You may remember seeing Benjamin Franklin Plumbing®, Mister Sparky, America’s On Time Electrician®, and One Hour Heating & Air Conditioning® appear on The Celebrity Apprentice recently. In their episode, the first ever featuring a service company, wily project manager Bret Michaels came up with catchy and creative jingles that won Mr. Trump’s challenge and the hearts of the company’s executives. These catchy jingles are now being used nationwide by the brands.

One of the best attributes I like about the people I meet in Nexstar is their entrepreneurial spirit. This attribute alone is what inspired most owners to go into business for themselves. Everyone has strengths and limitations. An entrepreneur will always tackle what they don’t know. They figure it out or find a way around every challenge and take pride in accomplishing what they thought they didn’t know. Every business is started by an entrepreneur. In time, the entrepreneurial spirit that started the business will become the anchor to its growth.

As a kid, I’m sure you must have tried running down a steep hill. Remember how easy it was to start and get up to speed? It was almost effortless. But gravity soon began to work against you. You were traveling faster than your feet could carry you. Next thing you knew, you had swan-dived into the side of that hill. When it happened to me all I could think about was how my mom was going to kill me for the grass stains streaking the front of my shirt.

I subscribe to Fortune Small Business Magazine. In a recent issue, columnist Jay Goltz wrote an article called Do the Math. He described a friend’s business this way…

“My friend was running something of a Ponzi scheme, except that he was conning himself instead of clients.”

The article illustrated how you can fool yourself (and your banker!) into thinking you have assets when it’s all just a house of cards. I have seen lots of balance sheets built on faulty accounting. If you are starting to sweat, read on. You can fix your financials and you can turn around a bad financial situation…if you are willing to apply some bare bones business basics.

This will be the last article in this series. Here I will respond to some common questions and criticisms that arise about flat rates from contractors around the country.

Isn’t flat rate pricing merely a sneaky way to raise prices?

I’ll begin my explanation by repeating a key statement from last month’s article.

It is critical for a contractor to perform detailed numbers crunching before going to a flat rate system. Otherwise you may well set your flat rates below your true cost of doing business.

This numbers crunching ought to take place whether you are a flat rate or T&M contractor. It’s just that by implementing a new pricing system, you are forced to do what you should have been doing all along.

I first got into flat rate pricing as a defense reaction. My company made a transition from new construction to service, replacement and major remodeling in 1972. Since I was one of the few people in my market who knew what it cost to operate my business and what kind of selling prices I needed to be competitive, my prices were a lot higher than the going market rates.

It was tough competing at first. Consumers could see that my hourly labor rate was a lot higher than what other PHC service contractors charged. I got a lot of complaints about overcharging.

There must be a better way, I thought. I wasn’t about to take the route so many PHC contractors do in similar circumstances – lower my prices to the point where I couldn’t make a decent living. So I came up with the notion of de-emphasizing the selling price of labor via flat rates.

Once upon a time, I worked at The Body Shop. The Body Shop is that green store with the prime location at your local mall. They sell perfume oils and lavender body scrub and lip gloss that tastes like mangos. I love The Body Shop products and I was excited to learn the retail game. So, I got a job there.

It was fun! The sales presentation was to get customers to try the lotions and potions. It worked…the smell and feel of sesame body butter sells itself.

Interestingly, NO ONE came in the day after the sale and accused me of ripping them off. The same people who cry foul at a middle-of-the-night drain cleaning charge will drop $250 on nut oil massage products without blinking an eye.

Homeowners and businesses across the country are replacing their clogged and disintegrating sewer mains while their landscaping stays in tact. In fact, plumbing contractor sales are going up because trenchless technology and techniques are going down-under.

Until recently, homeowners shied away from taking the plunge into sewer pipe repair because it was a messy and costly endeavor often involving multiple contractors in plumbing, excavating and landscaping trades.

Traditional trenching used to be the only solution for sewer pipe replacement, but now, trenchless pipe lining and bursting technology has hit the scene. Trenchless pipe replacement has great opportunity for homeowners to preserve their landscaping and street appeal while offering contractors a new business opportunity. Surprisingly, I’m finding the industry is not fluent in trenchless. Like homeowners, contractors have shied away from it because of the investment in new equipment and training to do it, including trained sales personnel who can talk the talk and explain the options and build trust among homeowners to earn the sale.

Have you seen the TV show, What Not To Wear? In one hour, they perform a fashion and grooming make-over on a disheveled woman (baggy sweats at the mall) or a way-too-casual man (tank top out to dinner.) The show demonstrates how, with a little education and practice, you can transform from schlubby to sensational. Really, it’s just a few tips. Wear nice clothes that fit. Accentuate your best features. Put on a little makeup. Stand up and smile.

Hmmm. I wonder if we took the same make-over approach to what we SAY? Imagine if a hidden audio recorder captured your conversations? Yikes! Suppose we established a few basic communication rules and improved the way we interacted with others? What if we assembled a list of frequently asked questions about our business and crafted helpful answers? What if we selected three tough questions (about price?) and practiced appropriate responses? I wonder…

Since the idea of the flat rate system came about, hundreds of my colleagues around the country have adopted flat rate pricing mechanisms, many of them inspired to do so after attending my “Business of Contracting” seminars. This is a meaningful step toward professionalism in our industry, but only a small step considering that there are tens of thousands of residential PHC service firms doing business across the land.

The time is right for a thorough review of the subject. This first article will explain why I believe flat rate pricing is the way to go. The second article next issue will report on some personal experiences with flat rates. Part 3, to run in September, will answer some common questions and clear up misconceptions about flat rate pricing.