Strategic Survival for Subcontractors in Today’s Tough Economy

The ability to lead, remain agile, communicate clearly and set and meet goals are the foundations upon which success is built

By David Rasco

In the early 90s I recall seeing signs in many companies (all in the oil patch) saying, “Dear God, Please let us have another boom and I promise not to screw it up!” Most of us realize that when the economy is booming, almost anyone can make money. People can and do cut corners, develop poor business habits and assume that the good times will never end. Then reality sets in.

David Rasco is a strategic business consultant with three decades of experience in leading East Texas businesses to profitable growth. He can be reached at dndrasco@suddenlink.net

In today’s business environment, we face a host of challenges, ranging from labor issues to global competition in areas that surprise us. Profitability, and even business survival, rests on our ability to grow our companies and deliver on our promises, products or services and all of the attending issues related to them.

While it is true that the business environment is changing, what has not changed is the basic components of business success. The ability to lead people, remain agile, communicate clearly, set and meet goals--these are the foundations upon which success is built... and the ability to set yourself apart.

For subcontractors serving the design and construction industry, the concerns are particularly great because most are typical small, entrepreneurial businesses. To compete, it’s important to ask some pointed questions: How do we win the business if you are simply one of many subs trying to come in as low bidder? How can our company survive and make a profit as low bidder? Is the price of getting the business, worth the cost?

Here are three suggestions that have worked for me over the years.

Make it simple to do business with you This means that you review your bid paperwork, your order/scheduling procedures and other areas that affect your customer. As you review, ask how you can streamline and simplify. What does not add value to your product or service?

Let me give you an example. I worked with a subcontractor whose bid paperwork was driven by the accounting department. The bid was multiple pages and hard to read, resulting in misunderstandings and unnecessary arguments and disagreements. To make it easier to do business with us, we introduced the package concept. We defined what was included in the package and the price. Everything added to the basic package became a line item. The result was reducing a four page bid to two pages--eliminating misunderstandings. And we received many comments on how easy it was to read and work with the new bid forms.

Develop a No-Surprise Policy This means that you deliver, as promised, on the date and time scheduled, with the right product or service, at the agreed price. The No Surprise Policy means you have an employee contact the customer 48 hours in advance, reminding them that you will be on location at the designated time and date. This will help if the contractor has a conflict, and helps manage your schedule. If the problem is on your end, you should give the customer a heads up immediately as to when you expect to be on his site.

This does two things: It sends a clear message to your customer that you know what is going on and you have given the time to reschedule, which will be appreciated.

How to Sell Your Business In the eyes of some contractors and subs, sales is a four letter word. Whether you call it advertising, marketing or relationship building, it is still selling and it is essential to your business.

If you want to break out of the low bidder category, or simply take your business to the next level, you need to follow these steps:

• identify the contractors/companies that you want to do business with
• determine what their hot buttons are and if you can truly deliver to their expectations
• set an appointment and meet with them to tell your story (bring marketing materials that will help them see what you can deliver)

For example, a sales manager for one subcontractor targeted two leading contractors and a major residential/commercial firm. He told all three the same story, always ending in, “What will it take to get your business?” Each gave the company an opportunity. Each said the same thing: “Your persistence impressed us. You kept your word and delivered.”

As business owners, simplicity matters. Go back to basics. In a difficult economy, stay focused on the “keepers”: keep communications strong, keep your word and keep making it easy to do business with you.