First we were told to start tightening our belts. Then it was time to think about whom on our staff we could afford to keep. Then our capital reserves started flowing out the door like a monsoon. Companies with established good will still had some work, but the jobs got smaller. We kept hanging on. Word was 2010 was going to show some improvement. Now we’re hearing there could be another entire year or more of challenged work. What’s to be done?
I attended last month’s NAHB International Builders' Show in Orlando, Fla., and although the weather was bright, it doesn’t appear business prospects will be. While teaching my Business Accounting and Job Cost class, a majority of the attendees said they are not expecting their markets to grow much if at all in 2011. However, there is business out there. So where does the established company look for more and maybe different market share? Because the residential construction industry is losing members, there is more business per survivor. We just have to find it.
Traditional markets have not taken as big a hit as seasonal or resort. Which parts of residential construction are the most stable? I think handyman services have been stable to strong in many markets even where conventional additions and improvements are suffering. Large jobs are feeling the pressure of tighter mortgage credit and the consequences of foreclosure-dominant appraisals. Buyers are turning toward more conservative spending. They are saying, “I like nice, but how much nice can I afford?”. Hence the smaller job sizes. The foreclosed house on the market will affect business for years, not months.
Government bailouts have slowed the clearing of failed properties, a necessary process to real recovery. How much more time will it take to regain health in the shelter market? New home sales definitely affect remodeling with the force of families relocating; move ups and move outs are an entirely new cycle, but that cycle is a train wreck now. Can we afford to wait it out? I question that we can.
We also have witnessed what can be considered a political perfect storm. The reversal of control of Congress means at best a likely standstill for much legislation—not exactly conducive for business and job growth. I believe this climate will persist until the 2012 election. Whether President Obama can be re-elected or there will be a change in the White House residency is very much up in the air now. In more healthy economic times, this would not have as much market impact as it does with today’s case of economic influenza.
The strength of handyman supports the opportunity for moderate growth with companies with in-house multitasking capabilities. Remodelers whose employees can “do it all” have a decided advantage to stay busy and competitive while maintaining profit margins. In good times, give me the comfort of predictable pricing from trade contractors’ bids. Now is the time when flexibility is needed to react quickly and take advantage of diversity and control.
Most companies are smaller than they have been and that should simplify supervision to maintain productivity. There will be plenty of time to decentralize once the market shows concrete signs of improvement. This may sound like a step backward but the multitalented team was the forerunner of yesterday’s giants. Communication and senior guidance from ownership is key to this type of a move. Unity and support of this effort will give your employees strength. You have a client list from which to work, reinforcing that you do it all and you are a known quantity. If you get the opportunity to take on a larger job, subcontractors will still be available to help man up. Experiences gained this way will go a long way toward creating qualified supervisors and project managers in the future, while you’re here … .