been you've done everything can to set
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things up properly. So that brings me on to my my
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Third Point. And you know what happens in the
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first week really sets the tone for everything.
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And most players start with expectations that aren't set
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before the boots hit the ground. So having those expectations
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before you step foot on site is super important.
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I, I like to have a pre start checklist.
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So before anybody shows up at site, we've we've got the
12:21
schedule, but there's that those list of things like, you know,
12:24
is there, is there poor John? Is there a site signage?
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Is there protection? You know, especially, you know,
12:30
remodels like floor protection policy screens, all this kind of
12:33
stuff, right? Have we ordered the materials?
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Whoever trades or carpenters, are they scheduled to be there?
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Have we called the client and let them know if someone showing
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up 8:00 AM, that's going to be, you know, making a bunch of
12:45
noise or whatever, right? So have this pre start
12:48
checklist. So again, you hit the ground
12:50
running you and you just you have that momentum going in the
12:53
project and the client sees that it's like, wow, these guys are
12:56
organized, right? Again, you're just boosting,
12:58
boosting that trust before that hitting the ground running as
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well as like I said, I like to have a what to expect document.
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This is a super important document that you need to get in
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place. This is something you provide
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for the client well before the project starts and it goes
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through everything they need to know and expectations of how the
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build is going to go. So this is everything from
13:21
regular working hours, noise, dust, what it's going to be
13:26
like. They need to get their stuff out
13:27
of the way. They can't park in the, you
13:29
know, driveway. If you need guys going in and
13:31
out what things look like, if it, if it's a new home build,
13:35
you know what they can expect as far as like a site access, they
13:39
need to call you, whatever it may be.
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And then also set out like call me like these are my working
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hours. You can call me from like, you
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know, 7:00 AM to 5:00 PM or 6:00 PM or whatever you want to set.
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Outside of that, I will not answer.
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Emergencies are for emergency people.
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So unless it's like staffed fire flood, you know, call the
14:00
police, call the plumber, you know, like call the
14:05
firefighters, unless it's that you can wait till the next day,
14:09
right? So set that all out, invoicing,
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what you expect for payments, all that stuff.
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So set expectations with the client that way when it happens
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and set expectations for things that you can't expect like that.
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It sounds counterintuitive, but really tell them this is
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destruction. There's stuff going to come up.
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There's there can be details that are get missed.
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There can be walls that we open up and, and you know, there's
14:34
stuff that we just can't account for.
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That is normal. We will deal with it.
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And you can kind of expect the unexpected to some degree.
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You'll do everything to mitigate it and you can expect a call
14:43
from us whenever something goes wrong.
14:46
And this just like smooths out so much stuff.
14:48
And now your your clients totally up to speed on what to
14:52
expect and and ready to, you know, get the project started.
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So on point #4 here, silence creates stress and the solution
15:02
is proactive communication through consistent updates,
15:05
visibility, and your leadership. So you want to be over
15:11
communicating? I don't think I've ever that I
15:13
can remember in my life had a client say you are over
15:17
communicating too much. I don't want to know the
15:20
details. Sometimes they'll they'll tell
15:22
you like hey, just send it to me in an e-mail or whatever.
15:24
But very rarely from my experience, while client ever
15:28
tell you too much information. I don't want to hear from you.
15:32
Just get the job done right and if you get a client like that,
15:35
wonderful. Continue to communicate with
15:38
them. Don't bother them, but there are
15:40
things you can do to make sure they always have the information
15:43
they need without them having to come and, you know, chase you
15:46
down for or give you calls or or pick up the phone because
15:49
something, some issue came up on site, right?
15:51
Those are the last things you want, last fires that you want
15:54
to put out. So over communicate.
15:56
What I like to do is set up is have a weekly e-mail that goes
15:59
out typically on Friday. So every Friday, send them an
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e-mail, Hey, this is what we got done this week.
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This is what we're getting done next week.
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So they've they've got like a kind of a week by week set up.
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Even if they even if you got a schedule and they can see like
16:13
what's happening, give them an update, let them know this is
16:16
what got done and then some notes.
16:18
So there's always, hey, you know, we ordered the wrong
16:21
plumbing fixtures. No worries.
16:22
We got the next one on order. It'll be two weeks, but it's not
16:26
gonna slow down production or whatever, right?
16:27
So whatever comes up, put it in the notes.
16:30
And this way they start to realize that hey, I don't really
16:33
need to know exactly what's going on.
16:35
I'm going to get an update on Friday.
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It'll send me up again for the weekend.
16:39
So they're not calling you on the weekend wondering about, you
16:41
know, they go by the house and it's like, hey, where's that
16:44
plumbing fixture, right? It's they know that you're on
16:48
top of it and you're being proactive as well as a client
16:52
dashboard. So I know this is not always the
16:55
easiest thing to set up with the right information, but a client
16:58
dashboard, it should have the schedule.
17:00
So they always know and I don't do you depending on on how you
17:05
work with clients, but they should at least see the phases.
17:08
So the big phase, you know, we're framing, we're doing
17:11
foundation, we're doing finishing, whatever.
17:13
They don't need to necessarily know all the little nitty gritty
17:16
probably detail of a schedule that that you're most likely
17:19
using. If you're using schedules, you
17:20
can just kind of show them the phases and that's pretty easy to
17:23
set up. Typically the client dashboard
17:26
as well. We'll have financials as far as
17:29
you know, contracted price, invoices to date change orders,
17:33
that kind of stuff, as well as pictures.
17:36
So if there's any pictures or updates you could also share
17:38
like a Google folder. So we'll have to set up a client
17:42
folder for each client and then they've got access to their to
17:46
any documents that they need. Any photos that we're taking on
17:50
site go into the folder, those kind of things.
17:53
And this just saves you from putting all those fires they
17:56
have constantly having to give them information if they call
17:59
you like, hey, can you send me the plans or hey, like, yeah,
18:02
you know, you have pictures or updates or whatever rate.
18:05
So it's like, here's your dashboard, you know, this is
18:08
where we're at. It's it's very easy for them to
18:10
get all the information needed without, you know, bothering you
18:13
or your team. So a few last things on on
18:16
communication here is if there's something exciting happening,
18:20
like, hey, they're gonna, you know, craning trusses onto the
18:23
roof or maybe the the cabinets just went in, you know, like
18:26
that's a beautiful day when when you see the kitchen starting to
18:29
take shape or something like that and give the client a like
18:32
a video phone call and just say, hey, just wanted to let you
18:35
know, like here's your new cabinets going in.
18:38
Here's, you know, whatever. Hey, Peter just finished up with
18:41
the place was looking amazing, right?
18:44
You could even just record a quick video and just kind of
18:46
text it to them as well if you don't want to do like a video
18:49
call, but really doing that kind of stuff like it just excites
18:53
the clients. It makes them feel involved.
18:54
It makes them feel like, hey, this guy's got it.
18:57
He's on top of it, right And he builds that excitement and
18:59
you're building that trust again, like you're they're
19:02
they're the client is going to be on an emotional roller
19:06
coaster right throughout this whole project that first they're
19:09
super exciting. We're getting, you know, finally
19:10
getting this new home or this new project underway.
19:13
And then they start getting into details of selections and it's
19:16
like maybe they're at first, but by the end it's like, oh, it's
19:18
just like, I don't know what colour of this and that, right?
19:21
And then it's, and then the project starts and they see like
19:24
the foundation going in and the framing and it's like all this
19:26
progress. And then so they're always going
19:29
up and down right throughout, throughout the whole thing.
19:32
So the more that you can, you can keep their mood and emotions
19:36
and kind of future looking positive outlook, the better
19:40
it's going to go and the easier it is to smooth out those things
19:42
that that may go wrong in the future.
19:45
Another thing is to do phone calls.
19:48
If anything wrong goes, you know, anything on site goes
19:51
wrong, good, bad, ugly, let them know.
19:55
So hey, we had a league wreck some of this stuff, we're fixing
19:58
it. Don't worry about it.
20:00
Hey, they again, you know. Plumbing Fisher came in wrong.
20:03
You have to order another one, right?
20:05
Little things, you don't need to give him a call.
20:07
You can do an update e-mail, but anything like really like bad
20:10
like especially if it's going to cost them money or it's going to
20:14
delay the project by more than like a day or two.
20:18
Call them, let them know, leave a voicemail and they will
20:22
appreciate you so much. And again, they will they you
20:26
always want to be on their side. You wanna be on their team.
20:29
You don't ever want them to think that they're at odds with
20:32
you and they've gotta like confront you to get the project
20:36
moving or to like not pay too much or whatever.
20:39
And you always want to be on the same side.
20:41
Hey, here's an issue. It's either, you know, if it's
20:44
the house's fault, it's an old house, or if it's like the lot,
20:48
you know, say that, but ultimately you're typically
20:51
accountable and let them know, hey, I'm we made a mistake or
20:54
this happened, right? And you don't have to blame
20:58
people or put the blame on necessarily on yourself.
21:01
You're simply providing facts, right?
21:04
Hey, wrong fixture came in. Hey, we under calculated this is
21:08
going to cost an extra $5000, right?
21:11
You don't wanna like spin it as like all this is the worst thing
21:14
ever or hey, this is like nothing at all.
21:17
Just kind of give them the facts.
21:18
Let them know you're going to take care of it.
21:20
If it's really bad, you know, you need to apologize, say
21:23
you're sorry or like, you know, it's unfortunate, but it happens
21:26
is, you know, they're like the expectations that we set.
21:29
These things come up sometimes. So let them know this will like
21:33
that communication just builds so much trust and puts out a lot
21:37
of fires before they start. So sometimes the world is just
21:40
on fire when things go sideways, and they will.
21:44
The key is transparency, accountability, and protecting
21:48
the relationship through action, not excuses.
21:51
So no matter how good a client is, how great a project it is,
21:55
it has to be something goes wrong and heavily there's going
21:57
to be a client that's upset with you or just a bad client or you
22:02
know, things have soured or whatever.
22:04
If that does happen, transparency and accountability.
22:07
First, you've you've got to maintain your reputation as a
22:10
builder and know that you've done everything to tell them
22:15
what's happening. Take responsibility for what's
22:18
what you're responsible for. Again, tell them the facts as as
22:21
it is ways to mitigate this is first thing.
22:25
You should always have money in the bank.
22:28
So if you have a deposit or like a retainer on hold, something
22:33
like that, you should never be in this space where with a
22:36
client, they have not paid ahead of time for the work that you're
22:40
doing. If you get into an altercation
22:44
or a conflict or a difference of view as far as like payments or
22:48
progress and stuff like that. If you do not have any money in
22:51
the bank on that project, then you are a disadvantage because
22:56
they can walk away and you're out the money.
22:58
And yeah, there's legal things and stuff you can do in
23:01
collections and whatever, but no one wants to go that route,
23:04
right? So as a builder, you should
23:06
always be have your deposit for the project, whatever it is,
23:10
1020% or whatever makes sense. And then you've got that deposit
23:16
and then you're gonna do work and that work is going to cost
23:19
whatever it is. Let's say you've got $100,000
23:21
deposit, you're going to do work before all that work that you're
23:25
doing in materials that you order reach that 100,000, you
23:28
should be invoicing for that work.
23:29
So that the amount of money you have is always more than the
23:33
money, the money you put out in labour and in materials, project
23:37
management, whatever, right. So that way you're more in
23:41
control and then you can make up the difference, right?
23:44
And you want to do right by your client.
23:46
If, if it's just got to that point, they want to walk away or
23:49
whatever, you know, we figure it out.
23:51
But essentially you, you split the difference, you figure out
23:54
the progress, you know, well, we've put $70,000 into this
23:58
project already. You know, here's your 30,000
24:00
back and we're all, you know, even, right.
24:03
Hopefully you can do that again. You never want to be in this
24:05
situation. Do everything that I said
24:07
previously and not get there. But that way at least you're
24:10
not, you have more, more control, more leverage of the
24:14
situation if you need to make a deal.
24:17
So you're going to have clients that are just dead set on
24:20
screwing you over, for lack of a better word.
24:23
And they believe that they, you know, should get their full
24:28
money back or whatever. Try to try to reason with them.
24:34
Try to, to litigate it with, you know, hey, you know, we've
24:39
here's the, if you're doing your documentation, it's pretty
24:41
obvious. Like this is the labour, this is
24:43
the materials that have been put into the project.
24:45
This is where we're at, you know, so on and so forth.
24:48
And then just, you know, make them a deal if if you need to
24:51
give them an extra, you know, a little bit on top for the
24:54
difficulty or whatever, but try to smooth things out so you can
24:57
at least salvage that. They're not going to go and ruin
25:00
your reputation or give you one star reviews and all that, all
25:02
that stuff. And then finally, if it's just
25:05
really that bad and you've just got to finish the project, you
25:09
know, live and learn, you know, just keep getting through it,
25:13
keep going through it. Try to do the best you can, you
25:16
know, stay professional. And then after it's done,
25:21
ordering is done, make sure that you really sit down and figure
25:25
out why did this go bad? What, what could I, what could I
25:29
have done earlier that would have let me know that this
25:32
client was either, you know, there's going to be a difficult
25:35
client or this project was going to go sideways.
25:38
Or, you know, did we make a mistake?
25:40
That they must make a mistake and put in some sort of system
25:42
or some check and balance, some sort of checklist or, or some
25:45
sort of item to go upstream to realize what was the issue, What
25:50
was the decision? What was the thinking?
25:52
What was, you know, how can we not have this ever happen again?
25:55
And you keep doing that. Bob's your uncle.
25:57
You're going to be in good, good standing very soon because
26:01
hopefully you will never have a bad client again.
26:04
So sometimes the biggest tires that you have to put out don't
26:07
come from clients or even employees.
26:09
They come from the owner, which is you in the next video we're
26:13
looking in. We're looking in the mirror to
26:15
fix the habits that keep your business in chaos.
26:18
So click here to watch the next video about putting out fires
26:21
that may be caused by you.