Plan for Recovery
As always, it’s vitally important to have reliable financial data to base your business decisions on. I always maintain a monthly leads report, which is an excellent predictor of future work (see spreadsheet, facing page). When I start seeing a significant increase in our leads, I know from experience that I have a three- to four-month window in which to hire new staff. I monitor staff productivity to see if there’s been an increase in billable time, which is another clue that I may need to hire. I also analyze our monthly profit-and-loss statement to review the key numbers — revenue goal, job cost, overhead expense, and net profit — all of which are good indicators of how well I sleep at night! I review these key indicators with the staff, too, so they can participate in reaching our revenue goals for the year.
I make it a habit to read the business sections of several local and national newspapers, to keep an eye on the tone of the articles. The in-depth business analysis gives me a more accurate view of where the local and national economy is headed. Over the last six months there has been a relatively optimistic outlook in the business press, compared with the daily headlines, which often seem to be predicting imminent economic disaster.
As I plan for a better future, I’ve already started to advertise for field staff, project managers, and design professionals. I don’t want to wait until we’re swamped with work to do this. It makes sense to lay the groundwork for the future now, as the economy begins to improve.
Don’t Repeat the Past
In looking ahead, let’s avoid those ways of doing business that we’ve worked so hard as an industry to stay away from. In an effort to win jobs, do I really want to give my prospective clients free information because my competition is doing so? Do I really want to work twice as hard to scope out jobs that I know in my gut won’t go anywhere?
In the depths of this recession — after the layoffs and when the future seemed most uncertain — we changed our policy and started offering free design services for prospective clients. We felt we had to because other remodelers were doing it. And guess what? We didn’t win a single one of those jobs. But in the meantime we noticed that we did continue to land those projects that were well-suited to our company. I learned — again — that it was smarter to target our ideal client than to get stuck in competitive bidding. And I learned — again — that our clients really do desire our high level of design and execution, and that they are still willing to pay what our services are worth.
Without a doubt there have been fewer of those clients to sell to, but we are still in business, and we’re still constantly looking for ways to serve our clients better while maintaining a successful — though smaller — company.
I think for me the simplest, most important lesson has been this: to continue to identify what makes my company unique and unlike those of my competitors, so that I can sell this difference to our potential customers. If I find myself competing for jobs against too many other remodelers, I’ll know I haven’t separated myself from the pack. But if I can successfully define my company, we’ll see greater success in the recovery.
Peter Feinmann owns Feinmann, Inc., a design-build remodeling firm in Lexington, Mass.