Referral Business, How does it work?

[Pro Service]

Referral Business, How does it work?

I'm starting this thread in hopes to find out how they got to be a referral only company or one man shop. I've asked the question a few times without any replies. There must be a certain set of criteria or it may be a very local thing where its even possible because I think there's somehow there's some sort of advertisement in there unless you only do big jobs for general contractors and not really service work or remodels where you need a steady influx of customers. Feel free to add questions for those of you who don't work on referrals alone.


1) How is it possible to work solely on referrals, people gossip like mad and spread your name? Or all the other plumbers are bad?


2) Do you have any form of advertisement?


3) Are your rates cheaper than everyone else? Is that why they call you back or refer you?


4) What is the competition like, a few plumbing contractors in your area or like me close to 100 companies (Population of 300 000)?


5) How did you get to a point where you work only for customers who were referred?


6) In the beginning did you advertise and you took jobs from new customers?


7) How did it get to a point where there was so much gossiping you stopped advertising or having a website etc.


8) Now do you only take a return customer or accept a new customer if he was referred from a previous one?


9) Do you work only a few 1 hour jobs a week or take only large paying jobs or you have so many calls you work full time all week?


10) What service field do you provide : residential service, residential reno/remodel, commercial, Institutional, Industrial, drain cleaning?


11) If you take only a few jobs since it's referral only do you make a comfortable living or is it supplementing your pension, insurance payment, or your significant other is making the big bucks and you don't need a lot of money, etc?

[sewermonster85]

I'll put like this,I worked for a shop for 5 years...afterwards I went on my own. Been on my own for the last 8. Basically referrals and word of mouth...only advertisement is google..I run 3 or so calls a day. Some small, some large ,some take all day,some take 3 days ,some take an hour...its a decent living but the business end of it does get rough..I enjoyed my time on my own but after being up and down for a little bit,I'm probably headed back to work for a shop full time... keep my number ,run a few calls a week ,what I can run ,and slowly step away from my own calls and either sell the shop,or offer my number to the shop I work for..

[sewermonster85]

Rates are less expensive than others but not cheap.
strictly residential
drain cleaning, sewer rodding,and plumbing repairs
rehab,stay away from new construction.
referrals are great,people recommend people they like and go great work..that builds repeat customers .
key things to remember..
Look good,smell good,drive a decent truck. Keep truck clean.
do great clean work,no slop
never leave a mess in a customers home...ever..stand behind your work,answer your phone.,
Your word and a handshake still means something in this business...But c.y.a at all times.. any iffy thoughts,have a contract, and a signature.
deposits when u can ,especially any job over $1000 that requires materials. Be fair ,but make a living. Theres no point in doing this if you're not making money.
be fair ,but charge accordingly...
be understanding, but firm
be confident but not cocky
dont let customers dictate your price.
learn when to say no...

[PLUMBER RICK]

You pretty much summed it up.

Good read.

Rick.

[sewermonster85]

Thanks rick

[Pro Service]

I'll put like this,I worked for a shop for 5 years...afterwards I went on my own. Been on my own for the last 8. Basically referrals and word of mouth...only advertisement is google..I run 3 or so calls a day. Some small, some large ,some take all day,some take 3 days ,some take an hour...its a decent living but the business end of it does get rough..I enjoyed my time on my own but after being up and down for a little bit,I'm probably headed back to work for a shop full time... keep my number ,run a few calls a week ,what I can run ,and slowly step away from my own calls and either sell the shop,or offer my number to the shop I work for..

Why do you want to go back as an employee? What's rough about the business end?

I've been open for about 20 months now, referrals and repeat customers is very very low I can count them on my fingers. For me I wouldn't go back as an employee as it's like going to work as a pirate on a pirate ship every day, back stabbing amongst the pirates, gang plank to throw you overboard and the captain whipping you because you do good work. Also getting up at 4:40 AM to be on the job at 6 am, it creates so much stress. Also nowaday finding work is an olympic feat putting gas in your truck and roam the streets until you find a construction site. Good luck trying to find a plumbing boss on site they are all from out of the city and already have their snake crew. I quit construction because in 4 years when you add it all up I worked in total 3-4 months and I was 1000$ from bankruptcy.

I'm not the only one in that situation, I've talked to other plumbers and they to do black market plumbing and lot's of it even new houses with unethical GCs! Anyway that's another story...

I'm not busy like you, if you have 3 jobs a day I have 3 one hour jobs a week!

[sewermonster85]

The pay is what is drawing me over
..great pay ,benefits ,vacations, weekends off..
when you work for yourself you do all the books ,scheduling, running calls weekends,after hours ,holidays,. No money when slow, equipment upkeep,vehicle upkeep,bonds,insurances, Bill's..Health insurance is nuts,no time for anything else but the business. Did I mention Bill's? No family time it's just rough being a one man shop

[Pro Service]

The pay is what is drawing me over
..great pay ,benefits ,vacations, weekends off..
when you work for yourself you do all the books ,scheduling, running calls weekends,after hours ,holidays,. No money when slow, equipment upkeep,vehicle upkeep,bonds,insurances, Bill's..Health insurance is nuts,no time for anything else but the business. Did I mention Bill's? No family time it's just rough being a one man shop

Check your PM's

[Mightyservant]

We have had 2 Journymen who had there own shops. One guys business which he sold 10 years into it is still going after about 30 years of struggling with an unmotivated sales force and less motivated crews. The pack goes like the lead dog I guess. He had 2 partners and the 3 of them couldn't agree on anything, he got fed up with the lack of progress and came to work for us. This guy was a fitters fitter, one of a kind, broke the mold, we will never see the likes of him again. Anyways he finished his career with us and although he didn't enjoy the really great years in the late 90's, even though he had retired already and had been gone several years from our office we made sure he received bonuses even though he had been long gone as an employee. He had helped through the rough early 90's and we owed him for his leadership and hard work.

The other journyman who recently left us had his own small shop in WA doing medium size projects and he had enough of long hours, chasing money running work while trying to manage an office. He had to sub out fabrication which isn't cheap, sub out design so he closed up and came to work for us. He is a very gifted journyman who can size up the cost and impact of a job in minutes to my hours. I feel he really came to learn how we do it and we are ok with it becuase we all love the guy. He is one of the more respected younger fitters in town and has remained humble despite his popularity. He is currently trying to go out on his own but in this town work is cheap and only seems to get cheaper. Unfortunately San Diego is a cheap town.

I don't begrudge anyone who try's to strike out on there own that's what freedom is all about. One thing I've observed is that it helps to be a big fish in a small pond and have ability to adjust quickly to changing conditions. Be small enough to be nimble but big enough to take on complex requirements. You also need to have a big moat around you to stay protected during slow times and you need to be in a location where you have a fighting chance.

[PLUMBER RICK]

100% referrals. Other than a business card, no money spent on advertising. But remember that it doesn't happen overnight. I'm on my 21st year on my own. But 43 years working for others and working with others.

My typical area is a 5 mile radius. No need to drive at 11 mph average speed.

Customers are like family and they treat me like family.

Takes a lot of time and money to do everything by yourself. December is a killer as most of my insurance is paid. So you need to work, save some money and then spend it all before 12/31. Just to start all over again in January.

I share many jobs with other local Plumbers. And they count on me too. It's not competition, it's keeping the customers serviced. They can't always get me, so I share the work with others, and Vice versa .

Yes, literally hundreds of plumbers in my 5 mile radius, but always room for more. There is a large plumbing shop 4 doors from me with over 100 trucks. Still plenty of work and they even hired me years ago for specialty work.

Remember it doesn't happen overnight. Takes years of working the neighborhood for the neighborhood to be yours.

Keep up the good work and the work will come to you over time. Your customers are your best form of advertising and they don't cost you a dime.

Rick.

[PLUMBER RICK]

Got this email this morning from a new customer that found me on a neighborhood website. I invoiced him last night for a guest house lav stoppage. It turns out his sump pit was full of roots. I billed him just for the sink stoppage that I fixed and tested his sump pump. Returned for free when his handyman arrived and uncovered the pit to expose the pump and massive root growth. Pump was still pumping to the front cleanout. But pump sounded like it was excessive vibration and no automatic float. They would plug it in as needed.

Here is what he emailed me this morning. Originally took a screenshot but too much personal information. So I did a copy and paste instead.

Rick.

I love how you run your business. Thank you for helping me out. Things are extremely tight right now, so truly grateful for your integrity and honesty.
Have a wonderful, joyous and successful New Year.

Take care!

Aaryan R







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[Mightyservant]

Thats excellent and the stuff every journyman on service calls should strive for. It was / is a very slow process who's trajectory I've been fortunate enough to see starting out as a shop helper and several decades later as a journyman.

[sewermonster85]

It?s rough the first couple of years. Calls and money are inconsistent. I subbed for a few shops, , ran my own calls, labored for a couple here n there the first 2 years on my own to help pick up the slack until I was busy enogh to just run my own calls.But once you build a solid reputation people will call.. especially being a one man shop,you establish a good relationship between you and your customers.. a little on the more personal side. They begin to trust you a lot more. Respect you alot more. Now you're their family plumber,friends plumber ect..not to get repeat customers is weird,if you do a good job,next time they need something, they will call..and when they really trust you,they'll call and ask for referrals for other contractors like electricians ,car penters ,painters,heating guys ect...because they trust your referral because they trust you.
..its like pizza ,you order from the same spot. Yes it might cost more then otheres but it's good everytime, you know what you're getting.same rules apply. Be friendly,explain what you're doing,why you're doing it and the reason for the price. Unless it's just slow for everyone you should be their go to guy...its slow for me ,its been slow all year,but other shops around me are way slower than me so I know it's just bad for everyone right now... I wish you the best of luck sir... unions are slowly dying out,new construction is almost at a stand still so everyone is trying to do service work... i remember 7 years ago I would get laughed at by other plumbers at the supply house... They would say things like what are you going to do today? Go fix faucets and toilets? Snake out some drains? Laughing.. and I would be like as a matter of fact,I am.... Heck at the end of the week i would easily clear $1500 after taxes and materials...Service repair has always been the bread and butter of this business..Once the new construction side died down, a once limited field of service techs has became an oversaturated crowded field.. everyone's doing service work now...

[Mightyservant]

Even though service work is a smaller nut, it represents more profit percentage wise. We turn nothing down from beauty shops to commercial bldg's service, inspections, maintenance and new. I will admit that it's harder to earn money today than 20 years ago. It's much easier to shop a number and the pie has gotten smaller.