It’s probably fair to say that happy days are here again for contractors. Total construction spending was up over 8% year-over-year as of May 2015, the more recent month for which data are available, with strong gains in both residential and non residential construction. We know from the many different types of contracting businesses we work with—from flooring and plumbing subs to homebuilders to handymen and more—that just about everyone is busy right now. And busy means less competitive bidding means profitable jobs.
This is all well and good; and trust me: no one wants the construction industry to be strong more than we do. But here’s the funny paradox of bountiful times: most of the seeds for future trouble are being sewn now. When lots of money is being made, less attention is paid to process efficiency. Worse, no spare capacity and tight schedules can results in slips in quality, leading to trouble with partners and clients.
We know that the idea of taking time to work on improving your processes now—when time is precious and more easily turned into profit—may sound crazy. But it’s a really powerful way to invest in the long term health of your business. Even with the present opportunity costs, we believe that implementing solutions that will make you a more efficient company will deliver a positive ROI, albeit smaller now than when construction work is less profitable; but the goodwill you earn from clients for, say, your professionalism with your paperless change order management and on-time billing, will bear big fruit in leaner times when bidding gets more competitive. More importantly, these same process improvements will allow you to run leaner, with vastly improved business intelligence, when the cycle turns and conditions aren’t as strong. It could mean the difference between making money and not making money, and over the long term having better processes will undoubtedly give you a leg up on your competitors, and enable you to grow your business with less administrative oversight or hassle.
We acknowledge that the opportunity cost for focusing on the administrative side of your business right now is probably high. But process administrative and process improvements are critical investments that will bear tremendous long-term fruit for any business, and especially in businesses with the cyclical swings experienced by contractors.