Having Lived Through Several, Recessions Beginning In The Mid 1960's I Sincerely Understand And Empathize With The Challenges That All Construction Owners, Workers And Support Staff Have Faced For The Past Several Year. The Good News Is Everything Is About To Change For The Better!
There is natural ebb and flow in the business cycle, which in normal times operates, somewhat predictable.
In normal times, contractors who pay close attention to their Five Key Performance Indicatorsfinancial reports and stay aware of the macro global economy and the micro local economy can plan ahead and earn a normal profit after paying the owners a reasonable salary.
The past several years starting in late 2008 have been anything but normal and frankly, we are having a tough time with the economic forecasts models we follow including our own internal ones.
Something similar occurred during the period of 1976 to 1980 and suddenly in early 1981 the national and global economy began to turn around and there was a severe shortage of contractors and qualified construction workers.
During the remainder of that, expansion and boom cycle many construction company owners made substantially high profits and the wise ones who thought ahead invested their windfall profits in real estate, stocks and other investment vehicles.
The good news is the Universe is always in balance and we could be nearing the beginning of a period of massive expansion the likes of which we have not witnessed since the end of World War II when the housing boom was explosive for the next 20 years.
Pent Up Demand #01 - Deferred maintenance. Many commercial property owners have been putting off sealing parking lots, painting, renovating and other general maintenance projects due to the lack of cash flow.
Pent Up Demand #02 - Drive the neighborhoods in your cities and towns all across the USA, Alaska and Hawaii and see for yourself how many houses have weathered "Blue Tarps" covering portions of the roofs which are leaking and need repair. If the homeowner is having trouble putting food on the table then a new roof is not a high priority, yet.
Pent Up Demand #03 - In the evening hours drive the residential neighborhoods in your target market and notice how many cars are parked in the driveways and surrounding areas. This indicates a lot of people are renting out rooms to help make their mortgage payments.
Pent Up Demand #04 - Visit the home improvement stores and observe the shift from six months ago when there were lots of lost and frustrated homeowners roaming the aisles searching for materials and tools for do-it-yourself projects and now there is an increasing number of contractors and handymen.
When You Have - A clearly defined and documented Business Strategy you will know what steps to take and when to take them. When you know the answers, the questions will not bother you! Just like when you took a test in school in your favorite subject, it was fast and easy!
When The Economy Is Expanding - Demand for construction rapidly and almost overnight outstrips supply because so many contractors gave up and left the industry.
Well Intentioned Yet Unseasoned Contractors - Seize the opportunity to grow their businesses rapidly by haphazardly bidding and winning projects without giving any thought to calculating their company Expansion Path Isoquants, infrastructure, logistical support, working capital requirements, Job Costs or Key Performance Indicators (KPI).
The Inevitable Chaos - Caused by too much work and not enough labor, material, other costs and subcontractors (LMOS) leads to the contractor becoming a pipe through which money flows with increasing velocity and not in a fun way.
This Is The Leading Cause For Large Contractors Going Bankrupt - The construction company starts small; the owner is a visionary who understands the "Tangible" side of the business. They know how to bid, sell, produce and manage the company as it grows to roughly $5,000,000 in annual sales without having a clearly defined Business Process Management System or Strategy.
When They Take Their Business - To the next level not having a strategy or as I refer to it the "Intangible" side of the management equation, they often end up going bankrupt, several times in most cases, before hiring us or someone else to help them put together a strategy that includes the "3 P's" Processes, Procedures and Policies. It has been said, "The same law that binds the ignorant frees the wise"
Proactive Construction Companies- Who invested time and money getting their Business Process Management systems in place use The 80 20 Rule to grab a nice big thick slice of Market Share Pie and laugh all the way to the bank!
This Is One More Example of how Fast Easy Accounting is helping construction company owners all across the USA including Alaska and Hawaii put more money in the bank to operate and grow your construction company. Construction accounting is not rocket science; it is a lot harder than that and a lot more valuable to people like you so stop missing out! Call Sharie 206-361-3950 or sharie@fasteasyaccounting.com and schedule your no charge one-hour consultation.
Profitable Contractors and Construction Company owners have known about the value of outsourced bookkeeping services and contractor coaching services like ours for a long time and now you know about it too!
We Scan Your Receipts And Invoices link the appropriate transactions to QuickBooks or Xero Accounting Online depending on the construction accounting service you are using and provide ongoing Cloud Based Contractors Bookkeeping Services by accountants who understand construction.
About The Author:
Our Co-Founder Randal DeHart - Is a Certified PMP (Project Management Professional) with several years of construction project management experience. His expertise is construction accounting systems engineering and process development. His exhaustive study of several leading experts including the work of Dr. W. Edward Deming, Michael Gerber, Walter A. Shewhart, James Lewis and dozens of others was the foundation upon which our Construction Bookkeeping System is based and continues to evolve and improve. Check out our Contractor Success Map Podcast on iTunes and Follow Randal on Google+