Building More: Survival Tips From Some Hard Lessons
Words: Corey Adamshttps://youtube.com/shorts/XJZNntJPn_Y?feature=share
I wrote a few months back about the rollercoaster, which is business ownership. I was hoping that we weren't in a slow period, but the more I talk to other contractors, the more I fear we are. Hey, it is an election year, and we all know how they go. Customers start hoarding cash to survive whatever they can imagine. Projects are pushed back or, at worst, canceled forever.
The same thing happened in 2008. We went 6 months without 1 new contract. It looked bleak. We made it through, but some days were harder than others. Even when we had a qualified lead, the pricing seemed out of reach for them. We did learn a few things through it all: Survival tips that we could always fall back on.
First, we tried lowering prices. This is the initial response to a slow period. Most owners think that lowering prices will result in more work. The reality of it was far different. Our lower prices were still too high, and on the jobs we did get, we broke even. It's not a good way to run a company. This wasn't even the worst part. After we got through the slow period, word had traveled around about our prices being super cheap. For the next year, we dealt with what amounted to tire kickers, looking for the cheapest bid. Tons of wasted time bidding on projects only to hear that it was more than what they were told to expect. The moral of this lesson is to be careful when lowering your prices. If you do not know your numbers in and out, it can lead to disastrous results.
After our bout with pricing, we decided that we should look at overhead. Our overhead was quite large for a smaller company. We had used the good times to build an overhead eating machine that didn't flinch until the funds started to dry up. So we trimmed the fat. Looking at everything from in-house accounting, mailing, and even equipment delivery. We found that it was much cheaper to hire out medium tasks than to keep three people in the office. It wasn't fun cutting back on those hours, but it was a business. Emotions had no place in decisions.
While looking at our equipment transportation costs, we stumbled on another lesson. Stop hoarding. I will bet that every business owner reading this has a hoarding problem. Tools, equipment, materials, and piles of other business-related items are gathering dust. These items eat two types of money: storage and efficiency. The storage cost is pretty easy to understand, and efficiency is where the real money was saved. We realized we had $100,000 lying around doing nothing but getting in the way when we were trying to work. Constantly moving things around to get to something else is a tremendous waste.
The final lesson we learned, and it was a tough pill to swallow, was when everyone else was tightening their marketing budgets, it was time to up ours. Everything is marketing now. The noise is so loud it is hard to cut through and get noticed. This is until all your competitors start to lower their marketing budgets in an attempt to survive. Once the noise settles, your bang for your buck is at a peak. Hammer that marketing is hard, and I am not talking about general bland ads. You need to run very specific ads targeted at very specific clients. These ads let your clients know that you aren't going anywhere, and with less competition for ad space, you are getting to them cheaper than ever.
I am sure we could talk about all of our trials and tribulations at great length, and we all could learn something from each other. The main point is to keep your chin up and keep fighting. Don't race to the bottom on pricing, don't allow your time-habits to damage your company, and never stop marketing.
When this is all over, there will be more work than you could ever imagine as long as we all survive.