In the last few weeks we've been getting some troubling reports from our contractor peer group members. One said that 60% of his 2021 volume is at risk. Another said he is forecasting to be off 15% next year. A third said that, due to project delays, he is facing a half million-dollar loss in 2020 – a huge turnabout from his original positive forecast. Contractors have seen their healthy backlogs decline, projects are being pushed into the future, new work prospects are down, and suddenly the outlook for 2021 and beyond looks uncertain.
All this brings us to the need for greater communication with your employees. Why? In the absence of clearly presented information, people make things up. And the things they make up are almost always worse than reality. As Barney Fife would say, you need to “Nip this in the bud!” Construction leaders need to communicate a clear picture of what the future looks like and what actions you're going to take to make a worsening business climate more livable.
Here are four tips for getting ahead of the messaging curve and staying there.
- Demonstrate leadership. You may have a written strategic plan and assume everybody in your firm sings from the same hymnal, but events are constantly in motion. In a marriage, it’s not good enough to say, “I love you” on only your wedding day. The message needs constant reinforcement. In your business, you must communicate regularly and clearly to prevent inaccurate or negative information from putting you behind the eight ball.
- Leaders provide a sense of stability. Your employees probably sense that things may be changing for the worse, and you need to have an answer for how you plan to deal with emerging conditions. “Here's what we're doing. Here's how we're staying ahead of this situation. Here's how we're adapting to the new forecast."
- Communicating about a changing future provides an opportunity to educate your employees. If you handed your employees your financial statement and balance sheet, they probably wouldn't know how to make heads or tails of them. For them, the forms may be simply an accounting formality, but thinking through your P&L and balance sheet numbers give you a chance to educate your employees about where your costs are. Put your costs into a pie chart by percentage, and let them see how hard it is to turn raw volume into profits. Some employees think if you gross $1 million that $900,000 falls to the bottom line, and we know that's not true in any kind of construction! Educating employees about how thin margins really are and how much care and effort it takes to eke out a little profit at the end of the year is a worthwhile endeavor.
- Communication is not just a necessary evil. Many business owners think, “I don't need to be spoon-fed. Why do I need to spoon-feed this information to my employees?” But in the absence of information from their leaders, they’re going to make up things – and they will – which creates the potential for gossip, negativity, loss of momentum, and even the departure of key players. Leaders must grab the bull by the horns and deliver reality – maybe even harsh reality. You’ve got to control the message.
In the movie A Few Good Men, Jack Nicholson and Tom Cruise had one of the most famous courtroom scenes in the history of films. Nicholson became agitated and bellowed, “You can't handle the truth!” Your employees CAN handle the truth. They want it; they want reality and leadership. Communicating more now in challenging times can cement your leadership and paint a pathway to a better future for the benefit of everyone on your team.
Wayne Rivers is the president of The Family Business Institute, Inc. FBI’s mission is to build better contractors! Wayne can be reached at 877-326-2493, [email protected], or on the web at www.familybusinessinstitute.com