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Contractor Tip of the Month
It’s Finally Over!
You’re probably thinking I am talking about the recession. I wish I were, but unfortunately, I am not. The fact is, some areas of the country still are hurting badly and will for years, while other areas are improving slowly. However, I believe one thing is almost over in all parts of the country, and it’s something everyone reading this article can help bring to an end more quickly: bidding work under costs.
The results are in
Hell, three years earlier, I had written a contractor tip telling contractors not to take on work below their costs under any circumstances. Then, the economy got so bad, I did it myself – and I got the same results everyone else did. In the process, I wounded my company by not listening to my own advice. Hopefully, and with the scars I am trying to heal, I’ve really got it this time.
The old method of getting through a slow time was to take work cheap, to keep your people busy. Then, as soon as work would pick up, one could recoup money by still having good hands-on staff to do this more profitable work. That hasn’t worked this time. After buying our way through the slow time and thinking it was over, opportunities for work worsened. That left us all with a basic choice: Dig a deeper hole by taking on work at no profit and spending cash we didn’t have, or downsize to fit the workload available.
Here’s where we all went wrong: We didn’t face the reality of the situation and downsize to meet the jobs that were out there. We didn’t preserve cash. And, as odd as it sounds, sometimes the best way to preserve a future position for your best employees is to bring your staff levels down in the bad times, and ramp back up as the jobs out for bid allow. There can come a time when we have to lay off even our best people, until we get that next job, so we don’t dig that deeper hole. It’s one of my least favorite things to do, but there comes a time to face facts, cut quickly and hire back when the storm passes. Did any of us learn anything? Will we remember what happened 10 years from now? I sure hope I do!
The good news
When the tide turns – and I believe it is turning now – there will be money to be made in this business again. You won’t see this coming when it first happens, so price your work the way you know you should, and do it right now to take advantage of the turn. Otherwise, the next beating you (or I) take may not only leave financial wounds, but also fatal consequences. Remember, it’s finally over…the working-below-cost game, that is!