Last week we talked about how one’s ‘great reputation’ is only half the battle when getting clients. The other half is delivering on the promise of your great reputation. And this is the hardest half. So, let’s continue the story.
After having such an unfulfilling relationship with the first builder, I sought out other builders. But there was also another reason I went with a new builder besides lack of communication and follow-through. After my builder worked with the insurance company to get to a proper and fair dollar amount to do repairs he then sent me his estimate to do the repairs. Let me rephrase that. He sent me his estimate to do one quarter of the repairs for the full value of the insurance check. That’s right. He told me, and I quote, ‘with the insurance’s crappy labor rates and thin overhead margins we can’t possibly do all that work.’ Here he was telling me that based upon his company’s business model, he couldn’t do all the work required, but he could do some of the work and take all the monies to cover his bloated overhead. (I know, stop laughing. I’m not ignorant of the world of insurance. Just didn’t expect him to be that much of a hog. But apparently he underestimated this particular client.)
The reality is, this is totally parallel to the traditional law firm model. This builder has a number of permanent builders on his staff, pays health care, provides 401ks, dressed in designer polo shirts, drives a huge new gas-guzzling truck and, he, the general contractor, (think the senior partner) doesn’t do any work besides stopping in once in a while to check out the work in between courting new clients. He’s the figurehead.
But let’s talk about the new builder I’ve hired. First, while he was very cautious not to be rude, he was pretty appalled at the price tag presented by my former builder but said this builder bills himself as a premium builder and has a lot of layers of overhead he has to sustain. My new builder, on the other hand, shops the various components of the job to qualified and reputable independent contractors in their specialty – decking, siding, painting, foundation work. He then coordinates these independent contractors while getting his own hands dirty, too, doing his speciality. He doesn’t mark up materials, nor does he mark up the independent crews’ prices for the job. He simply takes a percentage for his work as GC. Therefore, ALL the required work will get done with the monies provided by the insurance company with a little left over to fix our lawn which will get destroyed once the heavy machinery moves in.
As you can tell, the quality of the work isn’t compromised by having the work done this way. As a matter of fact, what shocked me was the new builder pointed out critical issues that were not addressed by my builder that simply had to be corrected. This was not part of the first builder’s estimate. If it had been then his estimate would have gone over the amount of the insurance check and now I would have been taking money out of my own pocket to get one quarter of the work done! I also would have had an end product that was sub-par and potentially dangerous and a liability issue. Now his ‘great reputation’ totally was gone for me. Prior to this, being greedy, having a bad business model still left the quality of his work intact. Now this was destroyed. His business model had become ‘profit before anything’ and that’s really tragic.
However, with my new builder, I, the client, only have to deal with the one person. He puts together a team to do the work as required and takes care of coordinating their efforts, paying them, and he has no overhead that he must pass along to me because each independent contractor is responsible for their own overhead.
Smart solos are starting to do this. They are creating networks or collaboratives which allow them to take on bigger jobs in direct competition with Big Law. Others have written on this subject before as the idea is not necessarily anything new and there are some networks and collaboratives emerging. But like the introduction of the automobile, which only became a true disruptor when it stopped being just a new toy for the rich and instead replaced the horse and buggy for the masses, this model has a ways to go before it becomes mainstream. However, you will probably see more and more legal collaboratives as time goes on because the economy is ripe for this type of disruption. The key is getting started now.
I wanted to present this analogy today, though, because sometimes it’s hard to visualize how it can actually play out until you see it in play with something you might have more familiarity with such as home construction. More importantly, we already know clients don’t want to pay for profit margins and one-note players like senior partners. They don’t want to pay for the learning curve of associates. They don’t want the open-ended billable hour. They want the best work at the best price* with good and easy communication and results. Have you started thinking about a model like this? I bet you already have a referral network in play and maybe haven’t considered the possibilites. This is the basis for the model discussed above. Put your thinking cap on!
*best price doesn’t mean lowest price. Remember, I was willing to pay a premium for great quality. I just wasn’t willing to pay a premium price for dangerously sub-par work.