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