Build Your Business, Even During a Recession

by Heather Martin, VP of sales for EAI, Inc. Environmental

Both during a recession as well as during good times, business owners and management teams must stay competitive and maintain an advantage in the tough environment of New York construction. When good times abound, we seem to intuitively make deals and grow our business.  During good times, however, it is also easier for us to get complacent, or to assume that the economy will always be surging.

With the likelihood of recession looming, it is critical to look at your business and figure out how you can maintain your edge, and build your business.  By applying some of the following tips to keep your business competitive during the recession, you can find long-term strategies that will help you stay afloat, no matter what the state of the economy. 

Bid more work.  If you know you get 10% of the jobs you bid, then bid more work and you will get more contracts.

As you bid more work, be strategic.  Find out who is bidding and how many competitors you are up against.  If 20 people are bidding, and you know your chances of getting that specific bid are slim, shift your attention and focus your time where you will get the most bang for your buck.

Add a new service or product line.  Start bidding public work.  Start bidding private work.  Do smaller jobs and build a relationship with new clients.  Whatever you haven’t been doing or refused to do in the past – consider it.  Many opportunities won’t pan out overnight, but start building the relationships and seeking opportunities, and in due time you will reap what you sow.

Don’t underestimate the critical importance of the sales process, including timely client follow up.  Some jobs automatically go to the lowest bidder, but others go to the bidder who sold the quality of their work and service.  Price is therefore a factor, but it is only part of the negotiation.

Keep on top of your bids and tell clients you want the deal, but do not panic and negotiate solely on price.  Basing your business strategy on price is a losing battle. It might be tempting if work is scarce, but it is not a good habit to get into.  You can always price your jobs slightly more competitive, aware of the change in the marketplace, but do not give away the store. 

Even during good times, the sharpest companies are always asking, “how can we be better?”  And, “how can I communicate this better to my client?” So think about what sets you apart from your competition, and how you can effectively relay this to clients. 

Service is a great added value in the construction industry. Make this your competitive advantage!  Whether pricing, information, submittals or quick response to scheduling needs, you will become someone they rely upon.  Being responsive and reliable helps to forge relationships, which should lead to more opportunities (and more contracts).

You may have worked with a client 2 years, 10 years, 20 years, or maybe even longer.  So naturally you assumed that they know all the work that your company is capable of performing and all the product lines you carry. Big mistake.  With existing clients, it is easy to get comfortable, but push yourself outside of your comfort zone.  Next time you speak to that existing client, ask them this: “Bob, did you know we can also take care of Y?  Is there a need for that on this site?”  The simple task of asking this question will create an add-on sale, or at least an additional bid opportunity.

Many businesses make a point of getting contracts, but not collecting money as it comes due. While you try to increase your revenue, also be mindful of monies due.  Invoicing and payments are just as critical as sales.  Keep this in mind as you review your forecasting and cash flow projections for the years to come.

Make your contingency plans now.  Plan out for the next two years.  Write a marketing and/or an updated business plan.  Clarify where your business is, identify your goals, and set a plan in motion to achieve those goals.