Cutting The Fat - Slow Down Survival Tips

November 25, 2007

Action is the key to success. Here are just a few tips on leaning out during a slow down. This is a first of an upcoming series on surviving the market slow down.

Look around your company for those employees that just don’t shine quite as brightly as others. OK, now trim the fat. It’s that easy. Use this time to get rid of non performers. Think very carefully before cutting key employees. Replacement many of the costs for replacement are hidden. Long term employees know and understand your business. It’s essential during vast change to keep together a cohesive core.

Where did salaries go through this last building craze? Through the roof. Guess what, the slope just changed. Take command of your company. Trim just five or ten percent across the board while it’s here. Will it go over well? Probably not. However, having a job is much better than standing in the unemployment line.

Be sure you’ve scrutinized your insurance policies. Be sure to adjust estimated payrolls for projected premiums. Look at your estimated tax payments. Be sure they are re-aligned. The impact on cash flow from adjusted tax deposits and premiums can only be of help.

Many costs as you downsize naturally fall. Look at your floor space. It’s not going to shrink. If like many contractors you own the building, cost compare renting a smaller space, leasing your space to a more another business. If you’ve recently built, the change may pencil.

Keep the knife sharpener handy. Cuts don’t have to be deep nor drastic by any means. From toilet paper quantities, to pencils, to the cell phone plans to benefits synch it in. Lock it up if you must and designate a gatekeeper.

Hold brain storming sessions on how savings can be achieved with key employees and their subordinates. Create departmental teams and offer incentives for finding ways to save or increase efficiencies.

Take a very close look at your material handling or lack thereof it. Take your field guys to the conference room. Audit material handling and develop strict material handling training and processes. No nail shall go unclaimed. No board shall be cut too short. Use them as your tool for coming up with best practices. Most of it should stick when the heat dials up again. You’ll be operating as the new trimmer you.

Renegotiate with vendors. How low can they go? Negotiate a long term relationship to stabilize your costs if at all possible. Be sure to leave market adjustment allowances built into the agreements.

Stay tuned for more. Coming soon are moves that generate cash plus tips on running a successful construction company.

Summit Technology Group - Client PR

September 17, 2007

One of our clients (Summit Technology Group) just had a great article come out about their business in a trade publication:

Summit Technology Group: Divide and Conquer

The business strategy of diversification is huge for a contractor. The other thing we love about Summit Technology Group is their relentless focus on customers and employees. These are the two drivers that produce long-term profits. Any other strategy will fail in the long-term.

New Accounting Standards

July 30, 2007

The Wall Street Journal published an interesting article detailing some potential upcoming changes to the financial accounting standards:

Profit as We Know It Could Be Lost With New Accounting Statements

See the draft layout of how the new rules could affect financial statements

While this may seem trivial the effective design of financial reporting can create more rapid and thorough insight into a company. You should spend as much time designing your financial reports as you would designing your estimating take-off / recap format. Using the standard, "canned" reports that come with your accounting system is unlikely to produce optimal results for your unique business.

Company Integration

Currently we have several clients who are involved in acquiring, merging or otherwise integrating the operations of their company with another. This is a very exciting way to grow because of the upside of almost immediate revenue dollars but behind the scenes there are thousands of details that need to be managed.

If these details are not managed correctly then the chances of those additional revenue dollars turning into profits are slim to none - losses are more likely.

There is a great short article called "The Right Way - and Some Wrong Ways - to Make an Acquisition" written by Wharton / GE Capital that outlines some best practices. The dynamics of integration do not change whether it is a $10M company integrating a $1M company or a $100M company buying a $10M company or simply trying to tie together a strategic partnership.

Building Information Management

July 17, 2007

California Construction magazine provided a great overview of BIM - It's a BIM New World

Personal or Company Responsibility?

July 01, 2007

Just reading the latest edition of IEC Insights and there was an article by Christopher E. Hoyme, a partner at Berens & Tate. The article described a case setting some precedence regarding an employers liability for an employee's mobile phone use.

Recently a Smith Barney broker was using his mobile phone on his personal time but making a call to a client. The broker got into an accident and Smith Barney was sued because it was "understood" that brokers made business calls on their personal time. The case was settled out of court for $500K.

This is amazing and just goes to show how there continues to be a degrading line between an employee's personal responsibility versus a company being responsible for almost everything an employee does on or off the clock.

For more information about employment law sign up for Laborwatch newsletter from Berens & Tate or contact them directly:

Berens & Tate, PC, LLO
10050 Regency Circle
Suite 400
Omaha, NE 68114
(402) 391-1991 PH
(402) 391-7363 FAX
www.berenstate.com

Bug of the Month Club

February 24, 2007

In the IT world there are people that actually dedicate themselves (for free) to finding and publishing every bug they can find for a specific piece of software.

There is some debate whether this is good or bad - I can see both sides.

Personally I think that when problems are exposed in a "big and loud" way it does put a lot of burden on people to fix them quickly and that stress causes a lot of short-term problems but in the end it forces people to rethink entire processes.

People by nature are typically complacent and therefore they don't like being pushed out of their comfort zones. Sometimes pushing people out of their comfort zones causes damage. Sometimes a company can not act fast enough and more damage is caused.

Of course people are going to think this is bad - but the upside is that it is making people (forcing them) to get very, very good and quick at fixing problems.

Rapid recognition and broadcasting of problems is probably the best thing that a company can go through even if it is painful in the short-term.

Read the complete article called "Time to End This Gimmick" online at www.darkreading.com if you are an IT Guru - if you are not an IT Guru just think about how to make every problem in your business stand out as if you had a team of people watching you every second and posting the problems in real-time.

Start fixing those problems and their root causes and you will have an amazing business.

Be Smart About Taxes

January 31, 2007

Irving Blackman is a partner in Blackman Kallick Bartelstein and specializes in estate and tax planning issues. He got my attention through a column he writes in Contractor Magazine. Right after he got my attention we had a great phone conversation and he is a wealth of knowledge.

Recently he put all his past columns (35 years worth) online at www.taxsecretsofthewealthy.com - definitely worth checking out.

Customer Service - Blocking & Tackling

January 30, 2007

Paul Cardis of NRS Corp writes a great article in the December 2006 edition of Professional Builder that focuses on customer service. His main point is that real data should be studied to find the true root cause of the problem before trying to implement a solution.

Data is hard to argue with and can be used to find and fix so many problems in a company, not just customer service issues. Our approach has always been about using data to highlight problems and then, once people recognize the problem and root cause fixing it is much, much easier.

Fantastic Construction Marketing Example!

January 14, 2007

There could not be a better example of how a contractor / developer used some of the great marketing ideas oulined by Seth Godin that this.

Learn how to sell a $140M project via web, e-mail and permission-based events!

Read the post for more details - it outlines 9 basic steps to success and could not be more clear.

Chris - thanks for putting this example out there and trying something new when it comes to marketing in the construction industry.

Seth - thanks for being such a great influence and putting these ideas out there.

I was hooked since I read the book Idea Virus which was followed by Permission Marketing. Both of these books can generate a ton of ideas about how a contractor can utilize the web, e-mail and standard marketing means to create a cohesive marketing package that delivers results.

When I look at most contractor web pages all they have are pictures of their projects and some relatively boring text. They are not taking full advantage of what the web can offer for their businesses. It is about educating people, building relationships and interacting with them in a way that helps drive them to buy.

What if you were a service contractor and started putting a series of how-to articles on your website? What if you started really using it to educate your potential customers about their plumbing, HVAC, electrical or home maintenance? What if you had a sign-up for a newsletter with each article where they could get additional information? What if this additional information was geared to educate them, not just glossy sales material?

The first thing I hear when talking about something like this:

"That will just attract people who want to suck information from me and then go to Home Depot and do it themselves!"

Yes, this is true for a percentage of the people but, what if this whole process were automated so that whether there were 10 people or 10,000 looking at your site it didn't matter to you?

That is the advantage of the web and e-mail. The cost of distribution is near zero after the content is created. With this in mind you are better off using your website as a central place where people can learn about your services. Your website should position your company as an expert and whether the person uses your services or goes the DIY route they will still remember where they got the information from.

Now, picture that DIY person who installed their own ceiling fan last year thanks to the information on your website. Now they have been getting your newsletter with electrical tips each month including safety tips, enhancing home value with outdoor lighting and highlighting pictures with low-voltages spot lights.

They decide they want to do some of these things but they will need a new service panel - now you get a call from a customer who already loves your company. This minimizes haggling over price or even needing to sell them on your company.

Again, if your website looks like your company brochure then you need are missing out on huge opportunities!

Why Employees Are Sick

January 13, 2007

CCH recently conducted a study showing the growing problem of people calling in sick when they really aren't and the reverse of the problem - presenteeism - where people come to work when they are actually sick and their production suffers.

If you are involved in HR or manpower management in any way this is a quick survey that will give you some insight that can be helpful.

For more information see http://www.cch.com/absenteeism2006/

Yellow Pages Advertising

January 10, 2007

Adams Hudson writes another good column for Contractor Magazine regarding the use of Yellow Pages advertising. The response rate for advertising is not driven by size of the ad alone. If you are planning to spend a few thousand dollars on the ad then you may want to think about shifting more of the budget to design.

A well-designed, well-targeted marketing piece will produce the best ROI for your marketing dollars. Spending money on size and quantity will not always translate into revenue dollars.

Read more at - Change your Yellow Pages ad and Budget. Visit Adams' website at www.hudsonink.com for more articles on marketing for contractors. Remember that if you boost your service business it will help protect you from the volitility of the project market. It is better to have nickles trickling in from all over the city than it is to have a million dollars coming from a single source.

E-Mail Communications & Contractors

January 08, 2007

This is a very, very critical subject and you should read everything you can on it. You should be putting policies and procedures in place for dealing with electronic communications and making sure that you are legally in compliance with your contract.

Susan Linden McGreevy makes some excellent points on this issue in Contractor Magazine.

"One Night Brand"

January 06, 2007

Alain Thys does a great job of telling a funny story about the difference between how a customer perceives your company when you are selling to them versus when they are actually doing business with you.

Contractors will all find this story very funny - but probably hitting close to home. Does everyone in your company treat the customer the same way throughout the sales and installation process? When you are doing submittals is your project engineer treating them as if they are a proposal to a very important potential customer? When you are turning out a bill are you paying the same attention to detail and customer service that you did when you presented them the initial proposal?

E-Mail Marketing

Joe Dysart wrote a great article for Contractor Magazine that applies to any contractor who uses e-mail as part of their marketing campaign.

The article is titled "The Spam Filter Gauntlet" and is a must-read for anyone using or thinking of using e-mail.

FYI - if you are not using e-mail as part of your marketing campaign then you are missing out on a lot of opportunities.

10 Ways to Motivate Your Employees

January 03, 2007

Jacki Bradbury-Guerrero gives us some great tips on how to motivate employees based on Maslow's Heirarchy of Needs theory.

Maslow's pyramid of needs is a great way to look at human motivations. I would suggest making a list of ALL programs and services your company offers from training to retirement to health benefits and see which one of the needs on the pyramid it meets.

Are there any gaps? As a company trying to compete with today's limited workforce those that provide programs to help employees at all levels of the pyramid will thrive because they will be the employers of choice.

What do you offer near the top of the pyramid?

10 Ways to Motivate Your Employees

Jacki Bradbury-Guerrero gives us some great tips on how to motivate employees based on Maslow's Heirarchy of Needs theory.

Maslow's pyramid of needs is a great way to look at human motivations. I would suggest making a list of ALL programs and services your company offers from training to retirement to health benefits and see which one of the needs on the pyramid it meets.

Are there any gaps? As a company trying to compete with today's limited workforce those that provide programs to help employees at all levels of the pyramid will thrive because they will be the employers of choice.

What do you offer near the top of the pyramid?

Quick Advice for Anyone Marketing on the Internet

January 01, 2007

Seth Godin put together a quick one-page list of things that can be done to help non-profit organizations market themselves on the internet.

This list is just as good for any contrator seeking to improve their internet marketing. We talk to a lot of contractors and most are still stuck thinking about the internet the same way they think about print advertising. The internet is a lot different and if you don't learn that you will just be wasting money and time on a "pretty" website.

This one-page summary gives you some places to start learning about the web.

Also see our conference summary on SEO (Search Engine Optomization) for more details.

Electronic Discovery

December 30, 2006

Just something to be watching as we move more and more into electronic record storage in construction. I don't think I've heard a solid opinion from a construction attorney yet on electronic records because there is no real case history where the validity of the electronic records has been challenged.

From another industry but still something to watch: Discover or Else: Rules Take Effect on Electronic Evidence.

Thinking Differently

John Moore posted a list by Bruce Mau about change - the list is short and concise. Reading it over breakfast this morning reinforced my thought process in some ways (refreshing) and sparked a lot of new ideas (VERY refreshing).

Notice that many of the ideas mentioned seem counterintuitive - until you think hard enough about them.

Thank you John for posting this list!

Winning - The Answers

December 15, 2006

Yesterday I was at the airport in San Antonio, Texas and saw the book Winning - The Answers by Jack and Suzy Welch. The book is a compilation of various Q&A sessions similar to what the very end of Winning had. Unfortunately my brain was a little tired and though I wanted to read the book I opted for a magazine instead.

This morning I see a post from John Moore with some great quotes from the book (see slides below). I loved the book Winning - the ideas were applicable to every business and every career. This weekend I fly back to Florida and will definately pick up a copy but in the mean time I really enjoyed the excerpts.

If you haven't checked out John Moore's website, Brand Autopsy you should - he regularly posts the best excerpts from the business books he is reading along with great insights.

One Laptop Per Child

December 03, 2006

First Near-$100 Laptops Roll Off Assembly Line - News by InformationWeek

There are few things that will do more to change the world (or a company for that matter) than giving everyone access to the same information. This program will do just that - imagine lifting billions of people out of poverty and war over the next century.

Costco & Employee Relations

Welcome to the Club | workforce.com

Great points about workforce development including management development that are applicable to contractors as well as retailers.

Killer Customer Service Idea

December 02, 2006

Trust, But Verify - News by InformationWeek points to how Salesforce.com puts their data center performance metrics online for customers to see - both the good and the bad.

Customers want information - it is that simple. If you want to keep customers provide constant information whether it is good or bad.