32 BUSINESS AND TRAINING
Getting more customers may seem like an overly simple growth strategy , but it is worth looking at first . Often , this is the least risky and most attainable growth strategy . The question is how you are going to make that happen .
Usually , increasing sales from your existing market requires a price reduction , like a promotion or increased marketing . Most plumbers are not a fan of discounting service , and I agree with them . Not only does it devalue the labour , but also the cheapest is rarely the best . Customers know that . It can get a customer through the door , but you may have to continue to offer discounted pricing to keep them . Unless you have a very firm grip on your numbers , this is a dangerous game to play . Marketing efforts or sales can be effective , if executed properly . There is a bit of a risk in spending money and hoping for results , but always ask yourself how you are tracking the return on the marketing investment . Stick to tactics that allow you to track that easily and do not sign contracts unnecessarily .
Finally , keep in mind that this strategy has a shelf life . At some point you will reach market saturation . That will never be 100 % unless you are the only plumber in town , so don ’ t even try .
MARKET DEVELOPMENT Market development looks for opportunities to bring your current services to a new set of customers . Geographic expansion is the most common tactic for this , and a fairly obvious growth strategy for plumbers . Keep doing the same work in more places . your existing customers or attract new ones . For instance , you could add septic pumping services to a service plumbing business . But do you have an employee with a CDL or will you have to find one ? Are septic tanks popular in your area ? How happy are customers with the current septic service providers ? All of these questions and more should be considered to reduce risk and make sure that your investment is well utilised .
MERGERS AND ACQUISITIONS The idea of buying another company might seem intimidating , but it is actually very common . Even small companies can acquire . This is a fast track way to create growth , but it does require upfront capital .
Most people immediately consider buying a competitor . That can be a great way to increase market share , but that is not the only kind of acquisition out there . Consider backward and forward acquisition as well . Backward acquisition is when you purchase a supplier . For instance , if you work with a leak detection company who provides you leads for slab leak repairs , you could buy that company — now you have revenues for the leak detection and the repair .
A forward acquisition would be exemplified by buying a fixture retailer . If there is a showroom for plumbing remodelling or fixtures for which you would like to do the installation work , acquiring that company is a sure-fire way to get the contract .
Some may argue this strategy has minimal risk , but do not take it for granted . You probably saw success in your current geographic market because you understand the area and the customers . Moving to a new area means you do not have a network to build customers from , it means you do not know the suppliers or the inspectors , and there may be different codes or common problems than you are used to dealing with . Everything from soil type to climate can change plumbing practices , so do not take your success for granted in another market .
Another way to develop the market is to bring your services at a different time , rather than a different place . Expanding service hours or offering emergency service is another way of developing the market to build your business .
SERVICE EXPANSION AND DIVERSIFICATION Developing new service categories is a great way to build a plumbing business . This might mean the purchase of new equipment that diversifies your offerings , or it might mean expanding the type of work you do .
Training and market research are incredibly important to this type of expansion plan . It is not as simple as buying the new shiny machine at a trade show . You have to understand your market , your talent pool , and consider whether you can sell to
August 2018 Volume 24 I Number 6