How to Prepare Your Building Business For a Market Downturn
For once, a number of economists are agreed that there is a downturn coming sometime soon. Not that they’re telling us precisely when, as that is impossible to predict.
From their perspective, recession is the time in the business cycle when weak and inefficient businesses disappear.
These are the companies that pop up in periods of high demand, when they can charge high prices without necessarily delivering quality service.
Or, if they do deliver quality service, they can afford to do so inefficiently. It’s often during a recession that these lower quality and less efficient businesses struggle or fail. The question is, is that a good thing?
One sure sign that a business is not ready to thrive in recession is the business owner reciting all the reasons his/her business is not doing well – can’t get good staff, market is slowing down, anti-business government decisions, challenging cash flow, unfair competition, customers not buying, etc. Heard any of this lately?
However, the reality is that, during a recession, there are still customers who want to build and renovate houses.
The business environment feels different – customers often have more choice, working capital is usually harder to get, and prices likely need to be more competitive.
On the other hand, staff are probably easier to come by and subcontractors more able to perform to schedule.
Yet many things stay the same – potential homeowners still contact a builder or a designer to start the process, concepts are discussed and working drawings produced, subcontractors are engaged, and agreements struck.
So, the key to thriving in a recession is owning a business that is functioning well in all areas – attracting enquiries, pricing competitively and building efficiently. In other words, owning a business that has a culture of doing all its parts well.
POWER OF PERSONNEL
Businesses alone don’t function well – people do. Or, as it is often said, “businesses don’t win – cultures do.”
To ensure you have a business that is functioning well and winning – no matter the market conditions–take a good look at your company culture and how your people behave.
1. Focus on what you can control
When you focus on strengthening the depth of your company’s culture, you are paying attention to the things that you can control, influence and change. You are not wasting your energy complaining about the things that you cannot change, because this results in powerlessness.
Whatever the market might be doing, when you focus on what you can do, your company is likely to grow stronger.
Furthermore, your team members are more likely to follow you when you are positive about your (and their) future, and more likely to join you in facing any challenges that may lie ahead.
If you are overly negative about your company and its future, they may leave you to join someone who has more confidence. In fact, your negativity may become self-fulfilling!
So, are you focusing on improving your company’s culture?
2. Preserving the core values
It is difficult to build core values into your company without actually highlighting what those core values look like. Things like integrity, excellence, customer care, innovation, responsibility, commitment, etc. need to be defined by real life actions.
This is where a culture statement comes into play. Culture is defined as the ideas, customs, and behaviour of a particular group of people. Highlighting what these actions are and teaching them to your team is a sure way to get your culture ingrained into your company. This is reinforced when team members’ efforts that reflect the statement are celebrated.
Do you have a culture statement that highlights the everyday actions that reflect your core values?
3. People can’t be commoditised
While it is possible to purchase equipment and have it operational immediately, people are somewhat different. Each person comes with an individual background that may or may not fit easily into your team. They bring with them ways of behaving that may be different to what your team has been used to.
Their skills may be an excellent addition to the team, but unless they fit into your culture, they may not stay long. In fact, they may weaken your team. A strong team is always great but particularly when you might be facing a recession.
Markets can change rapidly, but building a culture takes time. Make sure that you are routinely and intentionally shaping your company’s culture. Have you scheduled times and events to ensure this happens?
4. Performance arises from ‘who I am’ rather than from ‘what I do’
Many small businesses recruit on skill- fit alone, with varied results. Careful business owners know that good performance comes from within the person – who that person is – as much as from what they can do. So they take time to ensure that a new recruit will fit into, or be amenable to growing into, the company’s culture. This way, the culture is preserved and strengthened.
How do you go about checking out a recruit before handing them a hammer? Could you have them come to smoko with your team to see how they fit in? Or go for a coffee with one or two of your team members?
STRENGTH IN DEPTH
There is no doubt that market conditions will change in the months and years ahead. Having a strong cultural identity will give your company an internal stability that will assist it through these times with success.
Graeme Owen
The Successful Builder
P.S. Whenever you’re ready….here are 4 ways I can help you grow your building business:
1. Grab a copy of my free book
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2. Join Trade Mates and connect with builders who are scaling too.
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3. Join My New Group
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4. Join Loft Members
If you’d like help to get off the tools, make more money and get your life back...just message me at graeme@thesuccessfulbuilder.com and put “LOFT MEMBERS” in the subject...tell me a little about your business and I’ll get you all the details.