The only thing worse than making something you can’t sell is selling something you can’t make.
With revenue down by at least 50 percent for many segments of the design and construction industry, most of the architects, builders and suppliers I talk with are about half their former size. Between layoffs, staff attrition, plant closings and consolidations, most of us in the business are operating with half the company footprint we had even three years ago.
“Business is picking up a little. We have all the business we can handle,” my friends working in traditional building and design are telling me when I ask how they’re doing. That observation leads me to the next “c” word in my continuing series, “capacity.” Nearly every company or firm has had to right-size to fit a market that’s a shadow of its former self. However, a good question, even now, is will we have the capacity to deliver products and services when business picks up steam?
During these tough times, we’re all busy but not necessarily flush with cash or even profitable. We’re busy because our clients demand more and take their sweet time making decisions. As one renovation contractor friend of mine says, “Three years ago, the client said, ‘Let’s do it.’ Now they say, ‘Let’s discuss it.’” We’re also busy because we have to do more with less. It is not unusual for an architect to put several thousand dollars’ worth of time into a proposal only to be told, “The project is on hold.” Busy feels better, but it doesn’t always pay the bills.
The president of a big window company told me recently, “We have figured out how to make money with only 600,000 housing starts.” The recession has allowed us to shed excess of all kinds. Good news, to say the least. But it has also diminished our capacity to deliver, and this puts more stress on a smaller number of producers. Not so good news.
I see more partnerships being formed on large projects, even partnerships with competitors. This spreads risk, increases output and gives clients confidence their project teams have the capacity to deliver. I also see more temporary workers, the 1099ers who are hired for a specific skill required on a specific project. Both are reflections of how we’ve adapted to the new, uncertain reality. Nobody has the confidence to invest more than they know will yield a solid return.
Finally, I see a greater emphasis on hiring people who can do more than one thing, sometimes simultaneously! And managers who are used to delegating are now doing it themselves, especially owners who feel like they are starting all over again in a start-up business. Retirement for most of us just got postponed, indefinitely.
How to cope? A positive attitude and eternal optimism pay off, if only to give us the capacity to keep going, despite an economy where victories are fewer and further between. Celebrate every little win! And innovate.
A new initiative will re-energize you and your team. It will cause you to focus on the future so the present seems more bearable. It will give you hope that better times are ahead.
For many of the traditional building professionals I talk with, every day is daunting because everything we do seems harder than before. It reminds me of a bicycle trip my best friend and I took from Rapid City, SD, to Cody, WY, over the Big Horn Mountains, about 13,000 feet up. Standing at the foot of those mountains, looking up at the snowcaps from the eastern slope (we were traveling west), made me wonder how the heck I was going to make it over. Did I have the capacity to do this?
That was the last time I looked up. Instead, I focused on putting one foot (pedal) in front of the other, slowly but surely making progress. When we got to the top, the ride down the other side was a lot easier.