Tips to Recession Proof Your Construction Business

Chances are, we’re going to be hit with a recession. While it shouldn’t be as bad as the Great Recession of 2008, the construction industry has already had its fair share of challenges from supply chain issues to a labor shortage. The economy is now another headache for you to deal with and worry about. Being entrenched in the industry, we understand your fear and frustration. And you’re not alone. Many of our clients are already feeling the pinch. So we want to share some strategies to help you weather an economic downturn and make your construction or contractor business more resilient overall.

8 Strategies for Building a More Resilient Business

Know Your Costs

While you’re busy juggling the daily to-dos on your projects, you might not necessarily be focusing on your bottom line numbers. Now is the time to dig deep into the actual costs of each project, as well as your overhead expenses. This will help you prepare for your outlay and enable you to provide better estimates for future projects. Take the time to sit down with your bookkeeper or accountant to get a real understanding of the money coming in and going out.

Don’t Rely on Your Pipeline

Hopefully, you have been really busy with a backlog in your pipeline. But you shouldn’t count on those backlogged projects as sure things. With the current economy, you don’t know what the future will hold. Projects may be canceled. Instead, put your efforts towards building more leads.

Keep Cash on Hand

We know finances may be tight, but if possible, try to keep some cash accessible during slow downs to cover a few months of overhead and operating expenses. 

Retain Your Best Employees 

It’s a strange combination – a possible recession, yet a labor shortage. But that’s what many construction companies and contractors are experiencing. Now more than ever, it’s important to retain your most skilled employees. So make sure you are keeping them happy with competitive wages, good benefits, and continued work. 

Nurture Relationships

As the saying goes, the best compliment is a referral. Nurture your existing client relationships. You never know if those clients may be considering another project, or if their family or friends are looking for a good, reliable contractor. And don’t ignore your strategic partnerships. Those may also bring you great leads. 

Cut Non-Essential Expenses

Take a good look at the money you are spending or wasting. Are all of your overhead expenses necessary? Are they helping you to grow the company or just extras you don’t need? Do you have equipment that is sitting idle that you can get rid of? Do you have a supply inventory that hasn’t been touched? Stop spending money on things that are not growth related and get rid of things that you are not using.  

Pivot as Needed

Keep a pulse on customer demand. While you may have been busy building new construction or working on additions, customers may start to cut back on the bigger projects during a recession. Consider promoting smaller jobs like bathroom and kitchen remodels to keep you busy during the lean times.

Continue to Invest in Marketing

Now is not the time to cut back on marketing and advertising; rather, it is the time to invest in building new leads. It’s important to keep your company’s name front and center of your ideal audience so that you are top of mind when someone decides to pursue a project.

Hopefully this planning will help you weather an economic downturn and recession proof your business.