The last 12 months have been a little crazy.
COVID-19 shut businesses down for a while and then the government threw PPP money at the situation.
Since demand remained high, PPP created a cash cow in many businesses.
Now the industry is facing both manpower and material shortages.
Excess cash and high sales demand have made many businesses get a little sloppy.
Nothing like roaring sales and cash in the bank to create a false sense of comfort.
Here are some things to look out for.
Sloppy sales practices: Zoom sales and high demand has created a situation where many salespeople have gotten away from the basics. Just because you are on a zoom call does not mean you still cannot follow good sales practices. Qualifying customers and finding out their basic needs can still be done. However, there is a tendency for zoom and Facetime sales calls to get to price too quickly. Slow down and follow a standard sales process. Avoid just being an order taker.
High sales demand and employee shortages: Now is the time to be a little picky and focus on jobs where you make the most money. Employee shortages will continue and there is a limited number of jobs you can staff. Wages are also increasing. Be more strategic. Focus on work with strong margins that pay on time and fit the type of work where your company does well. List jobs from low to high gross profit percentages and you will probably find common characteristics with both the losing and winning jobs. Eliminate the losers.
Monitor your backlog carefully: Many contractors are having a great year but it's not over yet. Material shortages may slow future sales and leave gaps in your schedule. One roofer I know was supposed to start a roof on a new school in July but found out the steel for the job won’t be delivered until September. Gaps in the material supply may make it even harder to keep your precious crews busy.
Watch out for litigation—especially with new construction projects: Even if you can get your trade material, other components of the building are in short supply and there will be numerous schedule delays. As material becomes available, jobs will become overstaffed and production will slow. Construction managers and general contractors are going to look for subcontractors to blame. Document and keep on top of your legal position.
Business is always challenging and the coming months may be complicated. Pay attention.