01 Nov 2017
You only get a few chances to capture market share and maximize profitability. Therefore, when opportunity presents itself, you must take action.
It won’t wait. And if you don’t take it - rest assured - your competitors will.
The mass amount of construction work going on throughout the United States is staggering. In Ohio and West Virginia (where my companies operate) opportunities are everywhere.
I’ve also traveled frequently the past few months - visiting Nashville, Charleston, Savannah, San Diego, Orlando, Key West, Dallas, San Antonio, Myrtle Beach, and Charlotte, among other cities along the way. I’ve seen firsthand that the building business is booming… everywhere I turn. In downtown Denver alone, I saw 17 cranes in the air.
For those in the construction business, now is the time to make your money. Don’t wait. Get it now. Or else…
I’m writing this contractor tip on a large fishing boat in the Pacific Ocean, where I’m fishing with 13 peers from my professional networking group. Our group - made up of owners and top managers from construction companies all throughout the USA - meets semi-annually for at least three days to discuss best management and business practices. This time around, we decided to shorten the formal meetings and take a 2 ½ day fishing trip out of San Diego, CA. And what’s really cool is that I’m writing this tip AND fishing at the same time.
You see, I’m able to maximize my opportunity (and time), because our guides have put trolling poles over the back of the boat and we troll until we come upon a school of fish. We may troll for HOURS before we encounter a tuna, Dorati or other type of fish we’re after.
When it happens, the captain stops the boat and over the loudspeaker comes his booming voice, “Fish in the area. Bait your hooks and drop your lines in the water immediately.”
There is no time for inactivity. We scurry like mice to cheese trying to get our gear rigged up and thrown overboard.
Once we are on a school of fish, we’re likely to catch many large ones before the rush ends.
But as soon as the fish are gone, we could sit there with bait in the water for days and catch only a small amount of fish - if any at all. Therefore, when the captain informs us to reel in our lines, we trust him. It’s time to travel to find more fish.
Earlier on our trip, I was at the back of the boat talking to a contractor who was telling me there is a ton of work in his area right now… he just needs to figure out how to take advantage of it.
“Raise prices and bid as much as you can. It’s time to fish! When we are on a school of fish, they bite almost anything we through in the water. Our industry is like our fishing trip. When construction slows, it’s over until the next big run of work comes along.” I said. This thought gave me the idea for this month’s tip, so of course I mentioned that I was going to the cabin to write a contractor tip!
Here’s the thing - when construction is booming, you need to hire and expand as fast as you can, but you can’t overlook your margins. You need to increase them!
To capitalize during good times, plan for profitability and strike while the iron is hot. During these booms, with far too much work on their plates too, our clients are willing to pay what it takes to get the work done. They want partners they can count on to make their jobs easier.
If my food supply depended on the fish I caught and I didn’t drop bait when I came upon a school of fish, I would starve to death. I wouldn’t be able to catch enough in the open ocean to keep me fed and safe.
It’s no different for you - during this busy construction period, make sure you fill up your piggy bank as you will need this extra cash to stay alive when work slows again and we’re all fighting for the same business.
But there’s one catch. You have to keep in mind that expanding when times are good means the opposite when it goes south. As soon as the work is gone, you must cut back just as fast as you expanded or you could end up---belly up.
If you don’t think you have the courage to cut back on overhead when the time comes, and it certainly will, you may want to think twice before expanding your operations - even in the good times.
Just stay the size you are and take advantage of what you can.
How do you get yourself to cut staff when the tide turns? Isn’t that unfair to the people you just hired?
Well, that sounds like a good topic for next month’s tip!
The bottom line for this month is - when the work is there, you must grow and expand. When it’s not, you must make the necessary cuts to become a lean and mean fighting machine---ensuring your sustainability.
The boat is stopping and the captain says to drop our lines in the water. I’ll catch ya’ later! Right now, it’s time to fish!
Damian Lang owns and operates several companies in Ohio. He is the inventor of the Grout Hog-Grout Delivery System, Mud Hog mortar mixers, Hog Leg wall-bracing system, and several other labor-saving devices used in the construction industry. His latest venture is Malta Dynamics Safety Company that focuses on bringing quality safety products to construction customers at the best possible prices. He writes for Masonry Magazine each month and consults with many of the leading contractors in the country.