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Contractors stay ahead of the curve with a plan

July 9, 2014
The Holy Grail of the subcontracting world seems to be finding a sine curve of just enough work to keep everyone busy. In a fairly good economy, which we haven’t seen in a while, the curve isn’t exceedingly steep, but is still a boom and bust cycle.  The question is can you beat the curve.

Every businessman knows that in order to be successful you must have work, both on hand and “in the pipe.” The prospect of living paycheck to paycheck when you worked for someone else gives way to the prospect of living job to job when you are in business for yourself.

If you have been in business long enough, you come to recognize the cycle of “feast or famine” as a recurring theme. The Holy Grail of the subcontracting world seems to be finding a sine curve of just enough work to keep everyone busy, the bills paid and the profit margin acceptable. Getting “a little busy” and being “a little slow” would be the high and low frequencies of the curve. 

Of course, like the Holy Grail, that eventuality has not been achieved, to date, by anyone or any entity of which I am aware. It seems, whether you are a small shop or a large one, you are constantly in a state of anxiety by having too much work (and not enough people, capital or other commodity) or too little work (and too many people, too much overhead, etc.). 

In a fairly good economy, which we haven’t seen in a while, the curve isn’t exceedingly steep, but is still a boom and bust cycle. Just not as severe.

In the economy under which we have been living, the actual diagram of the real world graph is a Mount Everest high and a Stock Market Crash low following quickly one after the other with, maybe, a flat graph between the cycles indicating ongoing work with no new work on hand but trending downward. 

To try to keep this roller coaster on its track, it becomes necessary to continually prospect for more work. Unless your company works exclusively in the service and repair area of the trade, it becomes necessary to enter into competitive bidding.

Even service and repair shops sometimes get into competitive bidding territory, as an example, for lucrative service contracts with developers, real estate companies or large manufacturing facilities. So bidding becomes the primary way in which your company gets, and stays, busy.

Some shops bid constantly on every project for which they are qualified. Using data services such as Dodge Reports, Reed Services and others, they select jobs in their area of commerce and construct bids for as many projects as they can.

The operating principle seems to be, if you throw enough stuff against the wall, some of it will stick. Of course, the down side of that scenario, in most cases, is you have to have a full time estimator(s) and the ability to man up the projects which you land. 

This brings into play the top end of the sine curve example above; having more work than you can handle. We should all have that problem, right? Add into that equation the inevitable questions asked of these clients about financial stability, bonding capacity and available manpower and it doesn’t take much imagination to understand the problems inherent in that type of strategy.

The landscape is littered with the metaphoric bones of companies that have gotten too big, too fast and suffered the inevitable fall from grace for one reason or another. There are even business people out there who have played the game multiple times and come to the same end, but their agenda is a little shadier than most would be comfortable with.

Can you beat the curve? While I am sure that there are some experts out there who would say “yes” and use all sorts of data and strategies to support their arguments, field experience of four and a half decades tells me that you can’t. In fact, don’t even consider it.

As with most abstract ideas, the curve is just something that we look at to tell us where we are in any given point in time. It has no value other than as an indicator, and usually that is in hindsight.

What you can do is be proactive in your search for work, bearing in mind that surprises can, and do, happen when least expected. Know what you can do and, more importantly, what you can’t.

Taking on a large project which will obviously require more people than you have and for a long time is not a good idea given the mercurial nature of the workforce we are dealing with today. Doing more work with less people might be a better strategy. Better to pay overtime to the devil you know than straight time to the one you don’t.

Also, tailoring your company to a type of project might be helpful. Instead of bidding everything that comes along, be a little more discerning and try to get projects that fit what your crew does best.

Industrial work, residential new work, remodel, commercial projects all have different requirements. Figure out which you do best and skew your bidding toward that.

In the end, it all comes down to planning. Put some thought into your plan and no matter how hard it might be to keep ahead of the curve, you will be better prepared for whatever comes.

The Brooklyn, N.Y.-born author is a retired third generation master plumber. He founded Sunflower Plumbing & Heating in Shirley, N.Y., in 1975 and A Professional Commercial Plumbing Inc. in Phoenix in 1980. He holds residential, commercial, industrial and solar plumbing licenses and is certified in welding, clean rooms, polypropylene gas fusion and medical gas piping. He can be reached at [email protected].

About the Author

Al Schwartz | Founder

The Brooklyn, N.Y.-born author is a retired third generation master plumber. He founded Sunflower Plumbing & Heating in Shirley, N.Y., in 1975 and A Professional Commercial Plumbing Inc. in Phoenix in 1980. He holds residential, commercial, industrial and solar plumbing licenses and is certified in welding, clean rooms, polypropylene gas fusion and medical gas piping.

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