Each year, we receive construction forecasts that we presumably use to determine what to expect for the promise of work during the coming year. Regardless of what these reports say, the question remains: How do you approach your own construction or work forecast?
We have experienced some difficult times since 2008, but many contractors have made it through the tough period and continue to grow their businesses. Now, you know the construction forecasts during those lean times did not bode well. So, did those successful contractors base their business models on the forecasts, or did they take a different route to growth?
I think many professional contractors looked at what they do best and at which markets they served that had opportunities. Then, they focused on their strengths and on those opportunities. That’s not to say they simply continued to do the work they had done in the past. Instead, they looked at the markets they served to see how they could leverage their contacts to do the work that the opportunities afforded.
College and university market
For example, even though new construction remained slow in the college and university market during the downturn in the economy, the upgrade of life safety systems continued to flourish at those institutions. In addition, new markets opened up within existing markets—what we might call “market extensions.” Again, using the college and university market as an example, mass notification systems (MNSs) and enhanced security and camera systems became important installations to satisfy security and safety needs on campuses throughout the country. While these system upgrades did not represent “new construction” per se, they provided a wide range of business opportunities for contractors who maintained good lines of communication with their previous customers.
Based on these examples, it would appear that the smart contractor should pay attention to his or her customer’s needs, regardless of what the construction forecasts predict for each coming year. Forecasting provides a useful tool. However, forecasting should not take the place of talking to customers regularly, anticipating the kinds of problems they may have to face, and developing plans to solve those problems.
After all, in large measure, your success depends on how you view yourself. Instead of seeing yourself merely as someone who sells the installation of electrical systems, learn to see yourself as a “problem-solver” who provides value-added services to your customers. The more you capitalize on a renewed vision of your role, the more convincingly attractive you will become to the customers you serve. When they have problems related to the products and services you sell, they will quickly turn to you for help when they see you as someone who solves problems.
Each year, set aside time to develop a strategic plan. What steps will you take to grow your business during the coming year? You have markets that you serve now, and you may have others you would like to enter to increase the breadth of your business and the depth of your bottom line. None of that will happen without a carefully conceived strategic plan.
Specific building markets
Most construction forecasts revolve around very specific building markets, such as multifamily, commercial, government or institutional construction. Few, if any, revolve around building systems, such as fire alarm, security, access control, power management, heating and cooling control, and other similar systems.
Obviously, if an expected rise in new construction occurs, you will get some of that electrical business and, with it, the required life safety and security business by default. Your strategic plan can address this predicted increase. But, you can more sharply focus your strategic plan to address what percentage of the electrical and life safety systems business you want to acquire to ensure you get more than just a “default” amount.
The 2014 Dodge Construction Outlook predicts “a measured expansion for the construction industry” of 9 percent. That translates into approximately $555 billion in all construction projects. Look at that percentage, and attempt to determine if it will represent the growth in your particular area. Once you make your own predictions of what will happen in your area, you can add that information to the new construction part of your strategic plan.
If you have installed systems and performed electrical work in the institutional market, you probably already know that it seems as if little new growth will occur in this market. The exception predicts the development of many more stand-alone emergency care, outpatient surgery, and urgent care centers to address the changing healthcare needs of our citizens.
Based on the 2014 Dodge Construction Outlook, commercial construction will increase 17 percent with warehouses and hotels leading the way in growth. If you service these markets, you will want to evaluate what you expect to happen in your local markets to ensure you properly prepare to get as much of this work as you can.
Don’t plan in a vacuum. Instead, look at the impact of cuts to federal spending, energy and oil costs—and other pertinent local issues—to ensure your forecasting remains both conservative and relevant.
During the economic downturn, many contractors found that diversification saved them and, in some cases, increased their sales. In contrast, many companies that devoted all of their energy and resources to one market went out of business. So, that should signal to anyone in business today that they will do well to serve multiple markets and to simultaneously become proficient in those areas.
Follow up on your strategic plan with a well-conceived marketing plan. Make certain that the marketing you do positions your company so that you appear to offer competent and competitive services to multiple markets. Avoid the label of “one-trick pony.”
Many of the systems you have become proficient in installing and maintaining have a definite place in many different markets. Make sure those markets know that you can serve them. And, if you happen to live on the East or West Coast, the Panama Canal expansion could impact your business, especially in port cities with projects including dredging; piers; warehouses; rail facilities; and highway, bridge and tunnel improvements.
Many of the forecasters couch their projections with caution due to the uncertainties in the marketplace, but they expect a steady, moderate growth in 2014. To make sure you include your company in that growth picture, look around your customer base, and plan now to grow your business.