Masonry Magazine January 2008 Page. 56
Business Building
By George Hedley
Flat Times are Here to Stay
Are you waiting for the economy to
turn around? Get over it! You can't afford
to wait. Over the last decade, the construc-
tion industry grew consistently. The last
two years have been up, down, rocky, spo-
radic, and now slow in most parts of the
country. While there still may be positive
growth in some markets, the construction
business will not reach previous levels for
many years to come. It won't be great in
2008, and it might not be fine until 2009.
With past positive growth of the con-
struction industry came too much expan
sion and increases in construction capacity.
This resulted in too much competition and
shrinking profit margins, Suppliers, manu-
facturers and distributors were driven by
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52 Masonry
Wall Street to grow revenues and expand
beyond market demands. Contractors,
architects and engineers who became
accustomed to growing 15 percent to 25
percent per year took on more overhead,
raised salaries, gave bonuses, and became
used to working at maximum capacity and
increased spending at a higher level.
Got that shrinking feeling?
To make matters worse, everyone got
into the act. Architects became consul-
tants, real estate brokers became con-
struction managers, engineers got into
design-build, banks became investors,
Home Depot got into the construction
business, and people without any money
called themselves developers. The result?
Too many competitors were seeking too
few opportunities.
Your total market share is now less,
while the number of competitors has risen.
This leaves a shrinking pie that is smaller
and more competitive. Continuing to do
business the same way as before will get you
less in the future. Contracts will be tougher
to get as bid lists grow. Profits will shrink as
construction companies buy work to keep
their people and equipment busy.
Do it differently
Working harder will only make you
tired. Working smarter is the only
answer. But, in which areas should you
work smarter? Sales? Quality? Productiv-
ity? People? Whatever you choose, you
must do something different to get differ-
ent and better results.
Nine different ideas to add to your
arsenal include:
# 1. Add new markets
Seek at least one new project type to
pursue. For example, home remodeling
will soon surpass the new home con-
struction market. In some areas, school
and health care construction are up 200
January 2008 www.masoncontracters.org
With past positive growth of the
construction industry
came too much expansion and
increases in construction capacity.
percent. Public works will be strong for
many years to come.
# 2. Add new customers
If you can't beat Home Depot, join it!
Home improvement stores need lots of
contractors to do work. Somebody is
getting lots of repeat work. Are you?
# 3. Add new risk
The home market is dead. But there
are opportunities. Find some depressed
real estate to buy and upgrade for rent.
This can add to your workload and boost
your bottom line. Developers need more
equity today than in the past to get their
projects financed. Offer to invest some of
your working capital, savings or labor and
materials in your customers' projects.
# 4. Add profit centers
Open your books to key employees
and share the profit with them. Give
each team member an area of responsi-
bility and make him accountable for his
own bottom line. No profit equals no
profit sharing or salary increases.
# 5. Add overhead targets
Make everyone aware of your fixed
cost of doing business. Make a goal to
reduce overhead by 25 percent. Ask
for suggestions to reduce overhead
costs and reward those whose ideas
are implemented.
# 6. Add field input
Hold quarterly meetings with your
entire field team. Ask for input to lower
The Voice of the Masonry Industry