Spring 2011 issue of Horizons

Contractors

practices may put serious financial strain on your company if done on a continuous basis.

Smaller Can Be Healthier Decreasing overhead wherever practicable is key. Most contractors have already reduced their workforce of field employees in light of lower volume and performed other job cost analysis, but a thorough analysis of general and administrative expenses is absolutely essential. Realistic budgets for overhead should be prepared and updated monthly. One benefit of getting smaller is that it should leave your company with only the best and most efficient resources. Micro-Manage All Projects Strong management is essential during these challenging conditions. With decreased overhead expenditures, your project managers may be taking on more work or splitting time between jobs. The importance for upper management to monitor projects and manage resources is greater than ever. With razor-thin profit margins, increased supervision should reduce the risk of errors and help keep projects profitable. Work Closely With Your Banker and Surety – No Surprises Third parties who have access to your financial statements should never be surprised by the information presented in them. Timely and accurate financial reports to your bank and surety will increase their confidence in your company. In addition to working capital, your company history and your character are heavily considered during the prequalification process for new surety bonds and financing, so communicating often (in good times and bad times) with your surety representative and banker should result in better working relationships with these key professionals.

For the contractor market, it appears that opportunities for growth during 2011 will be challenged by overall economic conditions. Therefore, it is imperative that contractors have a fine-tuned plan to survive the slow economy. Certainly, cash is king, aggressive billing practices and effective disbursement management are necessary, but other “fine-tuning” may include the following strategies. Strategies For Economic Recovery Low Bidder = Significant Risk Low bids, simply for the sake of low bids, expose your company to significant risk. While it is tempting to take work with little or no margin just to utilize your company’s best resources, such

Raise Your Expectations

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