The economic news these days isn't all bad. Some of it is worse! Next to the banking industry, the construction industry is probably being hit the hardest by the faltering economy. Residential housing starts are, for all practical purposes, non-existent. Commercial projects are only slightly less dire. Many jobs that were in the pipeline when the finance industry had a coronary have died on the vine, and those that are still alive are anemic at best.
Commercial credit has become a ghost; you can sometimes see it if you hold your head just so, but mostly it disappears when you look at it full on. Underwriters have become so skittish that even good loans are being denied for the most spurious of reasons. Businesses that rely on cash flow from new loans to their customers, such as swimming pool builders, are dropping like flies, not from lack of business, but from the inability of their customers to obtain financing. Further, prospects for an early rebound from the current state of affairs does not appear in the offing anytime soon. Municipal funding for schools, hospitals and other public projects is being held up by nervous administrators who are holding their collective breath to see what will happen or State and Federal funding is being halted altogether. In short it's pretty scary out there.
Keep on keepin' on
So what do you do? You're a contractor. You've got employees. Your bills haven't stopped, but your work load has dropped, and new projects are as non-existent as Paris Hilton's virginity. Closing the doors is an option you don't want to even entertain. What are you going to do?
As they say in my neck of the woods, you've got to “cowboy up” and do what needs to be done. Depending upon the type of shop you run, there are things that you can do to keep your business viable and in some cases actually improve it, positioning yourself to take advantage of the recovery that is inevitable.
First and foremost, you need to get a handle on your expenses. Overhead? Cut it. Be ruthless. From not filling the office refrigerator or vending machine goodies to laying off non-critical or non-performing personnel, everything that doesn't make you money or improve your bottom line is extraneous and should be jettisoned. If you are a service business, things like routing your truck(s) with an eye toward fuel savings is a must. It may be painful, but it is essential if you expect to survive. Cut everything to the bone and do it now. Streamlining your operation will pay dividends even after the crisis passes, but only if you are still standing when the dust settles.
Second, increase your bidding and job prospecting to maximum effort. Look at every project you can get your hands on. Blue Book, Dodge Reports, existing customers and new accounts all are fair game; anytime that you have the opportunity, bid. Forget about categories, genres or types of jobs you don't normally go after. If they are within your ability to perform, bid on them. Negotiate, offer discounts and incentives, but get the work through the door.
Third, expand your horizons. Look at facets of the business that you've never looked at before. If you are a commercial contractor and you don't have a service department, start one (it's the fastest, best, single cash generating machine in the trade). If you are a service business, look into new construction and remodels. Look for industries and businesses that could use your product or services and canvas them (dry cleaners, for example need lots of plumbing and HVAC work) with letters, phone calls and personal visits. Do mailings. Cold call the businesses that you think might have work for you. As the commercial goes, “Just Do It!”
Ride the storm
None of the preceding suggestions are rocket science. They are the bare bones necessities if you want to survive the downturn. Yes, it's bad out there, it is the worst that our country has seen since 1929, but the worst thing you can do is to give up without a fight. Businesses will survive this. You can make sure that yours is one of them by working harder and smarter than the competition.
To be sure, there will be casualties…There always are when things go into the toilet (pun fully intended). The trick is to do your best to make sure that you and your company is not one of them. By doing the hard things now, you will be doing the smart things. The big boys didn't get that way by being skittish and throwing up their hands saying, “we're all gonna die!” They grew, got big and prospered by doing the right things at the right time, and most of them will stay in the game and survive by doing the hard things now.
Remember this, it is dog-eat-dog in the rough and tumble world of construction contracting, but you can survive if you do the right things and make the sacrifices necessary to prevail. An old Romanian proverb posits - “The wolf has a thick (as in muscular) neck because he does the job himself.” Hang in there, my friends, the ride isn't over.
The author is a retired third generation master plumber. He founded 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].