Masonry Magazine January 1962 Page. 29
mpetition
(Continued from preceding page)
Business, including masonry contracting, thereby increasing competition when business conditions slacken thus drives the weaker ones out. This has always been the concern for business in a competitive society. What can we do right now?
Until business volume picks up as is predicted nationally next year (and remember although most localities will follow the national trend, yours may not), you as contractor have three basic patterns or alternatives you can take to increase profits:
1. Increase sales.
2. Cut costs.
3. Invest your capital (and/or time) elsewhere.
As you have already found out, increasing sales when the business available has decreased is a mighty difficult task and in many instances is next to impossible.
Increasing sales in these times usually involves taking work at reduced profit per unit. Extreme care should be exercised in bidding on large volume work with a very small profit margin, since one bad bid could put you out of business to the delight of your competitors. Business can often be increased by taking smaller jobs, which have a higher profit margin normally than volume jobs, and by developing specialities which usually have a higher profit margin.
Cutting costs has much promise for increasing profits in most organizations. It is painful, unattractive to most businessmen, and very unpopular among his employees and family.
In order to cut costs you must have accurate records of what these costs are and be objective as to which ones can be cut without injury to your business. Use great care not to be penny wise and pound foolish.
Costs can often be controlled by budgeting the Company costs for the coming year and for each job, and having up-to-date cost summaries for the business and for each job. If you receive up-to-date, accurate cost figures, you in most cases can detect excessive costs and correct the conditions causing them before you are hurt much.
This seems like a good place to inject that I was always taught that a good businessman took all discounts. In times such as these, these amounts may represent total profits for a year. This may not be true in all instances, but it is still a basic rule of all business. The individual who does not avail himself of these discounts is at least at a serious disadvantage competitively.
Another option is to reduce the volume of business and invest the working capital some other place where it will provide a better return. This could be another business, stocks, bonds, etc.
This route is usually not taken until after a sustained period.
(Continued on page 31)
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SONRY JANUARY, 1962
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