Reality Check: Stopping A Downward Spiral
Recognizing and promptly addressing signs that your construction business is headed in the wrong direction is the key to turning things around. Running a business can be lonely, difficult and stressful, and sometimes we’d rather avoid and overlook the challenges as we press through the days. Unfortunately, cash flow, misalignment on the team, and faulty systems and processes won’t fix themselves. Check these pointers from operations pros and get moving before it’s too late.
Take Focused Action and Measure Progress In Weeks
“What separates companies that fail from those that come back stronger is leadership that’s willing to confront hard truths, implement real systems, and ask for help when needed,”–that’s an observation from operations pro and business coach Jerry Aliberti. Though turning around a slipping construction company is hard work, it’s possible to succeed with increased attention to cash flow, team alignment and reliable systems, but steps need to be taken promptly. Decisive, focused action on the right pressure points can put businesses back on track, and for Aliberti, the first step is disciplined attention to cash flow, which can bring some signs of relief within about 90 days:
- Start with your cash flow management system….This doesn’t mean just tracking numbers better; it means implementing a weekly cash flow meeting where you review every dollar coming in and going out for the next 30 days.
- You need a good accounting system and a controller (or CFO, depending on the size of company) who clearly understands construction to help.
- Identify which projects are eating cash versus generating it. Get crystal clear on what projects you need to stay away from.
- Adjust your billing practices to get paid faster, even if that means renegotiating payment terms, if possible, on new contracts or requiring larger upfront mobilizations.
- Establish a line of credit before you desperately need it, not after.
- If you’re a labor-intensive contractor, you MUST implement a cost control system and master it immediately. Labor is your greatest variable and your greatest opportunity to increase profits.
As cash flow comes into focus, and improves, it’s essential to turn the spotlight on getting a solid team powering forward with you. Aliberti underscores the importance of rebuilding team alignment and offers these pointers:
- Schedule individual conversations with your key people, not to explain or justify, but to listen. Ask them directly what’s working, what’s broken, and what they need from you as a leader.
- Actually implement the highest value changes they identify. Create a transparent 90 day plan that the entire team can see, so everyone knows where you’re headed and what success looks like.
- When people understand the plan and see their input valued, retention improves dramatically because they feel invested in the outcome, not trapped in chaos. Companies that commit to this level of clarity and communication typically see measurable improvements in team morale and productivity within one quarter, which directly impacts project execution and profitability….
- If…your leadership team isn’t willing to want these changes more than the person you hire, they MUST be replaced immediately with those who genuinely want success. No amount of outside or internal expertise can overcome internal complacency.
Good To Practice: Effective Communications
When we are stressed, we are likely failing to communicate clearly, and that negatively impacts employees, clients and business. Consider for example, how many times you bump into a relatively simple misunderstanding that is at the roots of cost overruns, project delays and dissatisfied employees and customers? Amp up your leadership skills by aiming for consistency and clarity in your communication practices. Try focusing on these effective communication strategies as suggested by CIC Construction Group:
- Establish a Communication Chain of Command
To create accountability and eliminate confusion, it’s important to establish who’s in charge of what and who answers to whom. Setting up a communication chain of command allows that information to get to the right people in a timely manner.
- Choose the Right Communication Method for the Message
Communication comes in different shapes and forms, such as emails, drawings, photos, phone calls, orders, reports, construction management software, 3D models and more. Choosing the right method of communication can expedite and simplify the exchange of information. Sometimes a quick email is all that’s necessary while other instances may call for a meeting.
- Hold Regular Meetings
Daily briefings, weekly updates and monthly reports help all teams stay aligned, informed and engaged. Meetings help management and workers to stay on the same page regarding planned and ongoing projects, expectations and courses of action and to clearly understand their roles and responsibilities.
Establish A Line Of Credit Before You Desperately Need It…
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