Nearly every company out there, particularly in the small business realm, will go through certain “down” periods in terms of overall demand for their products and services. The contracting world is no exception, and those who own a contracting business should be prepared for periodic dry spells — including some approaches at the ready for helping kickstart business and return demand closer to normal.
At Contractors School, we’re proud to offer a variety of services for would-be contractors, including Utah contractor license courses and more, and assist our clients who already own an existing contracting business. We help contracting business owners with everything from business entity and licensure themes to managing your license qualifier. We are also happy to provide expertise and experience in numerous other areas you may have questions about. What are some common reasons for down periods in the contracting world, and what can you do to help renew your company’s demand? Here’s a basic primer.
Common Reasons for Slow Contracting Business Periods
There are a few reasons your contracting business might be experiencing a temporary drop in overall job demand, including:
- Seasonal needs: This is a particularly common factor in many businesses, particularly for those who offer services and products that can be used for select seasons of the year. For example, we’re sure you know contractors who primarily install snow removal equipment during winter months and then transition to work on pools or green-lawn projects through summertime. One notable difference between contracting and other businesses is that many contracting services are needed throughout the year– snow removal, tree-trimming, pool service, or general roofing/maintenance.
- Business cycle: Many businesses will experience peaks in demand at certain intervals of time. Contractors who primarily work with commercial properties may find themselves overwhelmed during years where construction on new facilities is booming; on the flip side, business may drop off slightly when there is relatively little construction work going on.
- Economic conditions: Of course, the nation’s overall economic health will impact how much work you have available as a contractor. If an area is particularly hard-hit by unemployment or other factors, demand may fall until those underlying issues are resolved.
Our following sections will go over strategies to help boost your business back to its prior levels (or even higher) if you’re dealing with one of these dry periods for any of these reasons or even for causes we didn’t mention.
Look at Cash Flow and Expenses
Tightening your financial belt is one ideal way to weather the storm of a dry business spell, and one way to do this is to be very careful about managing your expenses. Make sure that you’re not overspending on supplies and other materials, as well as any equipment or tools you may need to perform the services for which you’re contracted.
Look to lower your overhead costs if necessary — consider dropping excess workers’ compensation insurance if you have plenty of work yet few employees, for instance. Do the same with your credit cards — if you’re not utilizing them, consider canceling paid services like subscription or membership sites that you may be using as a contractor (but wouldn’t necessarily need as much as before), and don’t forget to cancel credit cards if there’s no work available to justify keeping them active.
Vary Your Services
As long as you’re properly licensed and trained to do so, you might also consider offering a greater variety of services during periods of slow demand. This could be as simple as expanding the type of work you do for your regular clients, or it might mean looking to other markets or industries in order to provide needed goods and services.
For instance, if you’re used to working with commercial properties, try offering snow removal services to homeowners when no contracts are available for your commercial customers. This is just one simple example — you can apply your specific expertise to it however necessary.
Consider Subcontracting
One additional possible solution here, and one that showcases the value of having strong relationships within the contracting world, involves offering your services to other contractors on a subcontractor basis. This is a common practice in the contracting industry, particularly for those who work primarily on larger-scale projects involving teams of specialized workers.
Look into this as an option if your business is going through a slow period, but other contractors nearby have available contracts. If you can pitch yourself as a means for them to have more workers on their team, you may be able to secure a subcontractor agreement.
Expand Gradually
This final tip is targeted more at helping you avoid slow business periods altogether, rather than helping you recover from them — but the benefits are similar. During periods of strong business, you’ll be tempted to expand; this is often a great pursuit, but it should be carried out gradually and carefully.
If you try to bite off more than you can chew, so to speak, you’ll likely find yourself overwhelmed with the number of contracts you have available, as well as workers to manage. If this is the case, you may be forced to turn down potential contracts — and that can contribute to a dry spell even before it begins.
Suppose you’re careful about how quickly you expand your business during a period of strong demand, on the other hand. In that case, you’ll always have the capacity to handle new clients, and you’ll never risk alienating anyone and causing an eventual downturn.
For more on how to avoid or pull your contracting business out of dry spells or to learn about any of our contractor’s licenses or other contractor services in Utah, speak to the pros at Contractors School today.
