Editor's Note: This is the third in our 2009 series, "Earn More, Work Less." To read the previous article, click here . To read the next article in the series, click here .
As a business owner, I bet you love what you do.
You're really good at doing your work with pride, integrity and quality workmanship.
If asked, you tell people you are the best at what you do and stand by your finished product and personal service. You have spent years working hard, building your company, grooming your management team, developing supervisors and foremen, training your crews and growing your equipment fleet. You have a small list of customers who keep your company busy and provide you steady work on an ongoing basis. Your business pays your bills, and there often is a little left over to buy a boat or recreation vehicle to enjoy on the weekends. Life is good as an entrepreneur and business owner.
The Economy Slows Down. Now What?
You continue doing business the same way you've always done and hope the economy gets better, not thinking a slow economy will affect your business. But it doesn't get better, and there are less jobs to bid on now. So you lower your prices to stay busy and keep your crews and equipment working. Your good old customers don't have much new work, so you venture out into new territories. Your competitors lower their prices even more and project bid lists grow from three to six to twelve to fifteen or more. The only way you can get any work now is to be "stupid low" which guarantees you won't see bottom-line profit for a long time. You bid more and more jobs in hopes of landing any work you can find. You start bidding on projects even when you have no experience, track record or expertise. Anything to keep your doors open, crews busy, equipment working and overhead covered. Now what?
You finally land a few new jobs. Relief! Back to work. But within a few months, these new jobs start coming in overbudget. These projects are different than the ones you usually work on, and the unfamiliar contract clauses and specifications cause you some grief. You have a tough time working with these new customers. Your crews aren't very efficient since they know there isn't new work for them when they finish these jobs. It starts costing you money to finish the few projects you have. Your paycheck becomes a distant memory as you begin to feed your company to stay afloat and keep unneeded employees and managers on the payroll while you hope to land new work soon. Then your lenders start calling to meet and review your monthly profit and loss statements before they renew your line of credit. And your suppliers call to notify you that your monthly accounts are late-you must get them current, or you will be put on COD. Now what?
Stop! Time out! Hold Everything!
What are you doing? Why are you slowly going out of business by spending your savings and trying to keep your crews and equipment busy? How long can you survive feeding your company every month? Do you think something good will happen quickly to renew your bank account balance? Will your long-time employees help pay your monthly expenses as a thank-you for keeping them busy when you are totally out of money? Will your under-utilized equipment fleet produce enough cash flow to survive? It's time to stop and take a hard look at what you are doing right now before it's too late.
When work was plentiful, it was easy to stay busy doing the same things over and over to the same customers. You didn't have to look for ways to improve your business, new services to offer or new customers. You just had to bid jobs to your same
