67. Professional Contract Proposals With Russ, Sky & Andy

There's a major difference between a contract and a sales proposal.

Well, I think if you're looking to sell something, you really need to keep lawyers and accountants well away.

Every bit of detail that you give around that itemizing of everything that is included is an opportunity for an argument, for a discussion.

I don't think proposals sell contracts, but they can lose them.

Sales is the transference of confidence.

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To industry experts and your fellow professional builders on everything you need to know to generate more leads, more sales and higher margins while improving the building experience for your clients. Hello and welcome to the Professional Builder Secrets podcast, a podcast by the association of Professional Builders for building company owners, general managers, VPs and emerging leaders. Here we discuss all things running a professional building company from sales processes, financials, operations and marketing. It's time for another exciting episode from the Professional Builder Secrets podcast. Joining us today are Sky Stevens, co founder for the association of Professional Builders. Sky, lovely to have you as always.

Thank you. Thank you for having me, Bosco.

Russ, co founder for the association of Professional Builders as well. Great having you, Russ.

Hey, Bosco, how you going today?

Doing well, my friend. Doing well. And Andy Scarta, head coach for the association of Professional Builders. How are you doing?

I'm rocking and rolling, thank you. Bosco, how are you doing?

I can't complain. I can't complain. Well, I'm really excited about our topic today and I'm going to get right into it. So do builders struggle with building professional contract proposals?

Well, I think it's fair to say that some do, and I think it all stems from having preconceived ideas about what a contract proposal is. Now, some guys believe it's all about itemizing everything that's included in a project along with a corresponding price, and then others believe it's a one or two page estimate. It's in all honesty, neither of those are likely to land a builder with too many contracts at a decent margin, if any at all. Now, I think to answer your question, the reason they struggle is because they've never been shown what needs to be included in a professional contract proposal or what it even looks like.

Okay, so why is it so crucial to have that strong contract proposal?

Well, let's just understand as well that there's a major difference between a contract and a sales proposal. And so very often we use the two words together. Contract proposal it's so important to have a strong proposal because you're still selling all the way right up until the very end. I mean, it's a formality at the point you're presenting the finalized contract proposal, but you are still selling right up until the end. So we're not going to bamboozle our clients with a really long legal document. We are giving them a proposal of this contract. This is a very succinct, summarized version of the legal building contract that we're going to have to draw up. But it's bringing together all the core pieces of information that they need to know in order to make a decision. So like I said, it's not necessarily fairly short. It's not a couple page estimate. They're still decent size in length, but they're not hundreds of pages like a legal document.

You know, what could possibly go wrong with an unclear contract proposal? Where does it turn into a nightmare for both?

Aren't you supposed to say what could possibly go wrong, go wrong, go wrong, go wrong? Isn't that the way the question should be asked, Bosco, how long is a piece of string? I mean, the two extremes that we've spoken about here, on one side, you don't have enough information. On the other side, you have too much. So maybe what we need to do is to say, while we're even doing a proposal and Sky's touched on it, it is effectively the last piece in your sales process. It is the document that is presented to the client that is effectively the summary of everything that's been agreed and discussed over your entire sales process. And you are confirming that both parties are ready to move ahead on that basis. So it certainly forms the summary, as sky said, but I think also the basis of the agreement between the builder and his client. And that has to be absolutely clear. Both parties need to clearly understand what is expected of them and what they get in return. So that, and you know, I always talk about the fact we're not selling widgets. We're going to be in a relationship with this client for potentially longer than a Kardashian marriage. So we better make sure that everybody knows what's going to happen in that period of time.

Okay, and do you have any examples where you know something has gone wrong? Do you have you had to coach a client to potentially revisit or look at their proposals differently? Andy?

Well, I mean, the thing that goes wrong is you don't make the sale that is essentially the goes wrong of this document. Remember, as sky said, we're differentiating between the legal contract and the contract proposal. And in the proposal document, it is essentially, this is the final offering that gets a client to move ahead or not. And I guess in simple terms, then what could go wrong? The client decides to not go ahead with you. That's the biggest danger that you face if you don't hit the balance that we've spoken about already.

Now, this is a sales document in many ways. I'm just wondering if working with a lawyer can really help the builders in the sales process when they're building the proposal, or does it actually deter them from getting the sale?

Well, I think if you're looking to sell something, which you are with a contract proposal, then you really need to keep lawyers and accountants well away because, I mean, seriously, an accountant couldn't sell a box of matches, and a lawyer would simply advise everyone else to get more lawyers involved before signing anything at all. So, no, those guys are extremely smart and extremely useful, but let's just keep them at arm's length a little bit longer until we get that actual contract, until we got people verbally probably over the line. And. And then we can put the clauses in there, which we know these guys love to use to. To protect us.

Really, somewhere out there, Russ, there's a statue of you in an accountant's office. I'm just saying hand in hand. Well, okay. What are some of the critical elements that your contract proposal? What should it have?

I guess there are so many things that it does need to include, but the most obvious, most important thing is going to be the price. And the most important thing about the price in your contract proposal is that it's a price everyone knew was going to be there. Because by the time you get to presenting this proposal, the price is not going to be a surprise. So we're not burying it in the last page of the proposal. It's going to be up front and obvious because we've been discussing the price the entire time. This is a proposal of works. This is everything that's included. And so obviously there are quite a few things to include. So, because your contract proposals, these are a very professional document as well. They're very styled, they're very beautiful. They're kind of like your brochures. You know, you get a graphic designer to put them together, you got a lot of information, but you are presenting them in a very beautiful way. Your contract proposals need to be just as beautiful. Let's stop with the white paper, just words on it looking like a contract, because that is boring. We are still selling. So let's put in a bit of effort. But because we've got so much information in them, we got to organize it somehow. So seriously recommend actually having a table of contents because you want people to be able to go back through this proposal and find what they're looking for. And down this table of contents you're going to find a whole heap of information. Of course you're going to need to have an introduction, like actually have a page that explains how you got here, why you are here, what you are looking for or you know, what your clients or potential clients are looking for, what it is you do that you're very excited to have been working with them them over the last eight months on this design. And we've put together in the preceding pages the full proposal of what's included. Have an introduction from yourself. Then you got to make sure you do have the price and the scope of works. This is super important. This is the real meat. This is what people are going to pour over the most. And then of course you've got other elements that are just going to help you sales wise. You need proof in there, you're going to need some testimonials, you're going to need a case study, you're going to need borrowed authority. What awards have you won, you know, what are your licensing details, all the things like that. You do want to have a few really important things like a schedule of payments. Make it really clear. And Andy did mention this before as well, responsibilities. What are you responsible for as the building company, but also what are they responsible for? And these are only a couple bullets. It's a one page of responsibilities really, but it keeps the clarity there. It's still a sales document, but you are being so crystal clear about everything. It's answering all of their questions. It's almost like you're trying to through every single one of their objections for not having clarity and why they wouldn't move forward, put it all in this document and then you step them through it. And a really good point, Ashley, that's zero in on this bit for a second when we talk about price and scope of works. Russ just mentioned this. He just alluded to it. It is not itemized, every little thing with pricing next to it. So the point when we go through a scope of works and what we teach our builders to do is when you've got the price, you've got a scope of work. So you are including detail about what is included. But there is a limit and there is a point and you Are not itemizing every point with every price. Here's what's included, here's what you have chosen. Here are your selections, blah, blah, blah.

It's not a bill of quantities.

Yeah, absolutely, absolutely. So it's not that we're gonna list everything. We're going to have our price at the bottom. But here's the kicker. Here's what you should do. It's kind of like buying a car. Here's the base model or here's certainly the model that we've specced up. Here's what we want. And this is the final price, but right below it, additional extras. Do you want the blackout pack? Here's the price for that. Do you want a swimming pool? Here's the price for that. Maybe these were things that were discussed, not committed to, and so you can tick those boxes and add them on, but this was the price. Everything that is approved up until this point, that is so, so, so important.

Yeah. And then that's a great opportunity as well to go in the. The direction that suits the prospect because you're going to get certain prospects that are building their ideal home, you know, their dream home. And budget isn't an issue for those guys, so they want to be made aware of what they can upgrade to. But someone building their first home where budget is a major constraint, you've got to give those guys options to actually downgrade to pull the budget back. So, yeah, you can use this strategy in two very different directions.

But you've got your main price. You've got the price, and it's only got these optional extras or options to remove at the bottom. But this is the biggest mistake we see builders make is when you itemize everything, you list the price next to everything. That's when you get. Consumers get really picky.

And that price as well, that should be the figure they are expecting. Yeah, yeah. This shouldn't be a shock to anyone. Yeah. That price that lands on that proposal you've been working towards, that you've kept them in the loop. That is the figure you've been talking about.

And just to jump in on, on the back of what sky was saying, every bit of detail that you give around that itemizing of everything that is included is an opportunity for an argument, for a discussion. So, you know, to be cheap.

Can my brother do this instead?

Yeah, yeah. My uncle's a painter. No, what we want to do is make sure that the things that were big items, emotionally driven things in the build. Absolutely. Let's make sure that they see those are there. But don't open yourself up to the kind of headache that itemizing everything will bring you.

Now, should they also be some technology with the proposals? Because I was just thinking about this recently. I got a quote, but I had to scan and sign it and send it back. And I said, what if I didn't have a scanner? What if I didn't have a printer? So should there be some form of digital experience as we're going through this as well?

That depends, I think, on the client more than anything else. You will have worked with them over a series of months to get to this point. Go with what the two of you have been doing successfully up until now.

I think the important thing to remember here as well is this is a contract proposal there. They're not actually going to be signing the contract. So, yeah, there's really no need. What we are looking for is an agreement to then get a building contract created. That's the exciting part because that's when we get the lawyers involved.

All right, well, take me through the process then of what goes into building this particular contract proposal. You know, builder comes to you and goes, I need help. Where do they start?

Well, I mean, obviously we want them to stick to the minimum that needs to be in there. So the structure essentially of the document. And because we are always about systemizing and making things run easier, we want to make sure that they create a template of the document that is as all encompassing as possible in its templated form. And therefore they're not going to forget to put things in there if they decide at some point, relative to certain clients, not every section is needed. It's far easier to take things out than to remember to put them in. So obviously once you've got your structure laid out in terms of what it's going to include, you then going to literally have to populate each of those sections that Scott talked about in the table of contents. You're going to need to put the content in. And as we said, we've already covered really what goes in there. And then part of the fact we're talking about this is a proposal, it's a presentation judging it up, which anybody that would like to just leave a comment below on how to spell the word zhuzh. It's something we debate often, but we wanted to present professionally and to bring some interest into it. So the graphics, the images, the logos, those kind of things obviously are important. So that's kind of putting the template together. Once the template is together, then obviously what you're going to do is Per client and per situation, you're going to customize that template to that client's actual proposal and circumstances. And obviously the trick, as with all of these things, is it's never a completed work of, say, art. That's probably pushing it a little bit, but you're always needing to be going back, reviewing it, updating it. We've kind of bounced around the legal implications of a contract. If those things are changing, you need to make sure that the proposal is reflecting as much of those changes as is needed for the client to be happy to move forward. So it's kind of an ongoing optimization process.

And are there any considerations that builders to keep at the forefront when it comes to building these professional contract proposals?

Well, I think it's important to remember that obviously these contract proposals are unique because they're unique to the home that's been designed, but they're also unique to the client themselves as well. Now, at this point, you may have been working with this particular prospect for six to even 12 months or maybe a bit longer in some instances when the larger projects. So you've got a lot of information, a lot of data. And one of the early things that we always try to get our members to extract and identify is that people will build a home based on one of three priorities and that's budget, speed and quality. There's always one of those that is the major driver. And then they might have a secondary as well, but, but it's never all three. It can't be all three. Certainly if you ask the client what's the most important, they'd say, I want all three. But your job as the builder is to identify what is the primary driver. As we mentioned earlier, first home buyers budget is going to be a prime consideration because they cannot go over their budget. You've got to make sure that you keep them informed of the budget and make sure that this proposal comes in under the budget. If it's all about speed because the relatives are coming to stay for Christmas, then you've got to demonstrate in your contract proposal how you are going to deliver that home on time. Because if you're going up against another builder, that is what will win the project. So you might want to include a job schedule. Yeah, I highly recommend that you include a job schedule regardless. But certainly where speed is primary concern. Yeah, they've got a deadline then that you cannot do without it. And in terms of quality, well, you would probably already been dealing with this particular client through your online portal because communication is really important to these guys that are building their dream home. So, yeah, it's quality, but it's generally communication as well. So you would probably be using a tool like Build a Trend to manage all your client communication, because a quality build takes a lot of different selections, so you'd be documenting those through an online tool like that. So, yeah, there are a few considerations, but probably one of the. The main things, I think, where we see the opportunity fall over at this late stage is when the proposal is not delivered in person, because the builder might finally, after eight months of work, put this proposal together and they might have the greatest proposal of all, including everything that sky just mentioned. You know, it answers all the questions because that's what it's got to do. It's got to answer questions when it's sitting there, you know, on their coffee table for the next week or so. But you've done all that work and then you call up the client and say, I've your proposal ready, I've got your price. And they're like, yeah, just send it through. We're busy. It's very hard for them to come back from that position. And you can't allow yourself to get into that position.

I think, to challenge that and maybe clarify that maybe it's not. You're not going to lose it from not delivering it in person, because we've seen in the last few years, you can do it online. I think you're going to lose it if you don't present it.

Yeah, that's a really good point. Yeah. The modern world, we can deliver it. When I say in person. Yeah. Talking zoom as well these days.

But that's an important point. Yeah. Presentation. We've got to deliver it, step them through it. Absolutely. We know how to talk through all these selling points. We had this experience just recently. Gosh, a massive proposal that we were getting. Can't say what for, but it was a lot of money there and it was just email through. Interesting proposals, not gonna lie, but they were asking us for a lot of money and I couldn't help but feel so disappointed that this gorgeous proposal was just emailed through to us. And I just skimmed through it, like I didn't show it the respect that it needed. Whereas if they scheduled in a meeting, like, we couldn't meet in person, could we? What if they just scheduled a zoom with us to step us through this proposal and demonstrate so much value in every single one of those sections? Well, it's a completely different story, but they emailed it through to us. So it was like, ah, well, That's.

A double foul, isn't it? Because they didn't even to present it to you. They just, yeah, literally took that option. But what we see with a lot of builders is they've kind of presented it in the wrong way, first of all by saying, I've got it ready. And then when the, the prospect says just send it through, very hard to come back from that. You know, a better way to approach something like that would be to say something like, hey, we're almost finished with your proposal, but I do have a couple of things that I just need to go over with you both, so would you be free to meet on?

So.

And so, bang, you've got your date locked in. You can go and present your proposal. But yeah, you can't allow the prospect to take the initiative, actually cheat you out of your moment in the sunshine.

So basically what you're saying is that there's really an importance of following up from a sales perspective. To follow up on what you, you know, you're, you're offering and then trying to, to have some human connection while you're presenting it, to also try to.

Build some assurance it's the final delivery. We haven't even got to the following up point at this point. But yeah, you do raise a very good point there in terms of follow up, because you've got to get to this final delivery. Your job isn't done as a salesperson just by sending through the price. But yeah, you're probably not going to make the sale there. And then a certain percentage will because you've built up so much trust. Yeah, let's do it. Let's get this contract written up. But most people will have an objection or two. The classic we want to think about it. So you will have to follow up as well. And don't be afraid to follow up because we all know the stats on that.

Okay, so what are some of the most common blind spots that builders tend to overlook when it comes to this process outside of following up?

Well, when it comes to proposals, stick with me here. I don't think proposals sell contracts, but they can lose them.

Interesting.

A bad contract proposal can lose the sale, but a good contract proposal shouldn't be what makes them decide to go with you. It certainly shouldn't because you should be the only builder in the running. They're not comparing your proposal to someone else's. So that's not what's going to cinch the deal. You've been working with them for probably 6, 8, 12 months up until this point. Point, as Russ said, this is the final delivery. So this isn't the only thing that should be selling them. They do not close the sale. It's the presentation of the proposal. It's all of the work up until this point. This contract proposal is the formality to get them to agree to get a contract written up. So do you see what I'm saying? So we can lose the sale from a bad contract proposal. Imagine working with someone for six, eight or 12 months. You've done full concept designs, you've moved forward into a preliminary building agreement. You're doing everything. You've done all of their selection decisions and engineering, literally everything. And you've. Part of that prelim process was a fixed price contract proposal preparation. So this is your moment. You're delivering your proposal. If you do a bad job, if it's two pages, if you don't present it, if you just email it through, like Russ said, if you don't have adequate proof, if you can't demonstrate literally just demonstrating competence in this proposal, you can lose the deal because of it. I think that's really misunderstood. They're not going to win you the contracts because honestly, they shouldn't. You really should have done a lot more work. It shouldn't be all on it, but you can certainly drop the ball with a bad proposal.

Now, when we look at where we're going and what's coming up in the market and where things are right now, what should builders prepare for when it comes to building a foolproof professional contract proposal?

You've got to start with, every single builder needs to go out and buy a crystal ball. That's the start. Now that's a stupid joke. Your question is valid from this perspective. If I think back two years, Russ and I often reflect on the world three years ago, and then all of a sudden it changed. We could never have predicted what was going to happen in the January of 2019 that eventually transpired. March, April, et cetera, et cetera. So the reality in terms of preparation, that's why I said to you earlier, when you're putting the template together, make it as comprehensive as possible. But you've got to constantly be thinking about the circumstances that are going on now. What impact does that have on my proposal? If inflation is a big talking point, if recession is a big talking point, whether or not you put that into the proposal depends on how serious it is. But you'd certainly want to put it into your presentation or maybe as Scott spoke about the introduction, in other words, setting people up. And Scott touched on this and I think I'm just going to highlight it a little bit. We always talk about when it comes to objections, try not to have them. And one of the ways that you can have or avoid an objection is to make sure that it's already covered before the question even needs to be asked. It's really, as I said to you earlier, it's an ongoing optimization process. You've got to be reviewing it, You've got to be be taking the current economic circumstances, the local economic circumstances, this client's particular situation into account and then making sure that every single proposal is presenting the most up to date information that you possibly can. If you're asking me to tell you what's going to happen in 2023, I'm afraid my crystal ball is actually in for servicing at the moment. So I can't do that for you. You or not today anyway, I'll tell you in December.

You see, it's in the state of the residential construction. The whole year is predicted.

I missed that one. Good pickup, Russ.

I think just going back to what you were saying though, Andy, I just want to highlight this point for everyone because you said it quite quickly, but you're answering questions before they're asked. Yeah, but the main question we are trying to answer in the proposal, which will change, it's seasonal, it depends on the quarter, it depends what's happening in the economy, whatever. You were trying to answer the question why now? Why do they need to get started right now?

Excellent.

That needs to be us leaning into two key things, where's the urgency and where's the scarcity. And so that's what we got to make sure we have in our proposals.

Which is why we have construction slots.

There we go.

Well, there's one way. Here you go.

What are other factors that could impact a professional contract proposal or even sort of impact the way how it's received? I guess.

Well, I think it's important to remember that there is no such thing as a done deal. So no matter how confident we are about a particular prospect, even when we're coming to these final stages, there is no such thing as a done deal. It can fall over for any number of reasons. Some under out of our control. Others, like sky mentioned, you know, a bad proposal can lose a deal and that's simply because of our reptilian brains looking to protect us and you know, searching for ways to actually not proceed with something, anything at all, whether it's a bit of exercise or making one of the biggest investments of our lives. You know, that voice inside our head is always, always trying to stop us from moving forward. So we have to be aware of that. And we can't take anything for granted. Which is why even when you deliver this contract proposal in person or in person in zoom, you can't take it for granted. You've got to build that rapport. You know, same with any meeting, any phone call. Just allocate that first few minutes, could be eight minutes, whatever. It's as long as it needs to be. Build rapport. Get everyone comfortable on on side before you start. And another thing that I think is really important, especially in this day and age. I mean, it always has been important, but now more than ever. This is a fixed price contract. If you're delivering a cost plus contract, then you're leaving money on the table. Yeah. So this should be a fixed price contract, in which point it has a very clear deadline, which in the current climate is no more than 30 days. And after 30, you reprice that proposal. Regardless, it will have gone up in some area. It has to go up. So yeah, you cannot leave a price on the table for longer than 30 days. So combined with your construction slots, there's a, another urgency factor there.

You talked about the fixed pricing and it shouldn't go longer than 30 days. I'm assuming you're referring to a lot of builders that haven't done this and got into a lot of financial difficulty because of of that, is that correct?

Oh, absolutely. We saw proposals left on the table for far too long, even when it became quite clear that prices were rising. But I think maybe a more extreme example of what's gone wrong in the last couple of years is the proposal was delivered, the contract was signed, but the contract wasn't able to start in a lot of cases for circumstances well beyond the builder's control. And they still honoured those prices that were agreed to, which they should really not have done. That was the point at which they should have renegotiated with the client. The contract hadn't started, they were perfectly entitled to renegotiate. As part of that, if the client didn't want to proceed, they simply handed back the deposit. Would have been a little bit disappointing, but much better than proceeding with a loss making contract. But unfortunately, in a lot of instances, especially in the larger building companies, that did didn't happen. Which is why so many large building companies lost so much money over the past 18 months.

Can you share a story from your builders that you have seen success utilizing a professional contract proposal? And where did you See the success?

Oh, totally. I'm not sure if one story in particular stands out to me, but I'm getting a few just from the points that we've spoken about right now, like from even just bringing up, look, we don't think that a contract proposal is going to win you a contract, but it can certainly lose you one. Definitely. When a lot newer builders come on board as a member, because as a member of apb, you actually get our proposal template and a full example so you can see what it would be like if you were to present it. And because they can be so night and day, it depends how systemized your building company is to begin with. But if you're relatively new and you don't have a template or a proposal like this, when you start implementing our proposal template, the structure, the order, the detail, everything, I can think of a lot of stories, a lot of posts in our members group of builders really just saying, wow, like here's a message from my clients who were amazed and blown away by the level of detail we were able to provide in a proposal. So that's on one end of the spectrum, but it's comparing to maybe very early on in their journey and maybe they actually were getting compared to other builders and that's why it was a massive win. But on the other end of the spectrum, I can certainly recount many stories in the last few years of a lot of builders being even quite surprised and very happy because they moved their entire proposal presenting process from in person to online because quite frankly they had to but didn't see a single difference in conversions. And they've realized no from the structure, they had the template, everything and they were just able to present it it face to face online on something like Zoom. I think that was a major win as well. Like the system works, the process works, we can deliver it in a different format.

I think just to add to this, more and more we are starting to sort of talk about the fact that sales is the transference of confidence. And I think that the overriding message I get back from clients is they feel confident presented a professional proposal. It's the old story, fake it till you make it. If you're not really confident, if at least there's something that makes you feel confident because you're proud of that document, you know, there's another little extra thing to help you in that proposal meeting.

Should be excited about the information that you're about to share with these people and the prospect of creating what's being designed. Yeah, yeah. You shouldn't be afraid of that at all. Nervous?

We've talked about details, we've talked about confidence. We've talked about following up any final words of wisdom before we get into perhaps where we can, you know, get some resources to help our listeners out there.

I think you just touched on it there. Confidence, confidence, sales. There's absolutely no doubt if there's any hesitancy at all in your delivery or whenever you're speaking to a client that will transfer over to the them. And then the reptilian brain kicks in and starts giving us a reason as to why we shouldn't proceed. So I think it's really important to be confident and I think having a professional contract proposal helps with the confidence because you are just following a process at that point.

Yeah, I agree. Having a template gives you confidence. Building on that template, improving it with every single proposal you create gives you confidence. It's kind of like, like structure gives you freedom. Templates and systems give you confidence. I love it.

Excellent. And for our listeners out there, what kind of sales resources can they access from the APB and where can they get these resources?

Bosco, I'm so, so glad you asked this question. I've been just dying to share this hashtag. Join the apb. Look, as usual with these kind of things, we do have some free resources. Our mission statement is to improve the industry for builders and consumers. So there's a bunch of free stuff available on our website, but the truth is, as a member, this is the end of the sales journey. So, you know, we have all of the training, all of the templates to literally walk a client through from that first meeting all the way to this point. And what our members get is the actual template, the actual document structure is done for them. Essentially all they've got to do is drop the information into their template and they're good to go as far as this particular thing is concerned, which is probably a good way to kind of wrap up this discussion. We've spoken about the fact that by the time you get to present this proposal, you've spent six, seven, eight, maybe nine months with these people. That proposal document is largely a summary of everything that has been agreed to already ready through the process. And every one of our sales resources is designed to help builders get those micro commitments across those nine months so that when you actually present this final document, you don't need to be nervous or worried because it's really just summarizing what has already been agreed.

Excellent. Well, Russ, sky and Andy want to thank you for your time and energy as well. And another great conversation. I look forward to having you back again.

Thanks.

Thanks Bosco.

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