Let’s Get Real

“Let’s Get Real”

In a recent article I wrote the following:

“There is a downside to the great market we are enjoying because some construction enterprises will grow too fast and the rate of growth can be lethal. Most construction enterprises were involuntarily downsized when the current market recovery began. As a result, many were already struggling financially and suffering from very limited cash reserves as they enter this rebounding market. The very natural reaction to be eager to get back to the size they were and beyond can drive a firm’s rate of growth beyond safe limits. Combine this with the acute and worsening labor shortage and the reality that growth eats cash means the construction industry is exposed to a “perfect storm” of risk. Just about every construction enterprise participating in this excellent construction market is enjoying considerable rates of growth and the symptoms of financial stress have already begun to surface across the country.”

Let’s Get Real

Then I asked a construction company owner how he felt about the growth opportunities in the current construction market. Here’s what he said:

“Let’s get real…construction is a tough racket…the financial collapse of 2009 was a nasty blow…the bankers did it – we didn’t…things are finally picking up…we tightened our belt, but now we want back in…and here’s what I tell my guys about wading back in… 

  1. Only bet a sure thing.
  2. Take work we already know how to do and know we can make money on.
  3. Cash is king. Get cash wherever you can. Save it, borrow it, leverage it. It doesn’t matter. Make sure we’ve got the cash to finish a job before we take a job.
  4. And don’t be a sucker. Negotiate, negotiate, negotiate. Don’t let owners take advantage of us because they think we’re weakened. If they can’t hit the bid tell them to build it themselves.
  5. No “letting it all ride.” No big deals that will solve all our problems. Don’t be swinging for the fences when what we need is a single.
  6. Be smart about rebuilding our team. Hire guys that can help us win. Don’t staff up with anybody who walks through the door because we’ve stupidly taken jobs we can’t staff.”

Enough Said

Read More: The Yin and Yang of Construction and Simplar.com