The World Has Changed!
As I sat in my hotel room, stranded in Boston, on September 11, 2001, I didn’t realize how drastically and quickly the business climate was going to change. I was still confident about the future and business in general at that time. Our construction company backlog was growing and customers were still moving forward on projects. But, in the next few weeks, I began to see the reality of an international conflict on my business.
Every day I read about slow downs, layoffs and poor financial results in nearly every industry. Many of my speaking clients began to ask for simple answers to the question: “what will the future be like?” After probing deeper, business owners and managers were seeking guaranteed survival solutions.
Most companies really want to keep doing business the same way and get the same positive results while the world changes around them and the economy suffers. Even survival will not be business as usual. Doing the same things will only result in less. Thriving will take determination, a decision to change, realistic leadership and decisive choices.
Don’t just survive. Thrive! Do these 10 things right now:
1. Visit your top 10 customers. Most small businesses live and rely on their best 10 customers. These customers generally provide 75% of their revenue and profit every year. Go visit them now! Ask about their needs, problems and future plans. How can your company be a continual part of their future? How can you provide cutting edge solutions to help them prosper? What can you do to improve your business relationship and give them exactly what they want for the price they can afford to pay?
2. Cut your fixed cost of doing business. Determine what your business really needs to survive. Eliminate all unnecessary expenditures including extra travel, gifts, donations, office supplies, subscriptions and new personnel. Hold your overhead budget at its’ current level. No raises, hiring or equipment purchases (except technology). No new long-term commitments such as leases, cars, office equipment or renovations. Challenge everyone in your office to see who can cut the most out of the budget.
3. Increase spending on technology. Recently General Electric cut 20% of their overhead costs in one year through technology. What can you eliminate by using more technology? How about making it a goal to never use blueprints again. Or eliminating paper for all contracts, checks, bids, proposals, memos, project correspondence, files, records, change orders, contracts, job meeting minutes, schedules, timecards and daily reports. Never stop upgrading the technology you use! You can do it with goals and a taskforce to make it happen.
4. Preserve cash. In times like these, cash is king and queen! Delay any major purchases. Lease vs. own if you really need something to survive. Rent equipment on an ‘as-needed’ basis for projects. Sell equipment you seldom use. Outsource as many things as possible including janitorial, job clean-up, payroll services, equipment maintenance, safety training, scheduling preparation, shop drawings, drafting, engineering and permit processing. The more services you outsource, the longer you hold on to your cash and reduce your fixed cost of doing business.
5. Subcontract more. For some contractors, subcontracting major portions of their work sounds like a big headache. Our company subcontracts 100% of our work. We have cultivated a strong group of quality subcontractors who we trust and rely on to meet our schedule and provide quality workmanship. Good subcontractors are much easier to find and manage than the number of people it takes to self-perform work. Plus, when the job is complete, your payroll stops! What part of your work can you subcontract?
6. Cut your “C” players. Eliminate employees who are not excelling and don’t fit into your long-range plans. In busy times you couldn’t find enough good help. Today, you have a choice. Rate your team on an A – B – C scale. Keep the A’s, train and challenge the B’s and replace the C’s with potential A’s.
7. Increase your marketing budget. Now, more than ever, you must market and sell your services! Tell you loyal, repeat and potential customers what value added services you provide. Spend time enhancing your customer relationships via meals, sporting events and relationship building activities. Build true friendships that will benefit your business. Send informational mailings to your entire target customer list every month. Send thank-you cards and notes to everyone you talk to and see. Let everyone know you appreciate their business and want to do more for them. Mail articles that will help your customers improve their business. Show you truly care about their future.
8. Bid more work. As competition increases while contract opportunities decrease, you must bid and propose on more work to land the same amount. Profit margins will also decrease in tighter times, so more work will be required to just stay even. Track your estimating and bid volume, increase your number of bids and proposals and get more work.
9. Seek new customers and markets. Look for more complicated jobs, difficult projects and new markets to enter. Most of your competitors won’t try new ideas during a slowdown, so real opportunities will emerge. Often times the best jobs are the ones that nobody wants. Spend more time seeking out these hidden projects.
10. Share your profits. Open the books to your management team and share the financial rewards of your company’s success. A unified team focused on survival, thriving, customers, profitable sales and making a profit has a much better chance of success than trying to manage alone. Two heads are better than one. Five to ten heads make a winner. What have you got to lose, except your company, unless you try it?
My goal is to thrive in good times and bad. The only way to succeed is to make tough decisions, be first, take a leadership role, face reality and change the way you do business. Do more than survive. Thrive by implementing these ten ideas. Now!
George Hedley owns a $75 million construction and development company and Hardhat Presentations. He speaks to companies on building profitable businesses, leadership, and loyal customers. He holds 3-day in-depth “Profit-Builder Circles” open to construction company owners in an interactive roundtable format every 3 months. His “Profit-Builder System” includes proven tools to always make a profit, build equity, create wealth, win profitable jobs, motivate your people, and enjoy the benefits of owning a profitable company.