The AI Trap Contractors Need to Avoid
The central thesis of this episode revolves around the perilous inclination of contractors to employ automation as a means of evading fundamental business challenges, rather than addressing the underlying issues directly. I elucidate how many contractors, beset by a meager closing rate or ineffective follow-up mechanisms, resort to developing elaborate technological solutions, such as chatbots, in an attempt to mask their deficiencies. However, such distractions serve merely to perpetuate a cycle of avoidance rather than engendering genuine progress. I contend that true freedom in business is achieved through mastering personal leadership, cultivating accountability, and implementing robust systems, rather than relying on automation to rectify a flawed process. By the conclusion of our discussion, I aim to equip listeners with a structured framework to discern when to incorporate artificial intelligence into their operations, ensuring that it serves as a tool for enhancement rather than a refuge from the hard but necessary work of leadership and growth. This episode offers a profound exploration into the pitfalls of misprioritizing technological solutions within the contracting industry. The speaker articulates a compelling argument against the prevalent tendency among contractors to automate processes without first addressing the foundational issues that plague their businesses. For instance, many contractors facing a dismal 10% closing rate are inclined to invest in chatbots rather than scrutinizing their sales strategies or follow-up protocols. This tendency underscores a broader theme: the inclination to utilize automation as a means of avoiding the uncomfortable and often challenging tasks of leadership and accountability. Throughout the discourse, the speaker stresses that the core problem is not the technology itself, but rather the mindset that leads contractors to seek quick fixes through automation instead of engaging in the essential work of developing their leadership capabilities and refining their business processes. The episode delineates a structured approach to this dilemma, proposing a three-stage sequence: first, contractors must address the fundamental aspects of their operations, such as improving sales techniques and establishing accountability measures; second, they should systematize their processes; and third, only after these stages have been established should automation be utilized to enhance their operations. This methodical approach emphasizes the importance of addressing leadership deficiencies before incorporating AI solutions. In summation, the episode serves as a critical reminder for contractors to focus on the foundational elements of their businesses rather than succumbing to the allure of technological advancements. By engaging in the difficult yet necessary work of leadership development, contractors can liberate themselves from the constraints of their operations. This episode ultimately advocates for a reevaluation of priorities, urging listeners to invest in their growth as leaders before seeking out automated solutions, thereby fostering a more sustainable and successful business model.
Takeaways:
- Many contractors attempt to automate issues without having effectively led themselves out of those problems first.
- Utilizing AI to solve fundamental business challenges often leads to greater distractions rather than real progress.
- Focusing on personal growth and leadership is paramount before considering automation and AI solutions.
- The fundamental steps to business success involve mastering self, leading others, and then implementing systems.
Links referenced in this episode:
Companies mentioned in this episode:
- Contractor Freedom
- ChatGPT
- Claude
- Gemini
Transcript
Most contractors I meet right now, they're trying to automate their way out of problems that they haven't led their way out of yet.
Speaker A:They've got a 10% closing rate problem and they're building a chatbot.
Speaker A: ompt engineering tutorials at: Speaker A:And it feels like work, it feels like progress.
Speaker A:But that's why this is so dangerous.
Speaker A:It's yet another distraction in business.
Speaker A:And look, here's the truth that nobody's gonna tell you.
Speaker A:They're not gonna put this in some slick AI ad.
Speaker A:And that's this.
Speaker A:Welcome to the Contractor Freedom Podcast.
Speaker A:I'm Jason Phillips.
Speaker A:If you're tired of feeling trapped by the business you worked so hard to build, you're in the right place.
Speaker A:As a multi million dollar contractor and founder of Contractor Freedom, I've learned that freedom comes from mastering yourself, leading others, and building systems.
Speaker A:Each week I'll help you build a business that serves your life.
Speaker A:Because the goal isn't to build a bigger prison.
Speaker A:It's to build a business that creates freedom.
Speaker A:Welcome to Contractor Freedom.
Speaker A:Let's go.
Speaker A:Now.
Speaker A:Today is not an anti AI rant.
Speaker A:I'm not arguing against AI.
Speaker A:I'm arguing against misplaced priorities.
Speaker A:Look, I use AI every single day.
Speaker A:Yeah, I use ChatGPT, I use Claude, I use Gemini.
Speaker A:And I'm not telling you to ignore it.
Speaker A:I'm telling you where it belongs.
Speaker A:In the order of operations.
Speaker A:By the end of this episode, you're going to have a three stage sequence that tells you exactly when AI earns a seat at your table and when it's just the newest place to hide.
Speaker A:Before you chase one more tool, let's look at what that tool is actually standing in for.
Speaker A:The problem isn't AI.
Speaker A:The problem is owners using AI as a sophisticated form of avoidance.
Speaker A:So, you know, why do we hide in tools?
Speaker A:Because selling higher and holding people accountable is uncomfortable and exposing.
Speaker A:But tinkering around with the tools in the.
Speaker A:With the tools in the shop or the tools on the computer, you know what?
Speaker A:That feels safe.
Speaker A:And the owner stuck in the tool is the most expensive person in the building doing the cheapest work.
Speaker A:Here's everything that AI conveniently lets you avoid.
Speaker A:Raising prices, firing a toxic employee, holding a salesperson accountable to following the process, calling old leads, reviewing scorecards, having the hard, direct conversation.
Speaker A:Look, technology feels productive and leadership feels uncomfortable.
Speaker A:One creates leverage, but the other one, it creates results.
Speaker A:And leverage without results is absolutely worthless.
Speaker A:I want you to Think back to when you were on the tools yourself, how you felt you couldn't get away.
Speaker A:You were just, you were just like stuck there.
Speaker A:The job needed you, nobody could do it as good as you, so you just kept doing it time and time again.
Speaker A:And what happened?
Speaker A:What were you ignoring when you were doing that?
Speaker A:Was it your leads?
Speaker A:Was it your follow up?
Speaker A:Was it your pricing?
Speaker A:Was it your closing rate?
Speaker A:You know, what did it actually call cost you because you stayed on the tools too long?
Speaker A:What's life like now?
Speaker A:What would you, what are you telling other contractors when you see them still on the tools?
Speaker A:You're telling them that they've got to get off the tools and they've got to hire someone to do it.
Speaker A:Well, this is the same exact thing.
Speaker A:You know what changes when you put the tool down and you do the hard thing, which is typically personal growth, leadership, hard conversations, creating clarity, those type of things.
Speaker A:But say you ignored all of that and you automate it anyway.
Speaker A:Put AI in every area of your business.
Speaker A:Here's what you're actually buying.
Speaker A:You're automating a broken sales process, for example, that just lets you lose money faster and more consistently because competing on price is a race to the bottom.
Speaker A:AI is not going to fix your broken process, it's just going to wallpaper over it for a while.
Speaker A:If an owner can't close the deal and can't price at higher margins and can't hold the team accountable for their process, for their follow up or whatever it is, no amount of AI is going to fix that.
Speaker A:So, so let's look at the math.
Speaker A:If this is going to dwarf any automation improvements that you're going to get, let's say you're a million dollar business and your closing rate on your opportunities is 25%.
Speaker A:If you were able to take that from 25 to 40, that's going to add $600,000 of revenue on those same appointments.
Speaker A:That's hundreds of thousands of dollars.
Speaker A:And AI is not going to get you from 25 to 40%.
Speaker A:Executing a proven sales process is going to get you from 25 to 40%.
Speaker A:Now let's look at another example.
Speaker A:Let's look at your pricing model.
Speaker A:Most contractors are out there pricing at gross profit, you know, 45% gross profit margin.
Speaker A:I see it every day.
Speaker A:What if you could take that 40 and make it 60?
Speaker A:Now you can't do that overnight.
Speaker A:Let's say you made it 60.
Speaker A:If you're, if you're a million dollar business and you're making 40% gross profit, that's $400,000 in gross profit.
Speaker A:That means your cost of goods sold is, is a million minus 400,000, which is $600,000.
Speaker A:Now say you raised your prices such that you were now making 60% gross profit again.
Speaker A:That's like what, hundred, that's.
Speaker A:I think it's $1.5 million off the same $600,000.
Speaker A:We're talking hundreds of thousands of dollars in additional gross profit.
Speaker A:These are the things that own not trying to automate some little process.
Speaker A:Here's another example.
Speaker A:Rehash your old leads, the ones that didn't sell.
Speaker A:What if you could close 1 in 10 of those?
Speaker A:What if you could close one more sale per week just by getting on the phone for 30 minutes a week?
Speaker A:But that's not the fun, comfortable work.
Speaker A:That's, that's uncomfortable things and that's the growth in your business is in the things you're avoiding.
Speaker A:And it's just too easy to hide in the latest technology tool.
Speaker A:Of course it's easy.
Speaker A:It's all over the Internet.
Speaker A:It's all, it's all over Facebook and, and YouTube and TikTok and Instagram and it's, everybody in industry is talking about it and all the events.
Speaker A:They're talking about AI in your business.
Speaker A:And yeah, AI in your business is, is great, but not when you're ignoring the fundamentals.
Speaker A:Look, if you spend a hundred hours building out an AI workflow that saves you three hours a week, that's not even on the same planet as a 5 point increase in your margin and your gross profit margin, you know which one of those is going to create more.
Speaker A:More cash, more gross profit, more freedom, more options for you.
Speaker A:It's doing the fundamental, the hard thing.
Speaker A:See, AI is going to amplify good businesses, but it's not going to fix broken ones.
Speaker A:A broken business with AI is just a chaotic business that's moving faster.
Speaker A:So you may be thinking, okay, fine, I'm going to hire it out, I'm going to quit that good instinct.
Speaker A:But here's the trap.
Speaker A:You can't delegate what you can't define an owner who doesn't understand how the sales process should work, doesn't understand their numbers well enough to even direct that person that they've hired to do the automation.
Speaker A:They're going to end up with a pile of orphaned workflows that nobody owns and ultimately aren't helping the business at all.
Speaker A:But you've spent a bunch of money on AI implementation.
Speaker A:So it's the sequence.
Speaker A:The sequence is not to Ignore AI, get rich and then outsource it blindly.
Speaker A:The sequence is this.
Speaker A:Get effective so you understand the process well enough to direct the person automating it.
Speaker A:That's the difference between leverage and a brand new mess.
Speaker A:You earn the right to delegate AI by first mastering the thing that needs to be automated.
Speaker A:I have to be fair here because there's a version of this that's exactly the opposite of hiding.
Speaker A:And I don't want you to swing the pendulum so far that you dismiss AI altogether.
Speaker A:Some narrow automations serve the exact leak, profit leak that we're worried about.
Speaker A:You know, for example, say you've got, say you've got in your CRM a thousand old leads, stale leads, whatever.
Speaker A:In your CRM you can take AI and put it together with an automation and build a reactivation campaign that could possibly bring in $200,000 in revenue.
Speaker A:That's not avoidance, that's directly plugging your profit leak.
Speaker A:So here's some force multipliers that are not shiny objects that are real important and these typically get ignored in many businesses.
Speaker A:Speed, delete automation, a missed, a missed call, text back with a link to book, the appointment, email and SMS follow up sequences, voicemail drops, automated review requests, appointment reminders.
Speaker A:And a lot of you guys already have all of that set up.
Speaker A:And those are, those are powerhouse workflows that work for you all the time.
Speaker A:But this, here's the test that's going to help you determine is this a force multiplier or is this a hiding place?
Speaker A:And here's, and here's the question I want you to ask.
Speaker A:Is this AI that I'm trying to implement, is it connected to a measurable business outcome?
Speaker A:A measurable business outcome.
Speaker A:And if the answer is yes, then hey, this is going to create leverage for you.
Speaker A:But if it's, this is just interesting or I need to do this because everybody tells me I need to do this.
Speaker A:It's just a place to hide from the real work.
Speaker A:Here's why owners get the order wrong in the first place.
Speaker A:And it maps right to the SOS framework, the self, others, systems, sos.
Speaker A:Most owners, they, they get it out of order and they want to start at systems.
Speaker A:Why?
Speaker A:Because systems are the least emotionally demanding part of the whole job.
Speaker A:The first one, self.
Speaker A:You've got to become a better leader, a better salesperson, a better owner.
Speaker A:You've got to get clarity.
Speaker A:And that's one of the hardest things to get.
Speaker A:Clarity of vision, clarity of what's most important.
Speaker A:Now this is super uncomfortable and it's, it's not easy.
Speaker A:That's the hard thinking work.
Speaker A:That and then the O in SOS is others building a team.
Speaker A:Building a team that has an amazing culture.
Speaker A:They're executing consistently, they're measured according to KPIs, they're matched to their role, and they're held to the standard.
Speaker A:That takes a lot of hard work.
Speaker A:Then use systems and technology to create leverage.
Speaker A:Listen to this on something that already works.
Speaker A:And here's the reason that the order matters.
Speaker A:Starting at systems is it's like starting at the easy end.
Speaker A:AI is just the most sexy, seductive version of starting at the easy end.
Speaker A:All progress starts with facing the truth.
Speaker A:And most businesses are not stuck because they lack AI.
Speaker A:They're leaking profit in leadership every single day.
Speaker A:That's why you're stuck.
Speaker A:It's not because you don't have AI implemented in your business.
Speaker A:A tool can, cannot solve that problem.
Speaker A:A leader can solve that problem.
Speaker A:So if you take only one thing away from this, take the order and here's the whole thing in three stages.
Speaker A:Okay?
Speaker A:Stage one, fix the fundamentals.
Speaker A:Learn to sell, increase your Margins, track your KPIs, hold people accountable and lead.
Speaker A:Stage two, systemize.
Speaker A:Document the process, make it repeatable and set the standard.
Speaker A:Stage three, Automate now and only now, use AI and technology to amplify what already works.
Speaker A:Run one test against everything that you're tempted to automate.
Speaker A:Ask this.
Speaker A:If AI disappeared tomorrow, would my business still grow?
Speaker A:And if the answer is no, you don't have an AI opportunity.
Speaker A:You have a tool that you're hiding behind.
Speaker A:And if the answer is yes, AI just helps you grow faster, then you're using it, right?
Speaker A:So, revenue first, automation second.
Speaker A:Because you cannot automate your way out of a leadership deficit.
Speaker A:Go do the hard thing this week.
Speaker A:That's the work that actually sets you free.
Speaker A:If today's episode helped you, don't do this journey alone.
Speaker A:Join thousands of other contractors inside the Contractor freedom community@contractorfreedomlive.com and and start building the business, the team, and the life you really want.
Speaker A:We'll see you next time.
