With fears of an economic downturn in the future, keeping your construction business recession-proof is priority number one.
Like a hurricane, a recession rolls in slow. People in the neighborhood are boarding up their windows and buying canned food to weather the storm. The key to survival is preparation. We talked to Bob Deeks of RDC Fine Homes in Whistler, British Columbia, Canada, to learn more about how his construction business survived the 2008 recession.
What is a recession?
A recession is defined as “a significant decline in economic activity that is spread across the economy and lasts more than a few months,” according to the National Bureau of Economic Research. In 2008, the economy experienced a recession and many industries were disrupted – construction being one of the hardest hit. During this period, businesses filed bankruptcy and folded under the pressure of an economic downturn.
The years following the 2008 recession, the construction industry continued feeling the impact. “As the industry came back in 2015, we saw a skilled trade shortage and rapidly rising costs,” Bob said. As smaller companies went out of business, Bob’s trade base continued to decrease.
After hiring a business coach, Bob marched forward to financial recovery and offers up these tips for other builders preparing for a recession.
1. Diversify business opportunities
Offering additional services that are still closely aligned to where you started spreads out your sources of revenue. You’re no longer depending on a single stream of income. Expanding into other fields can help cushion profits during trying times.
“We got into the development business on a small scale – partnering on a small-town home development and a few single-family homes,” Bob said. “While it didn’t make much money, it kept people busy and paid the bills.”
Expanding into new territories can be scary and it’s natural to stick with what you know. It’s safe and comforting. However, successful businesses aren’t afraid of doing things a bit differently.
With every change, there is a new opportunity to reinvent and learn new skills.
For example, the Krueger Brothers started out solely working on roofs. As more referrals came in for other services, like doors and siding, they needed to expand their offerings and started seeing significant growth.
2. Improve your online presence
More and more people are looking for a homebuilder or remodeler online. Incorporating a digital marketing strategy is critical when attempting to reach new leads. Assets such as a construction business website, a Facebook page, an Instagram profile and a Twitter feed are all components of a strong digital marketing kit. But like any tool, it’s all a matter of how it’s used.
“We invested in a better website and really expanded our social media platform to generate more leads,” Bob said. Think of a webpage as the storefront to your company. An attractive construction website design helps businesses stand out against the competition.
Having a digital presence allows you to immediately connect with potential leads. They can view previous projects or gain a sense of the company culture through social media or a website. Like a well-manicured lawn, keep information up to date and regularly refresh content.
3. Invest in project management
“A key part of our strategy was to move to a system-based project management platform where all staff consistently managed their projects in the same way,” Bob said. Construction management software, like Buildertrend, provides a simplified way of managing, budgeting, tracking and communicating a project.
The purpose of project management software is to make sure everyone is on the same page. Avoid costly errors due to miscommunication and finish your projects on time.
As timelines shift due to unexpected circumstances, you can keep a record of any changes in the schedule. This way, expectations continue to be met knowing the reason behind some adjustments. Lumber delivery delayed due to disruptions in supply? Make a note and notify the client right away.
Tools like the Buildertrend Customer Portal gives clients access to their project – allowing them to see how the build is progressing. “We switched to Buildertrend as a better client facing tool that was easier for the staff to use,” Bob said. Digital communication makes relationship building instant. Avoid late-night phone calls with progress reports.
Managing the books is necessary during any time of year, but becomes even more important with a recession potentially looming. Buildertrend Budget tracks change orders, billing, labor costs and purchase orders. Utilizing this feature leads to more accurate budgets leading to fewer surprises.
Schedule a demo today. The future is uncertain, and we’re here to help you with whatever comes your way.