It’s no secret that the residential construction market has gone through its share of challenges in the last 2-3 years. Unfortunately, we will likely be seeing more challenges in the next 6-24 months, no matter the names of those challenges – cooling, recession, inflation, boom, bust. Fortunately, General Contractors can adjust the business to maneuver through these challenges. (Regardless of what you may have been told or believe). Far too often we see GCs stuck or even trapped in their business model, not understanding that there are MANY ways to adjust your model to be profitable even in challenging markets.
THREE WAYS TO DO SO:
IMPLEMENT MARGIN MANAGEMENT
This would be considered level 2 business practices that detour from chasing top line revenue. That’s right if you think “being busy” is a business strategy… it’s not. How can you tell?
When was the last time:
- Your business answered every inbound call during business hours?
- Followed up with every good potential client in a timely manner?
- Got out all of your estimates on time?
- Tracked your margin at the end of a job and knew exactly where your team did well or underperformed?
- Looked at your P&L at the end of the year and weren’t surprised by the gross & net profit numbers?
These are all symptoms of not managing the most important piece to business success… MARGIN
MANAGE YOUR JOB MIX
All jobs are not created equal, no surprise there, but yet you may still look back at your last 10 jobs, and not all of them fit the criteria of work you specialize in, clients you enjoy, or jobs that give you the best margin. If you can’t manage this now in arguably the busiest time our industry has ever seen, how will you magically control it when the market shifts?
TARGETED MARKETING
This is not the age-old “we’re all word of mouth” or “we get lots of repeat customers”; rather, it’s a targeted approach to get customers who care about something other than price. It may be a surprise to you, but price is proven to not be the driving factor in your customer’s buying process. Targeted marketing drives MARGIN, not just LEADS. Before you go and change your website, understand that your website is simply a message vessel, it’s not marketing.
There are many tactics within these 3 areas that can be customized to you and your business model depending on your strengths and weaknesses. We’d love to share them with you at our upcoming workshop.
Click HERE for a list of our upcoming in-person workshops.
If you would like to discuss this or any other business strategies, please give us a call or contact us!
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