Changing your business model

Published in Civil Engineering Surveyor.

Construction was one of the first industries to feel the recession and it will be one of the first to signal the shift out of it. However, Gordon Brown announcing plans to cut public spending could mean, if current predictions of 2% of GDP year on year are correct, we will be in recession for a long time to come. The easy thing to do now with your business is sit back and wait for things to happen. Do that and you risk being swallowed. We need productivity. We need to be our own green shoots of recovery. This means taking responsibility and aggressively asking: ‘How can I/we improve our situation?’ Normally I recommend reviewing a business model every six to twelve months to keep the attitude fresh and focused. The recession affords no such luxury – we need to act quickly and decisively.

This summer a building contractor I know increased their fee by 30% and still won the business. Why? Because they were trusted above all others to do the job. I’m not saying raise your price. My feeling is building firms will be better equipped to ride out the recession by leaving fees alone, delivering quality work that goes above and beyond the call of duty, investing time and money into business development and building and maintaining people’s trust. In my experience, contractors are hired on their reputation to do the job, not on how much they charge. Lowering your price now can be interpreted by the industry as having a link to a decline in ability to deliver. People like to know they are paying for quality, so avoid putting doubt in their minds. When meeting prospective clients, give plenty of attention and help to the buyer and decision maker - these are the two most important people you will deal with at this stage.

Offer information and solutions, be as helpful as possible and build a good working relationship. Word of mouth is free and is the best way to sell your firm. Personal recommendations are highly valued – you cannot get enough of these for your business. When each project completes, ask the buyer and decision maker about future projects and, if appropriate, offer your firm’s services. Also ask for a testimonial to use in your marketing activities. Every pound spent marketing your firm to the right people will improve your chances of winning clients and increasing revenue, so don’t be afraid to put money into business development. In theory, you should give no financial limit to your business development there is a strong argument that the more you spend, the more you’ll make.

To avoid wasting money, research upcoming projects and companies you’d like to work with, and find out who the key decision makers are. Introduce yourself and your firm, invite them to your events, meet them for lunch, and impress with your firm’s portfolio and proven ability to deliver. Build trust and keep them updated with your news. It’s important to invest in making clients and prospects feel special, because they are. Going that extra mile pays dividends. If you know your firm is capable, you might consider foreign markets. Commonwealth countries are more open than most to British operators. Explore what is happening abroad and in global contracting markets, and build this into your business plan. I expect Libya in five years’ time to have opened up its trade links with Britain. This will mean massive opportunity for British contractors, so get ahead by investigating how your firm can be at the forefront of what will happen there. The markets in the East have been less affected by recession as those in the West. China has proved particularly resilient and plenty of opportunities exist there for the right contractors. Japan is recovering after a decade of bad economy. As with all prospective clients, whether home or abroad, you must prove to them you can deliver.

Contracting firms surviving recession and growing will be those responding to it as opportunity to gain work. The key to success lies in your ability to communicate your experience, expertise and value in the right way to the right people. If someone quotes a cheaper price, you can cast doubt in the mind of the prospective client by questioning how it is possible to complete the work at such a price. If your quote is cheapest, you should be prepared to explain in detail how you reached this and why you are the best contractor for the job. The building industry is renowned for its competition, and my view is it’s about to become fiercer. This is good news for clients, but bad news for contractors that remain static and do nothing.

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