For many contractors the “4th Quarter” of the year is here and contractors need to be primed and ready to exert all that they can to end their year on a positive and profitable note.
Let’s look at eight “4th Quarter Tips” that just might add a bit more profits to your bottom line THIS year.
1. Refocus & re-energize your staff and crews
As you approach the final months of the year begin reminding and challenging your leaders to “reload” for a strong year-end push. This should include:
- Each field leader should review jobsite plans and instructions prior to starting
- Estimators should review their efforts and sharpen their pencils for more accurate bid work
- Spend a few extra lunches on your troops to personally engage them with words of encouragement
- Speak to performance goals that need to be achieved — even set new goals for the final quarter
2. Commit 2 to 3 weekends for equipment maintenance
Have you ever noticed that equipment rarely breaks down when you have time to fix it but always breaks down when you don’t? Early in the fourth quarter commit several weekends (however many you need) to assess, maintain or repair each piece of equipment, vehicle and all hand and power tools. Don’t take any chances!
While good contractors maintain their equipment and vehicles throughout the year it is not uncommon to have workers drive their equipment just a bit harder. As the year extends in the fall your workers are tired, and tired workers tend to be less aware (or less sensitive) to maintenance issues or to handling the equipment and vehicles with the same quality, safety and care that was practiced earlier in the year.
Remember, you want and need to finish the fourth quarter strong. Anything less than good working equipment will cost you additional dollars in emergency maintenance work, equipment rental costs or both!
3. Create incentives for all pending bids/proposals
This will require some discipline and strategy from you and your estimators. With work coming down to the final quarter many contractors tend to let their aggressive efforts fade a bit, instead focusing on finishing the work they do have under contract and scheduled. While this is needed an equal effort and focus needs to be exerted on every bid or proposal not yet signed and closed.
Creating incentives can include giving them another 2%, 3% even 5% discount on your submitted estimate to “act now.” Tie this incentive to your prospect making a decision by the end of the year — or earlier. If you are truly a seasonal contractor you might also offer the same discounts for signing the bid now for a commitment to begin work early the next year, thus building up some needed backlog.
Other incentive options include creating a situation where the customer buys the needed materials himself paying only your labor and equipment costs; or some contractors create or extend a warranty for the work proposed if signed prior to the end of the year.
Look, giving something away might not always be the answer, but you need to push every “open” bid to create some incentive to get your prospect to move now. Don’t be shy, timid or bashful about pushing this lever. Customers realize that you are in your business to make a living. Many customers might be a bit surprised if you don’t come back with an incentive. Don’t let them down!
4. Look to expand your services
Often, customers can be swayed if they feel like they are getting a bit more for their money spent. So consider another need that the customer might have and offer to include that service when you complete the original bid work. For example, a concrete or pavement contractor might offer to power wash a particular area of the existing parking lot or sidewalks for little or no increase in fee. Another example might be for the same contractor to offer to refresh existing landscaping.
Interestingly enough, I’ve personally observed contractors who actually developed new divisions of service that all started with this type of end-of-the-year effort. You certainly want to be careful what you add since you don’t want to perform less-than-satisfactory work on the new service (and thus cut into the profits you were scheduled to make on your prime work). However, don’t be blind to what might be a real need for service by the customer.
5. Practice a “Two-Minute Drill” to capture referrals and references
This should be part of your normal sales and estimating process anyway but way too many contractors fade away from this practice — especially late in the year when they are just trying to complete all the work on the schedule. Have someone in your office pull every completed project for the year, then go back and ask each of those satisfied customers for names of others who you might call on and inquire about work.
I would recommend starting with those customers who like you and who have already provided you with good leads. “Go back to the well” one more time. In fact, let them know that you will give them a “bonus” or some additional service if a referral turns into a sale. Many satisfied customers are only too happy to help those contractors who have provided quality work. Most customers like to have some bragging rights with their friends, and what better bragging right can a satisfied customer have then telling their friends, “See, I told you they were the best contractor!” [pullquote]Most customers like to have some bragging rights with their friends, and what better bragging right can a satisfied customer have then telling their friends, “See, I told you they were the best contractor!”[/pullquote]
6. Create a “Weekend Warrior” crew
While overtime hours tend to creep up late in the year it is also a time when quality tends to drop off and safety incidents become a greater possibility. So consider bringing on some part-timers who can work the weekends, giving your crews some much needed rest.
I realize that this is a hard call and finding the right “Weekend Warriors” might be difficult, but you might be able to tap into some local companies that do not work weekends: hire a few of their maintenance guys, drivers or mechanics, and pay them good weekend wages to work 10 to 30 hours over the weekend.
You will need to keep at least one or two of your key workers, perhaps a foreman, too, to keep your company’s processes and commitment to quality in practice. If you have more than a few crews you might be able to rotate easily with your better workers, allowing them to only work one or two weekends a month for the fourth quarter.
7. Call on larger contractors for additional work
Ok, before you think I’ve sold my soul, give me a quick read. Many of the larger specialty contractors and general contractors also have end-of-the-year closeout needs. Beginning in August and pushing into late October many of these same companies begin to realize, “We might not make it at our current pace or with our work crews.” When they recognize this they often are quite open to subcontracting some work to those who can provide additional firepower.
Working for a larger specialty contractor or GC has its own challenges, but when you catch them in this year-end crisis it is amazing how willing they are to negotiate. In fact, in many cases they can use you as leverage with their client to cough up more money to finish the project on time or to hit some important milestone before the winter months. No matter, it’s a real possibility for you and your company to pick up some more work and add to your profits.
8. Cut-out all wasted expenses
The previous seven tips have been offensive. I couldn’t leave this without one defensive tip that actually has a little offense in it.
Near the end of the year we begin to see what has helped us and what has not: What equipment we used a lot and what equipment we seldom used, for example. Even what services, advertising or marketing we used but didn’t get an ounce of benefit.
Make a list of such items and determine to reduce their financial impact or get rid of them altogether. I’m amazed how many contractors continue to carry insurance on equipment they rarely use or continue to subscribe to services that they haven’t used in years.
Get rid of your waste and do it NOW! Such things become obstacles to your performance and thinking. Clean house as this will assist you in preparing for next year.
Obviously there are countless other ways to finish your year strong financially. There is no room for the contractor who is too shy or proud to go on the offensive.
Remember, it is during the fourth quarter that companies, like football teams, really find out what they are made of! Go for it!
This article originally appeared on ForConstructionPros.com
