The number one cause of small business failure is when the owner doesn’t make the necessary changes required to build and sustain a successful company. They continue to tread water and do business the same way they always have. What do entrepreneurs do when they face tough times and need to make some big changes? They do something! Anything! They try new ways and work different. They start moving and call the necessary plays to win in any environment.
You have to make tough decisions. When one of your subcontractors asks to get paid for the 27th time without a signed change order, give him the right answer: “no!” When your project manager is over-budget again, replace him with the right person. When one of your 20 year superintendents doesn’t fill out his timecard correctly for the 8th year in row, give him one last warning to do it right or don’t come back. When a family member employee isn’t cutting it, do the right thing and let them go. When your estimator makes another mistake on the bid, replace him with the right person and the right software. When one of your long time customers doesn’t pay you on-time again, tell them never again and start looking for the right customers for you. When your accounting manager gives you the monthly financial statements four months late again, find the right controller who will do the right job. When you catch one of your employees lying to you or stealing time or money, eliminate them and find the right people.
You have some choices to make. You can ignore reality and continue to tread water by sitting and waiting for “it” to change and hopefully get better. Or you can make a decision to do and work differently. In other words, be an entrepreneur and get back to building, or do nothing and hope for change. Here is a small list of 15 changes you can make to ‘re-entrepreneur’ your company:
1. Preserve cash now!
Postpone purchases except those which will make you money. Invest in marketing, your website, sales, and customers.
2. Cut overhead now!
Hold a contest for your employees to find ways to cut your overhead by 25%.
3. Keep the best & fire the rest!
Now is a good time to get rid of your poor performing employees or those with bad attitudes. You can easily find great replacement people who want to do an excellent job.
3. Control job costs now!
Hold an all field meeting and ask for money saving ideas. Reward the best ideas with an incentive. Have them think about your general conditions, labor costs, productivity, safety, and schedule.
4. Get out of debt now!
Meet with your banker and work out a plan to pay off all of your high ticket loans. The interest rates are now lower. So consider consolidating all of your loans into one low cost payment plan.
5. Cut equipment costs now!
Get rid of every piece of equipment you own that doesn’t make you a profit every month. If you haven’t used it in weeks, sell it now. You can always rent equipment when you need it.
6. Subcontract more now!
Why keep extra crews sitting around waiting for the next job. Make a deal with another competitor to share your crews to keep your costs lower.
7. Add profit centers now!
What can you do to expand your business? A roofing contractor started a pallet company and now does over $1,000,000 in pallet sales.
8. Add new project types now!
To grow you must expand your project types. Go out and land some new work in new territories and project types.
9. Buy real estate now!
Seek opportunities to turn your built-up cash reserves into wealth building investments. Start buying a small rental property you can fix up with your expertise and crews.
10. Seek better subcontractors & suppliers now!
The slow down gives you the time to find better subcontractors and suppliers who will give you better service and lower prices. Do it!
11. Get close to customers now!
Go and visit your top 20 customers this month. Take them to lunch or to a ballgame. Get to know them better. Ask them how your company can offer more services to get more of their work.
12. Find new customers now!
Make it your urgent goal to find at least ten new customers in the next 3 months.
13. Offer more services now!
What else can you offer your customers to get more of their work? Consider design-build, pre-construction services, total team approach, partnering, maintenance, build-to-suit, joint ventures, asset management.
14. Bid more work now!
You will need more work to keep your total profit margin at the same level. Gear up to bid at least 33% more projects.
15. Have more fun!
Make a decision to stop whining and complaining about the economy, the market, your competitors, your customers, the President, or your current situation. Be positive. Look for the good in everything. You attitude is your choice. Choose to be happy.
Are you acting like an entrepreneur?
When you look at successful businesses and how they succeed in good times and bad, you’ll notice they are focused on building their business. They focus on hitting their numbers, making a profit, increasing their stock price, purchasing or investing in new markets, seeking joint ventures, growing their revenue, finding new customers, buying new businesses, developing strategic alliances with other companies, or finding new business ventures.
Today is a great time to approach struggling competitors and ask if they would consider joining their company with yours. The strong will survive. The weak shall perish. Why not take advantage of the opportunities right in front of you and do something to be successful?