Reinvent yourself and your business for today’s economic climate.
By William Atkinson
During the trying economic times of the past two years, a lot of businesses have hunkered down and simply attempted to weather the storm, waiting for business to return to normal.
That strategy might work. However, according to some experts, this isn’t the time to sit back and do nothing. To the contrary, it is the time to become more active than normal. In fact, it is time to actually reinvent your business.
This doesn’t mean to throw traditional management practices and cost-saving strategies out the window. In fact, without these, it can be difficult to create a launching pad for the future.
One precast company that understands the importance of paying attention to the basics during tough times is Concrete Step Units, Scranton, Pa. “Eighteen months ago, we were just coming off our highs,” says Nancy Nealon, CFO. “We went from record years to below normal.” In one year, the company is down about 20 percent to 25 percent. The reason: “Even though we are diverse, 40 percent to 60 percent of our business is tied to home building,” she explains.
However, good forecasting helped the company predict the down times and plan for it. “We saw the slowdown coming in 2007,” says Nealon. “We knew the housing market was going to bust.”
In response, the company made the decision during the end of the boom years not to reinvest in additional “bricks and mortar” or delivery trucks. It rented instead. In addition, it cut back on inventory. As a result, even though the company has experienced a real belt-tightening time during the past 18 months, it is positioned well because it doesn’t have a lot of additional debt.
Concrete Step Units also scaled back on its staff in 2007 and 2008 and focused on cross-training employees. “Now we work with a core group of employees who have been with us many years,” she says. Another benefit is that the company’s safety record has improved significantly, since it doesn’t have many new employees. In fact, according to Nealon, the company has gone almost three years without a safety incident.
The company has also eliminated overtime. However, so far it has not had to reduce hours or reduce pay. “We may need to do that at the end of the year, though, because we don’t see the push that we usually get at the end of each year,” Nealon explains.
It’s not just about cutting back for Concrete Step Units, though. It’s about looking to the future. “We are thinking about different ways to grow and innovate,” says Nealon. “First, we obtained NPCA certification this year for our plant, which is a real feather in our cap for marketing purposes.” In fact, while some companies are reducing their focus on sales and marketing, Nealon believes the opposite should be true. “We don’t think this is the time to cut back on marketing and sales efforts,” she says. “We are also looking at new markets and trying to capture more market share.”
The company’s salespeople are really working hard, and the company has a lot of new credit applications coming in. The reason: A lot of the bigger homebuilders – those building 300 to 400 homes a year – have fallen hard, according to Nealon. “They have also had massive layoffs, which have spawned a bunch of new little companies, with the laid-off employees starting their own companies,” she explains. “As a result, we are trying to tightly control credit, as well as our collections policy. It is a real balancing act.”
However, Nealon is starting to see homebuilder stocks going up a bit, which she feels is a good sign. “We expect Spring 2010 to be slow but decent, and upticking slowly.”
Another precaster taking an innovative approach to the slowdown in the economy is Mid State Concrete Products, Santa Maria, Calif. The company is carefully looking at every job it finds, even though it may not have been originally designed as a precast unit. “We sit down with our engineers to figure out how we can precast it,” explains Ralph Vander Veen, president.
“We then take that concept to the contractor and engineer, and explain that we can probably save them some time and money by pouring precast instead of them doing it on site.” The company also focuses on quality, showing that precast concrete is manufactured in a controlled environment, whereas cast-in-place is not. Showing contractors that Mid State can save
them time and money and increase quality often wins the job, according to Vander Veen. “The most important of all, though, is money, because a lot of these contractors have more than enough time, since they don’t have a lot of other projects,” he explains.
Before you can reinvent your company, however, you need to reinvent yourself, says Jayme Dill Broudy, founder of Contractor’s Business School in San Luis Obispo, Calif.
“People who own contracting and related businesses tend to have a technical orientation to their businesses, which can create a lot of problems for themselves, their businesses, their employees and their customers,” she explains. That is, because of their technical mindset and skill set, the perspectives they bring and don’t bring to the business limit the opportunity to engage in broad thinking. Broudy has found that such business owners become so immersed in the day-to-day work that they don’t look at the larger issues. “This creates workflow inefficiencies, problems with employee management, and the growth of the business,” she explains.
“We don’t think this is the time to cut back on marketing and sales efforts. We are also looking at new markets and trying to capture more market share.”
– Nancy Nealon, Concrete Step Units
“A technician-managed business can only grow as far as the business owner can keep his or her arms around it, and that isn’t very far,” she continues. They manage by doing everything themselves, rather than by really leading or managing.
The result: A lot of these business owners hit a wall around a million dollars. If they try to grow beyond this, the wheels come off, and their business becomes even more chaotic. The problem with trying to change, she has found, is that a lot of business owners really believe that is the only way they can do things.
However, Broudy has seen a lot of business owners run their businesses in a different, more effective way. This involves a shift from “If I want it done right, I have to do it myself” to understanding how to produce results without doing the work themselves. The real job of a business owner, according to Broudy, is to create an organization that produces results, but
not necessarily to produce them himself or herself.
The first step is to determine if you are this kind of business owner. See if these statements describe you:
- I can’t get away from the business.
- If I want it done right, I have to do it myself.
- I run all day but don’t feel like I’m getting the work done.
- I can’t grow my business past a certain size.
- My day is full of hassles and reacting to fires.
If you answered yes, you are running your business as an owner-dependent business.
Second, identify a mindset that is more productive. “You need to be strategic with your time and activities,” says Broudy. So what does that mean? It means things like creating a different role for yourself in the business: guiding the business, planning the business, creating a vision for the business and creating business strategies.
Third, before you can take the time for this, you need to have other people handle your current responsibilities. This involves two things. One is to get the right people in the organization to start taking over some of the responsibilities. The second is effective delegation. She recommends delegating with processes and standard operating procedures. “In other words, delegate the work such that they can duplicate the results you currently achieve,” she suggests.
Once you have begun the process of reinventing yourself, you can begin to study the concept of reinventing your company. When the economy is down, according to Broudy, the mentality of business owners is often, “I have to get in there and work harder.” In fact, she has found, many business owners revert back to old way of trying to do everything themselves. The problem: “Working harder in this economy is probably going to cause you to do the wrong kind of work,” she emphasizes. In other words, you will allow the fear of the economy to pull you back into the technician role. Instead, what you really need to do is to continue the strategic work that will ultimately get you ahead.
The first question to ask when you look at reinventing your business: Are you going to sit on the sidelines, wring your hands and talk about all the work that’s not there? Or are you going to take this opportunity to strengthen and build your place in the marketplace?
“It is easy to sit and be upset about all the business that’s not coming your way,” she says. “Instead, look at the opportunities that may be there. They may be different than what you have been used to, but look at the marketplace with as fresh a set of eyes as you can.”
Broudy has found that successful business owners are always looking for new opportunities. Given the skill sets that you have in your organization, what other markets are out there that aren’t dried up? Once you find a new market, determine how you can position yourself and your company to take advantage of it. Then professionally reposition your company. What skills do you need? What resources do you need? What is important to customers in this new market so that you can speak their language and meet their needs?
Broudy knows one business owner who was pouring concrete patios for an awning company for new tract homes. He had a multimillion business, and then it dried up. “When I met with him, his business was dying, because all he was doing was looking for another awning company,” she recalls. After that, he started looking at all other different kinds of concrete work to maintain and build his business.
Part 2, to be published in the May-June issue of Precast Inc., will look at other ways to view your business in completely new ways and reinvent yourself and your company. It will also consider some opportunities related to the stimulus package and other government programs.
Bill Atkinson, Carterville, Ill., is a freelance writer who covers business and safety issues.