Is 2010 Looking a lot Like 2009?
So I think the hopes of a recovery beginning in early 2010, or maybe even 2010 at all, is fading fast. I was talking with a few contractors and bankers, and so far, no one is seeing any indication of a market correction. Seems we are all waiting for a spark in the economy that is going to kick thinks into gear. Is anyone seeing some exciting trends that are leading toward an optimistic 2010? Head down, work hard, and make your own luck – the rally cry for 2010!
Please share any of your ideas on how to make 2010 a successful year.
March 9th, 2010 at 5:42 pm
The most sensible projections I have heard is that the commercial construction recovery will lag the recovery of the rest of the economy by 18 to 24 months.
“Recovery” means that point in time in which good profit margins can be had on a majority of construction projects. As far as the rest of the Economy, whenever it rebounds, we’ll know it from all the news that it will kick up. (Note: it hasn’t happened yet!).
The most dangerous time for construction companies will be in that period after the rest of the Economy recovers. Proft margins will still be compressed, money will still be tight, and desperate contractors will be buying jobs. This is the time we will see many firms fail.
So, how to avoid this? Start by adjusting your thinking, rather than thinking that “…hell, I haven’t worked 20 years building this company to find myself only doing $15 million in volume….” to thinking “….hell, I haven’t worked 20 years building this company to find myself not making a profit…”
Whatever strategies you have used to survive 2009 will again be needed to survive until late 2011 (or beyond) cutting G&A, tightening up, being selective about what you pursue. And, you may have to adjust your appetite and figure out how to be profitable at half the volume you’re used to.
If you are cash rich or can get financing, this would be a good time to build for your own account.
Good Luck to us all