Noah Built an Ark, What Are You Doing?

by Tim Ayler, CPA | Partner, Director of the Construction Services Group

No matter what your upbringing, there is a good chance you have heard the story of Noah and the ark. While the events happened a long time ago, it is relevant in today’s construction economy.  How?  Because Noah believed it was going to rain and instead of just watching it rain, or just measuring the rain, he did something about it and built an ark. If you believe there may be difficult times ahead, do not sit by and watch the changes impact you, get involved and do something about it. 

These are not meant to be the top ten items that will work for every company. These have either come up in conversations or I have observed them. 

1. Not always, but many times the owner knows how to perform the work better than anyone in the company. Their approach, knowledge or skills make them an ideal person to effectively train and mentor others on efficiency and productivity.
2. Not properly planning the work is one of the barriers to profitable work, no matter what industry. How well do you plan? You may find that you can only realistically plan three or six months out.
3. What is your business strategy for obtaining work?  With fewer people, focus your efforts on areas that will yield the best opportunity for new work.
4. Sales training – if you have not properly trained your sales people to sell, then you may be missing out on lots of opportunities. There are professionals that can help with this.
5. Don’t just do things a certain way because that is what you have always done. Talk with employees, and even other business owners, to find ways to improve efficiency and productivity. 
6. We certainly would not recommend entering a new market or geographic area without careful consideration. At the same time it is important to evaluate whether you have people with skills that are not being utilized that could lead to new service offerings.
7. How are you connected within the industry? If you are not involved in relevant trade associations it may be time to consider getting involved. Even in a tough market, relationships are very important in obtaining leads to bid on or obtain private work. 
8. Don’t be overly optimistic. This can lead to serious trouble. If you haven’t prepared a conservative budget for 2010 then refer back to one of my prior articles. I continue to bring this up because many contractors still do not operate using a budget and expect the results to just happen. Track your actual results compared to your budget and determine what actions, if any, need to be taken to meet the budget as the year progresses.
9. Cash is king, so make sure change orders are obtained and receivables are being monitored and aggressively collected. 
10. How will negative changes to your financial statements impact your relationship with your bank and bonding company? Predict whether bank covenants will be met.

As I said before, these may not be the top ten suggestions for you, but all of them are likely worth consideration.  If you have questions or suggestions, please call or email me. I enjoy hearing from you.