19 Mistakes Struggling Contractors Make – Part 2

July 24, 2015

The focus of magazines like Contracting Business is successful contractors. Yet, success eludes many, if not most contractors. They struggle. And there is a pattern to their struggles. Here are 9 mistakes struggling contractors make.

11. They Pay For Time

Similar to the mistake of selling labor hours, struggling contractors pay for labor hours from their technicians. If you pay for hours, that is what you get. If, on the other hand, you pay for performance, you get that. Performance pay is really the mirror of flat rate pricing. The use of both together locks in gross profit from each service call.

12. They Hope Without Acting

Struggling contractors do not make annual plans. They do not budget. They operate from the checking account and hope that things will get better in the future. There is no path to prosperity unless it is planned and built.

13. They Ignore Reviews and Social Media

Online reviews and social media are replacing neighbor to neighbor recommendations and referrals. Struggling contractors do not monitor their reviews and do not participate in social media. Thus, they have no idea what people are shouting about their business to the world. They have no ability to influence the conversations or to correct bad information.

14. They Run Their Businesses Like Personal Piggybanks

Struggling contractors use their businesses to pay all kinds of personal expenses and luxuries. They pay for a new luxury car, boat, or lake house out of the business, sucking profits from the company and endangering future operations, let alone the future salability of the company.

15. They Get Financial Information Too Late To Act

If it takes too long to get financial statements, it becomes impossible to make timely corrections. This is especially true regarding cash and payables. A daily dashboard of key information can keep a manager on course and cash positive (e.g., the Service Nation Alliance uses one based on Ron Smith’s work).

16. They Become Their Customers’ Bank

Struggling contractors will bill customers, waiting for the customer to pay instead of collecting at the time service is rendered by cash, check, credit, or debit. While it may not be possible to collect at the time of service for some commercial customers, that should never be the case in residential work.

17. They Do It Alone

Struggling contractors usually struggle by themselves. They do not network with community groups or local trade associations. They do not invest in business alliances that provide them with resources to make life easier and business simpler. Instead, they reinvent the wheel.

18. They Wait Too Long to Form an Exit Plan

By the time a struggling contractor thinks about an exit plan, it’s too late to create one. It can take years to properly prepare a business for a good exit. Struggling contractors do not think about an exit until they can no longer work and want an instant out. By then, it is too late.

19. They Become Indispensable

Struggling contractors never hire up. They never hire people better than they are and give them their heads. They must remain the go-to-guy who knows the most and is the most essential. This limits their ability to ever grow a business beyond their own personal imitations. It also makes for a business that can only be sold for the value of its customer list.

You may or may not make these same mistakes. If you do, the good news is you can correct them. Every successful contractor corrected his mistakes. So can you!

For help with your business, check out or call 877.262.3341. Ask about an upcoming, FREE “Success by Design Day,” which are held around the country a couple of times each month.

About the Author

Matt Michel | Chief Executive Officer

Matt Michel was a co-founder and CEO of the Service Roundtable ( The Service Roundtable is an organization founded to help contractors improve their sales, marketing, operations, and profitability. The Service Nation Alliance is a part of this overall organization. Matt was inducted into the Contracting Business HVAC Hall of Fame in 2015. He is now an author and rancher.