5 Things Contractors Can Focus on Going Forward

by | Aug 6, 2020 | Uncategorized

As your business strives for optimal project management while also maintaining the cash flow and profit margin you need to survive, which investments in time or money will bring you the greatest return? The annual Deltek Clarity A&E Industry Study showed that there are areas of strength most business owners can focus on. These might already be strong suits you can build upon, and they are certainly things you should monitor to ensure that you’re making the right business decisions. They include:

  1. Benchmarking and utilizing business intelligence
  2. Implementing emerging technologies
  3. Nurturing key client relationships and business development teams
  4. Finding and keeping qualified staff
  5. Financial performance while managing your backlog

Benchmarking

While every business owner likes to occupy a specific niche, it’s important to gauge your company against other companies in the marketplace that do approximately what you do. It’s a rare company, indeed, that can’t use improvement in some process, technology or strategy. The goal isn’t to become more like your competitors; it’s to gain a competitive edge – to strive for best-in-class status.

  • Decide what attribute you’re going to analyze.
  • Choose a company with superior performance in that attribute.
  • Determine how your company differs from the comparison company.
  • Set goals to implement improvements.

Technologies

You simply cannot implement every technology that might make your business processes better. You’d go broke even if you had the time to implement them. However, there does exist a combination of technology tools that’s well suited to your particular situation. The challenge is finding that combination and then implementing it while staying productive. This is where a technology partner/advisor is of utmost importance. These industry-trained experts have the background to frame your needs within the scope of available technology tools. They’ve already invested the time and research to determine what works best, the products that function best together and what combination provides the greatest return on investment for specific business scenarios.

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Clients and Business Development Teams

Key client relationships before, during and after projects have a big impact on your business. These are the customers who can impact your business the most. They are the ones you will go to great lengths to serve, even to the point of adjusting your processes, in order to foster a long-term relationship that benefits both of you. Your business development teams are struggling to get quality time with prospects and clients. What are you doing after COVID to help with creative interruptions? eVolve MEP recently sent boxes of Georgia peaches to top clients and prospects. All of them responded, including several that had been out of communication this year.   

Staff

Finding the right employee can be expensive. Training can be expensive, too. Once you hire a qualified employee, it’s most cost effective to retain and nurture that person. Longevity of employees is often seen as a hallmark of stable companies, making them more attractive to prospective customers. It also gives the company a depth of knowledge and corporate memory. Keys to retaining skilled staff include choosing to:

  • Provide quality supervision.
  • Let them know your expectations.
  • Enable them to use their talents fully.
  • Show appreciation.
  • Welcome input and opinions about business operations.

Finances

The fundamentals that support your company’s profitability and stability need to be monitored regularly. The more you can charge the cost of labor to projects (net labor multiplier) the better your operating profit will be. Net revenue per employee (billable plus non-billable overhead) is better when employee turnover is low, and it improves when companies are able to do more work with the resources they have. It’s important to scrutinize overhead, which directly eats away at profits. In addition, pay attention to collections of outstanding receivables even during good times.  

Industry watchers agree that better times are coming. If you continue to focus on your company’s areas of strength, you’ll be ready when the next construction boom hits. Build upon your strong suits, monitor the key indicators of your company’s health, and your business decisions today will position you well for tomorrow.

Images from Wikimedia Commons

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