How to Create a Win-Win Scenario With Your Contractors
In my conversation with Tom Olson, who is the owner of four different real estate related companies and is an expert in all things real estate including developments, creative transactions, and wholesale deals, he provided his Best Ever Advice on the importance of focusing on value.
There are three parts of any transaction, whether it’s real estate, business, or anything: price, cost, and value. If you focus on price and cost, you will have a linear business. However, if you focus on value, then your customers, contractors, lenders, and investors will come back to you over and over.
Tom defines “value” as what you bring that is emotional and builds upon your trust factor. Therefore, when he is doing a deal, he focuses on adding value to all the parties involved, like the community, the new buyer, and especially, the contractors. Tom’s main focus is on bringing value to his contractors. Many people believe that the opposite is true – that contractors should only be bringing value to them – but Tom finds this to be completely false. It is a win-win scenario.
Tom provided three examples of ways that he brings value to his contractors:
- Process and Systems
Tom puts all of his general contractors on his Podio platform. This gives the contractors access to Tom’s project plan so that they understand exactly how a project is supposed to be run.
Tom also has systems in place that help the contractor’s business run more efficiently. For example, he created automatic weekly payments that are paid out as long as the contractors submit their invoices by a certain time.
- Events and Speakers
Tom has events and speakers for his contractors that help them run a better business. Most contractors are hands on practitioners and know very little about business. The events and speakers focus on teaching them the business side, help them understand how to grow personally, and how to do their jobs quicker.
- Cost Savings
Tom brings value to his contractors by helping them save money in two main ways. First, they don’t have to spend a dime on marketing. They know that once they get in with Tom and successfully complete projects with him, they will never need to market their services. Tom will continue giving them jobs and projects.
Secondly, and this goes hand-in-hand with 1. Processes and Systems, Tom creates service level agreements with all of his contractors. A service level agreement explains exactly how long a project should take. This helps the contractors save money, because if they can get the project done ahead of schedule, they will save on labor costs.
Disclaimer: The views and opinions expressed in this blog post are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action.