Recession is good for you

Aug. 1, 2009
Because of the recession, economic Darwinism has taken hold, Marks said. If you have survived so far, make the most of it.

Colorado Springs, Colo. — The recession can be good for you, especially if you have decent credit and some cash in the bank, members of the Quality Service Contractors learned here.

“We're still here, maybe making less money but leaner and meaner for the experience,” author and columnist Gene Marks told the contractors at their Power Meeting XXXI. QSC is an enhanced service group of Plumbing-Heating-Cooling Contractors - National Association.

Marks believes the economy has turned. Some commodity prices are up slightly as is consumer confidence. Web traffic has hit bottom and is now increasing on Expedia.com. The Baltic Dry Index, an obscure measure of freight costs on the Baltic Sea, has bottomed out and is now rising.

His banker actually called him, said Marks, who sells software for a living. Now is the time to renew your relationship with your banker when the people who actually deserve to get money are the ones getting loans. Contractors have profits and bricks and mortar that banks are looking for. Find a good community bank, Marks advised.

The Small Business Administration has a program called the American Recovery Capital program that will give contractors $35,000 to pay down debt. It's supposed to be for emergencies but it's there for the taking for anyone who fills out the paperwork correctly.

Be wary of experts; even Warren Buffet has been wrong lately.

“It makes more sense to invest in ourselves than the stock market,” Marks said.

Section 179 of the IRS code allows a $250,000 deduction in the first year for capital investments. The section was part of the stimulus package, Marks said.

Invest in training for your people. In some cases you can be reimbursed for your expenses from state training funds.

Go back to fundamentals, Marks advised. Put together a daily flash report, a single page list of five to 10 key numbers that you look at every day: cash on hand, receivables, orders, backlog, overtime, sales per employee, and so on.

“There are more opportunities for profit,” Marks said.

Buying cheap is in vogue. Always ask for a discount. There are great deals out there, he said. Check on Froogle.com. It's a listing of where everything is sold on the Internet and it's sorted by price. Another plus from the recession is the people who still have jobs with your vendors are the ones with knowledge and experience.

Buy real estate. Renegotiate your lease. Move to another property. This is the best time to do it.

Make the best use of technology to allow office staff to work from home, so you can downsize your office space. Marks has three file servers in the basement of his house and all of his people work remotely.

Software vendors are offering deals. Microsoft is releasing Windows 7 in October, so vendors are unloading a lot of software now. If you want to buy scheduling or estimating software, GPS units or handheld computers, do it now. Remember Section 179 and write it off.

Partner with other contractors, Marks suggested, and create your own network of roofers, landscapers, painters and electricians. Any time any of the network's people are on a job site, they should be on the lookout for additional work they can pass on as leads.

Hit singles and doubles. Small jobs still pay money and they can turn into referrals for better jobs.

The failure of competitors creates opportunities. Circuit City going under is an opportunity for Best Buy. The death of Linens and Things is an opportunity for Bed, Bath & Beyond. Plumbing and heating contractors have folded. Now is a good time to buy out a competitor cheap or buy a customer list. Moreover, the competitors who are left are retrenching. Marks recommended increasing marketing and advertising targeted right at your competitors' customers. It's time to steal some business.

Look for good people to hire. There's a lot of talent on the street.

Look for new ways to make money, Marks said, in solar, alternative energy, electronic monitoring, water conservation and clean water technology. Follow the money. Out of the $787 billion stimulus bill, only 10% of it has been spent. Find out where it's going. How is your town, county or state going to spend the money? Some of it undoubtedly is going to be spent on energy and water conservation. Any contractor that is too small to chase federal contracts directly should find out which generals, energy service firms and large mechanicals are going after the money; go after subcontract opportunities.

Because of the recession, economic Darwinism has taken hold, Marks said. If you have survived so far, make the most of it.

About the Author

Robert P. Mader

Bob Mader is the Editorial Director for Penton's mechanical systems brands, including CONTRACTOR magazine, Contracting Business and HPAC Engineering, all of which are part of Penton’s Energy and Buildings Group. He has been  with CONTRACTOR since 1984 and with Penton since 2001. His passions are helping contractors improve their businesses, saving energy and the issue of safeguarding our drinking water. He is a graduate of the University of Notre Dame with an A.B. in American Studies with a Communications Concentration.

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