You don’t have to have the ability of the biblical king Belshazzar to see the handwriting on the wall. Nor do you have to have the interpretive capabilities of his servant Daniel to understand what is happening in our economy.
In the vernacular – It don’t look so good! Recession is upon us.
But hold on.
While you can’t recession-proof your business, you can take strides to make your construction company economically resistant to the effects of a recession.
Financial flexibility allows construction company owners and executives more opportunities even during a recession. Owners who have been wise in terms of debt management and cash governance can seize those opportunities.
Here are three ways to shore up your financial flexibility.
Being selective in picking projects requires the discipline to say no to opportunities with identifiable issues.
At the same time, some projects tend to be better options during a recession. These might include insurance-secured work, some government contracts, and high-end remodel or restoration.
Another option you might want to consider is the diversification of services. Dawn Killough writing for Levelset, says, “Diversifying might mean taking on multiple construction project types, like public or private jobs. It might also mean branching out into service work, or picking up a new trade or skill that you can add to your construction repertoire.”
And finally, in the project picking category, you may wish to consider teaming up with another contractor or other provider who contributes a complementary service.
Even in the best of times, controlling costs is good for construction contractors. In downturns, it becomes imperative.
Some initial questions you can ask are:
Do we have equipment sitting idle for months at a time?
Which of our employees isn’t pulling their weight?
Are we spending money on management issues that are out of control?
Some ways to cut costs are:
Determine whether to rent or purchase equipment.
Remembering that the scarcest resource in the construction industry is experienced, qualified people to manage and deliver work, think about allowing them the most opportunity to get their jobs done by removing those who are lazy or dull.
Stop the slow drip. A few ways you bleed money might include estimating deficiencies, lack of change order management, or production inefficiencies.
Lien Rights Protection
What better place to go than to the folks at Levelset who understand what lien rights protection means in both stable and unstable economies? Their article, Recession Survival: 5 Steps Construction Businesses Should Take Now, by Curtis Dennis, is worth the time it takes to read.
“By getting a better handle on the things your business can and should be doing today, you’ll prepare for the best tomorrow!” – Tonya Schulte
Reflection – How can you rethink supply chain challenges? Will negotiating vendor credit terms help? Is there a way to strengthen your processes by billing more quickly for materials?
Construction Contractors look to The Profit Constructors to provide advocacy in dealing with:
Clients and customers
Employees and subcontractors
Vendors and service providers
Working with The Profit Constructors gives Construction Contractors the means to organize their operations in ways that help them:
Ready for action? Or want to know more? Get in touch today to schedule a complimentary discovery call. 866-629-7735