7 Traps To Avoid

That’s what Jeff Carowitz, vice president, Hunter Industries, San Marcos, Calif., told a group of nearly 50 irrigation professionals who attended Hunter’s Preferred Contractor Conference.

After a day of product discussion of business-oriented roundtable discussions, Carowitz provided the group with his expectations for the coming year, emphasizing that contractors should spend more time planning and strategizing if they want to succeed in the face of this year’s uncertainty.

TRAP #1. “The most important thing is to beware of potential traps that could sidetrack your success,” he noted. The first trap he warned contractors to avoid is the idea of trying to grow too fast.

“Be very wary of doing this,” Carowitz warned. “People all over the country are saying that they’re selling all they can, but that can create problems.”

In order to manage this growth, Carowitz recommended contractors have a plan to incorporate new sales and customers into their operations. “If your ability to respond suffers with growth, you risk losing existing customers,” he noted. “This is especially true with your top accounts who are used to the best service. Continuing to service them at the level they’re accustomed to will be difficult as you grow.”

TRAP #2. Some companies will get too complacent because of how easy growing has been of late. “People are inclined to do the same things over and over when times are good, but that’s the easy way out,” Carowitz said. “The tough way is to change. Doing so will cause pain, but you have to do this to grow and be successful.”

Examples of change he suggested contractors consider are expanding into lighting, computerizing the routing process and focusing on add-on sales.

TRAP #3. Carowitz’s observations over the past few years have shown him that an increasing number of contractors are struggling to find the right marketing mix for their business. “If the phone is ringing and you can’t get to all of the estimate calls, reallocate your marketing dollars because there’s no reason generating leads you can’t follow up on,” he suggested. “But don’t stop cultivating the market when the phone is ringing off the hook. Maybe you need to focus more on generating referrals, which are more profitable business anyway.”

At the same time, Carowitz reminded contractors to be mindful of the customers who contributed to their growth in the first place. “Your existing accounts are the long-term clients that stay with you,” he noted.

TRAP #4. Carowitz talked of one irrigation contractor who had a lucrative relationship with the largest homebuilder in this town. Their contract meant that this company was installing new irrigation systems all over the market. Unfortunately, the construction company went out of business and took the irrigation contractor with it because the irrigation company had fallen prey to another trap.

“Don’t put all of your eggs in one basket,” Carowitz related. “Assess your large, lucrative accounts and measure what your potential downside would be if you were to lose one or more.”

“Diversification of accounts is good,” he continued, adding that diversification could come in the form of picking up more accounts, offering more products and covering a wider geographic area.

TRAP #5. “You need to have a strategy to keep your best people through tough times,” Carowitz said. “Not having a people plan is a dangerous trap. You need a holistic approach that should address what I call the three Rs: Recruit, Retain and Reward.”

Along with a plan for keeping people, Carowitz said more contractors need to improve on their delegation efforts, noting that a business is only as good as it runs when the key owner or manager isn’t present.

TRAP #6. Low pricing for irrigation work frustrates plenty of contractors, and Carowitz said one cause of this problem is that “too many irrigation companies aren’t trying to be in business. Too many people are working just for wages and not to build a company,” he explained. “You need to have a pricing strategy that will deliver you a fair return. Don’t just cover your wages.”

TRAP #7. Not watching the finances is dangerous for any businessperson. That means collecting bills quickly enough to pay your own bills on time as well as having a thought-out pricing strategy to deliver a profit.

“Cash flow and profits both have to be watched because not having enough of either of them can ruin you,” Carowitz warned.

In addition, the rapid growth many companies have enjoyed has led them to make impetuous decisions with significant long-term financial impact. “Don’t get over extended with easy credit,” Carowitz noted. “It’s very easy to buy a new truck at low financing, but think about how that truck fits into your plan and what you’re going to do with it in a few years.”