Contractor Tip of the Month
All Contractors Must Have a Treasure Chest:
Another Lesson from the Great Recession and a Car
Without a ‚Äútreasure chest,‚Äù we are all just one bad job away from going out of business. It is your safety net, your peace of mind, your stress reliever, so you can sleep at night. Yes, it‚Äôs your guardian angel!
Working summers on a produce farm beginning at 9 years old, I always had money in my pocket at school. Even though dad kept telling me to save part of my money for hard times, I blew every dime on bikes, go-karts, potato chips, pop and Chef Boyardee pizzas. Man, life was good!
During those times of boyhood excesses, I was invincible. Riding as fast as the wind, I never thought should I break a leg or get injured, with no treasure chest I would go from one of the wealthiest kids in class to the poorest as I would have no ability to continue earning. I got a few scrapes, nothing serious, and I kept on spending.
When I turned 16, like the rest of my friends, I wanted to buy a car. With virtually no savings to purchase what I wanted, I ended up buying a $50 Ford Maverick my friends rightfully dubbed the ‚ÄúBlue Beater.‚Äù At the same time, one of my best friends, Brad Schott, purchased and drove a snazzy Oldsmobile Cutlass Supreme. I was envious of Brad, who also had worked through school but, unlike me, saved and had a treasure chest he used to purchase a really nice car. As embarrassing as it was idling at a stoplight next to the Supreme, what a great lesson I learned on saving for the future. ¬†
At 19, I started Lang Masonry Contractors. All the while, Dad was still preaching to me to save for hard times. He would say, ‚ÄúKeep one foot on the ground son as hard times are coming. You just don‚Äôt know it yet.‚Äù
I started to listen and tucked away much of my earnings throughout the years. With my investments succeeding, all of a sudden, I had over $1 million in savings. When my company would hit a bad job or two, and one of my managers would voice concern, and I would tell him or her, ‚ÄúIt‚Äôs okay, I have a million-dollar club we can use to club our way out of hard times.‚Äù The beater Maverick flashing through my mind, I‚Äôd nod my head and smile.
The million-dollar club continued to grow as did the size of Lang investments and companies. Then, the Great Recession hit and, soon, that million-dollar club became a $6 claw hammer we used to claw our way out from the verge of collapse of the total empire we had built. Had it not been for the ‚ÄúTreasure Chest‚Äù or the ‚ÄúMillion Dollar Club‚Äù being in place, after 25 years of hard work building the companies, they would have crashed. My companies would not have survived the Great Recession.
During the difficult times, I confided in a friend who had been in business for more than 30 years and was going through a similar situation. He asked me if I knew what real stress was. ‚ÄúWhat?‚Äù I asked, curious of his slant. He said, ‚ÄúReal stress is when you don‚Äôt have enough savings to pay your bills during a slow period.‚Äù It‚Äôs time for me to rebuild my treasure chest to avoid that stress coming near my life again.
Whether you own a business or not, you need a ‚ÄúTreasure Chest‚Äù as hard times will eventually come your way. Many business books will tell you to save 10 percent of your annual earnings solely for hard times. Then, you should maintain 10 percent of your annual sales in your ‚ÄúTreasure Chest.‚Äù Therefore, if you do $5 million in sales, you should have a minimum of $500,000 in your chest.
Although many of us are battered and bruised by the storms of the Great Recession, it is good to still be standing. It is also a blessing to get another opportunity to do it all again, while being equipped with lessons learned. One thing I know for sure is that more hard times are coming, we just don‚Äôt know when yet. When they do, I hope you and I have our ‚ÄúTreasure Chests‚Äù in place, so we can get through them.