Stand the Test of Time: 5 Ways to Grow a Lasting Contracting Business
October 24, 2016
His clients write him blank checks every Monday. He’s a two-time recipient of Renovator-of-the-Year award from the Toronto Home Builders’ Association. He’s been a general contractor for 40 years and has an 18-month waiting list. And he’s been the host of a popular home improvement radio show for 16 years.
Yeah, I think Frank Cohn can teach us a thing or two about sustainable, contracting business practices.
Cohn first got his start as a teenager in 1969, cutting grass and doing small household jobs for extra money. Impressed with his work, his customers frequently asked him to take on more sophisticated jobs until he was eventually doing “full-blown renovations” that financed his university education in anthropology and geomorphology.
Looking back, Cohn says he relates to millennials today who struggle to find meaningful, well-paying work when they graduate. “I had the same problem 40 years ago. I thought, ‘Fine, I’ll be self-employed so I don’t have to rely on other people.’ I was making staggering money as a contractor, so why not go into that full time?”
While Cohn’s self-taught approach to starting and running a contracting business may differ from today’s entrepreneur (he doesn’t have a computer or an email address and has never been on the internet!), there’s a lot to learn from his longevity.
His advice could fill a book, but we’ve narrowed down Cohn’s time-proven tips for staying relevant, in-demand and happy with your business—for 40 years and beyond.
Be Present: Join an Industry Association
Cohn’s first few years in business were “hit and miss” in terms of getting jobs, which he credits to his utter lack of knowledge about business. “I relied solely on referrals. I had no idea how to run a construction company properly,” he admits.
A member of the Greater Toronto Homebuilders’ Association suggested he join and that’s when his career took off. “I went to one meeting and learned so much that I signed up right then and there.” Since then, he holds the association’s attendance record: 19 years and two months without missing a monthly meeting.
As a member of the association, he learned critical business skills such as how much to charge for his work, how to write a contract, which products are best for each job, where to find sub-trades and more.
“Every time I went to a meeting I’d learn something, and that made me that much smarter than my competition. I could go into jobs and charge double the price [of my competition] and get the work because I could explain [the methodology] better and each line item of my estimate. My membership is what kept me in the contracting business all these years. If I hadn’t joined, I would have gone bankrupt.”
Find Your Inner Influencer: Be Active in Your Industry Association
Attending association meetings was just the start for Cohn. He soon joined the Renovators’ Council, a subgroup of his association and was eventually named chair of the Building and Land Development Association’s Ontario division.
As part of his work on this group, he helped spearhead the creation of RenoMark, an organization that connects homeowners with renovators who adhere to a strict code of conduct, which include carrying liability insurance, enforcing workplace safety standards and pledging to return all customer calls within two days.
His elevated status in the industry gained him attention. In 2000, Toronto radio station Newstalk 1010 asked him to audition as a replacement for a popular call-in home improvement show. He’s been hosting every Saturday morning ever since.
“What I’ve learned through the show and the contacts I have through the radio station is unbelievable. I can call almost anybody now. Presidents of companies and owners of businesses know who I am and will help me out if I, my callers or clients have issues with their products or services. I would never have achieved any of this if I hadn’t joined the Home Builders’ Association all those years ago.”
Don’t Do it Alone: Find a Mentor
Cohn says the support and guidance from a few mentors over the years also made a tremendous difference to his long-term success. He came to rely on the occasional support of one of his fellow industry association members and an uncle who employed him in his furniture business on a three-year hiatus from general contracting. “He taught me a lot about running a business and handling money and people.”
The guidance from experienced business people is particularly valuable when you have a specific problem that you’re not sure how to manage, he says.
Do What’s Best for You: Don’t Be Afraid to Remain a Small Business
There was a time when Cohn employed a number of workers and ran a booming business. But 16 years ago, he made another decision critical to his satisfaction and longevity: He downsized.
“You get to a certain size where one person can generally manage it, usually up to $1 to $2 million in sales. Beyond that, you have to hire. Unfortunately, profits don’t double. A lot of guys get into this middle section and can’t understand why they’re not making it. You almost have to triple or quadruple the size of your company to see big differences in money going home.”
Cohn found himself smack dab in this phase of business with only a month’s worth of work lined up. “For me, that was like being out of business.”
He noted that the big renovation jobs had dried up due to an economic downturn, but people still had money for bathroom or kitchen renovations. He decided to scale back, reducing his stress and increasing his profit margin significantly. He acknowledges that growing a business into empire proportions may be great for the ego, but can create strife and stress that may not be worth it.
“I find that a small business is better. It’s leaner, easier to keep under control, the cash flow isn’t as much of a problem and you get to enjoy the fruits of your labor every day instead of worrying about the bigger things.”
Today, he has one lead-hand carpenter he works with regularly but does the rest himself, taking on one job at a time and focusing on doing it right. His sterling reputation means that he’s booked up a year-and-a-half ahead—mostly with repeat customers who are renovating their homes room by room and are happy to wait for Cohn.
Always Go Back to Your Budget: Stay on Top of Your Finances
While contractors can command hefty deposits and installments, Cohn keeps it exceedingly simple.
“I tell clients I need $500 to hold my time, that’s it. And I invoice every Monday for last week’s labor, materials and charges. That way there’s no sticker shock.”
Cohn is so trusted among his clients that many of them leave a blank check on their dining room table for the previous week’s work. He says the weekly system is less labor-intensive and ensures his money is reasonably liquid at all times.
Money management wasn’t always this straightforward, he admits. He’s come close to bankruptcy a couple of times over the years due to what he considers a classic rookie mistake. “You get a deposit and put it in your bank account, forgetting it’s not your money. You get into trouble when you’re taking money out of the business for things like cars or travel. You have to make sure each job is paying for itself.”
It wasn’t until his second brush with bankruptcy that he got serious about creating a budget and sticking to it. He ditched his credit cards and now manages his personal and business finances entirely in cash.
Cohn’s wisdom was hard won through 40 years of learning on the job, but he says he wouldn’t change a thing. He’s got the business he wants, the clients he loves to serve and the satisfaction of doing an honest day’s work every day. “Life is wonderful.”