Contractors are faced with more work than they know what to do with right now, but instead of celebrating, they're combating the challenges of needing to complete the work. The supply chain is a rollercoaster of unreliability, and with material prices skyrocketing and delays on orders being weeks or months out, there is no stability in sight. Coupled with this is a skilled labor shortage, and finding qualified workers is a significant roadblock in keeping up with demand. When winning work becomes too much work, it's time to reevaluate your business strategy to focus on growth and future-proof your business.
Don't Stop Bidding New Work
Continuous bidding should be on every contractor's priority list. Consistency is key: you'll retain employees, hold onto better contractors, and expand your business as your work expands. You need revenue from new work to overcome losses or shortfalls that could result from your current backlog. Keep the new revenue and new contracts flowing in. You can never have enough work, so be proactive—not reactive—when bidding.
Leverage Technology to Battle Labor Shortages and Grow Efficiently
Fight the labor shortage by giving your employees the right tools to do more with less. Adding process systems will make your business more efficient, whether it's a cloud-based preconstruction software or a project management app. Doing so will help you grow more efficiently, making sure you have the most streamlined processes with employees you need, rather than simply adding things and people for the sake of it. Then, if the economy turns quickly, you can feel better scaling back technology versus laying off your team.
Another way to navigate the labor shortage is by temporarily outsourcing work. For example, instead of hiring an in-house accountant, look to hire local, reputable accounting firms to take on your books.
A Yin to Your Yang: You Need a #2
It is critical that you have someone in your organization who is a yin to your yang. Often, the person driving the organization forward is not the best person to use their time to clean up details. Every successful leader has a #2 person who is strong where the #1 cannot be. This step should not be overlooked or skipped.
Get Better Payment Terms
Look for opportunities to lock in better payment terms in contracts with your customers, including early pay discounts. Many suppliers will offer early payment discounts, so you can pay them with your deposits from your customer. Remember, cash is king. When you run out, you are often out of the game.
Another way to ensure no financial surprises is by adding language to your contracts regarding material price fluctuations. When you bid a job, those are current material prices. If you win that bid and build three months later, you could be looking at major price adjustments. Do not take responsibility for the economy. Solutions exist, such as Billd and Struxtion, that provide favorable financing terms to help cash flow issues. Protect your business from profit loss by mitigating risk.
Have Financial Help Before You Need It
If you reach a point of success that feels repeatable, look to set up a relationship with a reputable local or regional bank. Setting up a credit line before you need it and when you are in a favorable cash position is one of the smartest, forward-thinking things you can do for your business. It's much easier to borrow money when you don't need it than when you do.
Network and Nurture Industry Relationships
If you're transitioning from residential to commercial projects, make sure your bidding follows suit. You can't price commercial jobs the way you estimated for residential. Bidding a 20,000-square-foot warehouse at Home Depot will price you out of winning. Find a local supplier to help you, and nurture that relationship.
Learn To Say No
In the current climate, you have the freedom to go after the most profitable projects. Pick and choose the right job for you, and focus your time and effort there. You cannot afford to take bad projects at any point. Using a system for efficient evaluation, like Bid Retriever, ensures you have the most up-to-date view of specs and plans to make an educated decision. With more work than ever available, now is the time to learn to say no.
Everyone in the construction industry is feeling the pressures of our current economy, but that doesn’t mean your business has to suffer. On the contrary, with these strategies, you will safeguard your company, employees and profits from future challenges that can and will arise.