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Master Builder – 2009 Survival Guide for Contractors

December 30th, 2008 · No Comments

When I wrote: Where’s Your Master Builder “Potential Meter”?, I indicated an upcoming article would be: Today’s Economy and Your Bottom Line

 

I received a copy of the “2009 Survival Guide for Contractors” from Dennis Feidner at CFO On The Go with the okay to use for this article, Thanks Dennis!  (see below to get a complete copy, this one is edited).

 

2009 Survival Guide for Contractors

Manage Cash – In business there is one rule that absolutely cannot be violated. That simple rule is “Do Not Run out of Money.” So what can you do about that? As an owner, now is the time to review all  monthly recurring costs. It is amazing how many items you can trim. How about these?

  • Have some extra cell phones lying around? Cancel them.
  • Eliminate overtime pay.
  • Office supplies – How many pens/pencils did you buy last month?
  • How much did you spend on buying paper plans?
  • How many times did your field or sales person take someone to lunch, golf or dinner? Was it really goodwill or a way of getting his/hers for free?
  • Call your current vendors and ask for either extended payment terms or additional discounts for early payment.

Better Expenditures Review I cannot tell you how many stories of employee theft we have seen in the past 4‐5 years. The annual amount has been quoted at $600 million on the low side just for the construction industry. Things we have seen:

  • Foreman filling up his fuel tank and selling the fuel for cash‐‐almost $500 a week tohim. The cost to the company was almost twice that every week.
  • Padding overtime hours
  • Turning in a timesheet for an employee that was terminated, cashed the check and kept the money.
  • Turning in the same entertainment expenses twice.
  • AP clerk was paying a vendor that she created and paid bogus invoices.
  • Materials used to perform side projects on the weekend‐‐you buy it and he gets paid for it.

Better Collections – Build into your proposals incentives for prompt or early payments. Review your aging regularly, not just when your bank balance starts to dwindle. Assign this to one person as their primary responsibility. We would also suggest that it may make sense to outsource this task. Another crazy suggestion is to take credit cards. Yes, there is a fee associated with doing this, but the older a receivable gets the smaller the chance of collection.  How many balances in your aging right now are either uncollectible or have been sent to an attorney for collection efforts? Offer a discount and accept payment by credit cards, the owner will like it because he will get bonus points for free travel or gift certificates.

 

Equipment Management – A great idea that I learned from one of our current clients was to work with your insurance company to “mothball equipment.” What our client did was set up temporary fencing and locked all the trucks and equipment that was not needed and the insurance company reduced his policy amounts. Still paying full insurance on older equipment? Reduce to liability only, talk to your agent about this.

 

Benefits – When was the last time you took competitive bids on your health insurance? What if you could lower your monthly cost by $200‐400 per employee? You need to get going on this now. Large companies change often. A large hospital is getting another provider which will be their third in the last four years. It is very important that you do this annually. Yes, I know that you like and trust your current insurance broker. You bid jobs competitively every day, why shouldn’t your carriers.

 

Technology If your software solutions are more than 4 or 5 years old, it may be time to look for another solution. Don’t buy just because it is newer; buy because it will yield a very attractive Return on your Investment. We have been involved in some situations where the ROI was as little as 4 months. Examples could be:

  • Wireless connection for field techs
  • GPS enabled phones for your field employees (This one has some real hidden benefits for your bottom line).
  • Eliminate paper plans
  • Automate bidding/estimating process resulting in more accurate and quicker estimate production
  • Receive “Realtime” alerts on a job’s progress
  • Enter time sheets and daily field reports over the web

Marketing This is a good time to reach out and call your current clients; you should ask them for a referral or a testimonial you can use to get future work. It is a good time to update their email addresses so that you can stay in touch with them. You may want to send them a few job photos of the last project you did for them. Go to Amazon.com or Barnes and Noble and pick up a copy of Duct Tape Marketing, one of our favorite books. Do you have a website? They are not as expensive as you may think. (Call Jim Schuett for website info). If you have stopped going to monthly trade association events, now is the time to get back to them.

 

Training – Pick up a book online or at the library on a topic you may have fallen behind on. Check with the AGC or other trade associations. Most people have a tendency to take short cuts or get sloppy in the good times. Now is the time for good core business practices, read some books and implement one or two of the ideas/concepts that you think would add value to your company. Topics that I would suggest are project management, estimating, construction accounting and of course marketing.

These are just a few things to consider as we navigate through these tough times. There is one certainty in all of this, “those who are proactive on any of the above will be in a better position than those who just complain about how bad it is out there.”

 

If you have additional suggestions, use the “COMMENTS” section on this article to discuss, or email them to me.  I will be glad to share your ideas with others.  …Jim Schuett

 

To receive your free copy of the 2009 Survival Guide for Contractors, call: 800-659-5851, or click: http://cfosonthego.net/

 

 

Tags: Helpful Tips · Notes from Jim · Sage Master Builder

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