Who wants to be a millionaire?

BY RICHARD DiTOMA, L.M.P.

Who doesn’t? A veteran contractor recently told me of a young contractor who had come into his area with all sorts of new ideas about how to run a phc contracting business. The older contractor’s point was that with all his progressive ideas about contract pricing [that’s the proper term for flat-rate pricing], advertising, hiring etc., the young contractor ultimately failed. My response was simple. The fact that any person believes in any business strategy does not mean that person will understand and implement it correctly.

You’ve probably seen, or heard, of the popular game show Who wants to be a millionaire? In order to win the million dollar prize, a contestant must correctly answer 15 multiple choice questions in succession. If the contestant answers any question wrong, they lose the opportunity to win $1,000,000.00. The contestant does have the option of leaving with the winnings he/she has accumulated to any point as long as they do not answer any question incorrectly before opting to leave. If the contestant answers the $1,000.00 or $25,000.00 question correctly, they are guaranteed to receive that amount even if they answer a subsequent question incorrectly. The first question is worth $100.00 and is relatively simple. The second $200.00 and so on and so forth until the fifteenth question, which is more difficult to answer, is worth $1,000,000.00. To assist the contestant in their quest for riches, the rules give the contestant three lifelines. Once the contestant uses a lifeline it is gone. One lifeline is to ask the studio audience for help.

Another is to narrow the four multiple choice answers to two. The third is to phone a friend. After reaching the $25,000.00 level, a fourth lifeline is added. With it the contestant can change the question by using this lifeline. That’s It! Seems simple.

As I watch this show it never ceases to fascinate me when contestants answer a question incorrectly while they still have a lifeline available. That’s like failing an open-book test because they never checked the book to see if they were correct. The lifeline is worth nothing after they leave the show. So it’s obvious that the problem is that the contestant thought they knew the answer. But, there is a huge difference between “thinking you know” and “knowing you know.” One will give you an answer based on assumption while the other gives a factual solution to any question.

Even if the contestant uses a lifeline, there is no guarantee that the audience or the friend will know the answer. They too could be guilty of “thinking they know” instead of “knowing they know.”

That’s probably what happened to the young contractor who failed. He probably thought he knew how to implement his ideas. But, by not understanding, not implementing procedures correctly, and looking before leaping, he probably made numerous errors. The older contractor thought the younger contractor’s ideas were new. And, since the young man failed, he came to the conclusion that those ideas must have been flawed. The truth is business plans that don’t give naïve contractors, both young and old, the opportunity to grow their businesses soundly through proper, logical, easily understood and doable theories and methods could hurt rather than help. And, since all people in business do not have the ability to succeed in business, only those who act like business people have a chance to attain their goals.

Another contractor who attended one of my workshops and had read my book, Solutions Management Theories and Methods for the Contracting Business©, called seeking my advice regarding implementation of those theories and methods in his business. I’d say that made me his “phone a friend” lifeline. And, it made him smart enough to call because he recognized his need for further business assistance.

After an interesting and fruitful consultation he expressed his dismay over the number of contractors who don’t take the time to run their businesses properly. He felt that they decimate our noble industry through the use of their ridiculous ill-advised methods of pretending to be in business. He had a valid point. That’s when I saw a need to pen this article using the lifeline example as a caveat to contractors.

In the game show, the lifeline that allows the contestant to ask the audience for help is usually good for simple questions. But, as the questions become more difficult, the help given by the audience becomes increasingly dubious. Asking the audience for help answering the more difficult questions can be compared to contractors asking other pretenders in the contracting business for business advice. Since proper sound business methods are a rarity in the contracting industry, the source of the advice would be shaky at best.

The “phone a friend” lifeline gives the contestant the opportunity to ask a friend for their answer. The contestant often asks the phone a friend, “How sure are you?” The friend usually responds, “not very,” “positive,” or gives a percentage such as 100%, 75%, 50%, etc. depending on their grasp of the situation. What’s really comical is the friend who answers 25%. There were only four multiple choices. A monkey has the same chance of being correct. But, the phone a friend who reminds me of most of the pretenders in the contracting business is the one who replied 20% when faced with four choices. Most contractors don’t have a clue, and many business strategies are susceptible to misunderstanding and improper implementation.

The contractor, who was dismayed by the absurd actions of contractors who don’t do the right thing, described a conversation he had with a fellow contractor regarding proper business theories and methods. That contractor told him that the logical sound business procedures of which I preach probably wouldn’t work. Why? The answer is obvious. That negative nellie contractor didn’t know whether those theories would or wouldn’t work. That was just his ignorant, fearful, egotistical moronic excuse for not conducting business in a proper fashion. However, he was correct to some degree. It wouldn’t work for him because he doesn’t understand the principles, and therefore, he wouldn’t correctly implement sound logical business procedures.

I’ve taken the liberty of making 15 multiple choice questions regarding the management of your phc contracting business. Take the test and then ask yourself whether you’re sure you know the answer or only think you know the answer. .

Question 1: What is the only reason for which my business exists?
A. To incur costs inherent to running a business.
B. To have something to do each day.
C. To make a profit.
D. To give me a job.

Question 2: What is the foremost value I deliver to consumers?
A. I give them a place to excrete other than in their hats.
B. I can expose my butt crack by wearing clothes that do not fit well.
C. I provide humorous anecdotes.
D. I protect the health of the public and allow them to be comfortable when it is hot or cold.

Question 3: What is my biggest problem regarding the results I get from my business?
A. Having too much money and not enough personal time to spend it.
B. Having too much personal time and not enough money to spend.
C. Not having enough personal time or money.
D. Knowing little, or nothing, about running a business correctly.

Question 4: How should I establish the price of any service?
A. Look up in the sky, think about a number, then put a dollar sign in front it.
B. Ask the competition what they charge, and charge a dollar less.
C. Identify & calculate true costs as they pertain to the service; choose a proper profit margin; and blend the true costs with the proper profit margin.
D. Double the material cost.

Question 5: What should I do when the customer complains about a price?
A. Perform the service for nothing.
B. Ask the consumer how much they are willing to pay.
C. Explain to the consumer that my prices are calculated in a fashion that will allow me to deliver value to them while recovering the costs I incur in the delivery; be there tomorrow to service their future requests; and hopefully earn a profit for the risks I have taken in the delivery.
D. Offer to pay the consumer for the privilege of serving them.

Question 6: Why do I have a difficult time finding good help?
A. The compensation I offered was overly generous.
B. My company is the best place to be employed.
C. People don’t want to work.
D. I don’t charge consumers enough money for my services to pay my technicians a salary commensurate with the hard work they perform for my company.

Question 7: What type of person should I look to hire?
A. A person who moonlights and will steal customers from my business.
B. A person who can simultaneously hold a wrench and fog up a mirror placed under his/her nose.
C. A person of integrity, with mechanical aptitude, and the will to please and deliver excellence.
D. A person who acts in a way that will ensure that the consumer never calls my company again.

Question 8: How much should I pay my help?
A. As little as possible.
B. Enough to just survive.
C. Enough to be comfortable.
D. Enough to be content.

Question 9: How much does my service vehicle cost per hour?
A. $5.00
B. $10.00.
C. $15.00
D. The cost per hour varies due to different vehicular characteristics and company vehicular policies.

Question 10: What is the first commandment of business?
A. Thou shalt buy the job at any cost.
B. Thou shalt not worry about the costs incurred to run a business.
C. Thou shalt play it by ear.
D. Thou shalt sell the job by identifying, calculating and controlling costs; choosing a profit margin that will maximize profits; and attaining your goals through the development of profitable selling prices.

Question 11: What should I do when a consumer asks a question?
A. Ignore them.
B. Dazzle them with my intellect.
C. Baffle them with my gibberish.
D. Constantly repeat the words “Homina, homina, homina”!!

Question 12: Which statement best describes the relationship between “profit” and “salary”?
A. Profit and salary is the same thing.
B. Profit is the money left before taxes after all expenses including salaries have been paid.
C. Profit is the money left before taxes after all expenses excluding salaries have been paid.
D. Profit is all the money my company collects less salaries.

Question 13: What type of management procedure should I use?
A. “I’ll cross that bridge when I get to it” method.
B. Documenting issues on small pieces of paper that I will lose.
C. An organized protocol that documents consumer requests from inception to completion; files the documentation for future reference; and, allows my business to be run in a business like manner.
D. “I don’t need no stinking procedures” method.

Question 14: What steps should I take in setting up my managerial procedures?
A. Be certain that I am well versed in the services I perform for consumers.
B. Identify, calculate and control my costs; choose a profit margin that will maximize my profits; and attain my goals through the development of profitable selling prices.
C. Deliver excellent value to the consumer for the dollars they pay for my services.
D. All of the above.

Question 15: What should I do to ensure that my business is run correctly?
A. Get a business education regarding the reason business exists, the problems I will face; and the solutions to those problems from persons who know proper managerial procedures for the contracting business.
B. Make sure that I know, not just think I know, the proper managerial theories and methods to employ.
C. Have “phone a friends” who know, not just think they know, the proper managerial theories and methods to employ.
D. All of the above.

Asking a person who is unfamiliar with the subject matter of any question is futile and will probably only lead to wrong results. If you’re not sure of the proper answers to this quiz and/or procedures to employ, give me a call at 845/639-5050 and make me your “phone a friend.” I’m a positive person, I know the answers and I’m ready to help you succeed. If you’re not sure you know the answer to a managerial question, and you don’t use the lifeline of someone who does know, the only way you will win the game is by luck. Or, on the other hand, you may not even win at all.