560: Scaling And Adapting Business Strategies Amid The Cost Of Living Crisis

This Podcast Is Episode 560, And It's About Scaling And Adapting Business Strategies Amid The Cost Of Living Crisis When you're ready to take your construction business to the next level, you might start thinking about "scaling." No, it's not just a fancy term for growth; it's about doing more with less. Scaling is about increasing your revenue without proportionately increasing your resources—fancy yet practical, right? It's like sending an email: your effort is the same whether you send it to 100 people or 100,000.    But, as of now, we also probably feel like we are in the thick of a cost-of-living crisis. This challenges entrepreneurs and is a nerve-wracking time for many small construction business owners.   If you've had sleepless nights worrying about how you'll pay your suppliers or support your staff, you're not alone. You've likely already considered where to cut costs, but it seems impossible when suppliers raise prices.   

But don't despair just yet! There are strategies to stretch your dollar further, and they're not always about trimming expenses.

What are the tricks to scaling and adapting effectively? Efficiently using your resources without emptying your pockets, the MAP way (Marketing-Accounting-Production).

So, how can you make this happen? Let's get into it.

1. Look at ways to bring or retain more money into your business.

Knowing exactly where and when money is coming from your business, is the first step to seeing where you can save costs. You could be paying for services you don’t even use or simply aren’t worthwhile. Take it one step further and ask yourself if the products or services you pay for add value to your construction business.

Arm up your marketing efforts

Spending more when you're looking to save might seem counterintuitive, but investing in marketing can yield profitable results in increased sales. There will be short-term costs, but effective marketing can substantially contribute to a positive cash flow in the long run.

Understand your clients

During uncertain times, empathy goes a long way. Understanding your customers' fears and concerns can inform strategies to drive sales. Depending on their situation, you might be able to offer more services or adjust prices without adverse reactions. As inflation rises and suppliers hike prices, it's crucial to respond accordingly or risk bearing the brunt of the impact.

2. Do what you can with the things under your control while monitoring external influences.

Resist the urge to slash expenses indiscriminately. Cutting back in the wrong areas might hinder the growth of your construction business. Make it a priority to retain your staff if you have any, exploring other places to trim costs or increase revenue instead. You can't control everything about your business, but you can stay aware of external factors that might impact buyers' behavior.

Keep it simple, keep it clean

Don't get lost in complexity. More complexities equal more chances for things to go wrong, time wasted, and resources spent. If you're scratching your head trying to understand a process or a tool, chances are, so are your employees and customers. 

Keep it simple to keep control and keep everyone on the same page.

Monitor your competitors

Do you know how competing businesses cope with the cost of living crisis? Can you see what kind of strategy they've adopted? Understanding their strategies can provide insights about your place in the market and potential customer perceptions.

3. Embrace technology.

The daily processes and transactions involved in operating a general maintenance and repair contracting business can mean long hours of repetitive tasks and occasional oversights due to human nature. Automating these tasks can result in significant savings in resources and eliminate mistakes. However, the key is knowing which tasks should be automated and which ones warrant staff intervention and guidance. 

Automation is your friend

The future is here, and it's all about automation. Some tools can take care of your administrative tasks, saving time and effort. From invoicing to project tracking, automation can streamline your process, making your construction business more efficient and leaving you with time and energy to spend in other areas.

Check the activities you perform regularly and explore whether there's a tool that could automate them. 

Manage your receivables effectively

Nobody enjoys chasing after debts, yet doing so can significantly boost your business, especially in challenging times. Here are some ways to streamline the process:

Adopt direct debit systems like for invoice collection. Enable invoice reminders via your accounting software. Consider asking clients for an upfront deposit or partial payment.

4. Use the situation to your advantage.

There's a silver lining in every cloud. Reduced sales? Use this time to review and streamline your business processes. Examine the reasons for changing sales patterns and adapt accordingly.

Rely on the data

Take out the guesswork and let data guide your decision-making. We're in the information age, and there's a metric for nearly everything. Know what's working and what's not by looking at how customers engage with your website or which marketing campaigns are most effective. 

Making decisions based on solid data is more critical than ever. Use actual business data, not assumptions, to create your strategies. Don't create an approach based on what you think is happening, but on what is actually happening.

As the saying goes, "The numbers don't lie". Before making decisions, know your numbers!

Your data remains a reliable constant in an unstable economic and consumer landscape. Accurate, in-depth financial data is crucial to making informed business decisions.

Working closely with your accountant is a game-changer

A good construction accountant can provide the right solutions at the right time. Their expertise in your business can be instrumental in improving its financial health. They can help interpret the numbers, understand the situation, and guide your future steps.

Final thoughts 

Scaling your construction business is all about smart growth. It's growing your revenue without increasing your expenses at the same rate. 

Imagine increasing customer retention with minimal effort from your end. It's possible if you scale your offerings. Consider automatic renewals, subscription models - maintenance work if you're a plumber or repeatable pricing packages. Not only will these save you time from manual work, but they'll also boost customer loyalty.

The secret to effective scaling and adapting lies in maintaining simplicity, embracing automation, making data-driven decisions, and fine-tuning your offerings. 

It's not just about working hard but about working smart. For further support navigating your construction business through the cost of living crisis and beyond, please contact us. We're here to help you.

PS 

We offer free resources to help you save time and money that you can download and print now. 

About The Author:

Sharie DeHart, QPA, co-founded Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com