While businesses in many sectors experience ebbs and flows, in the contracting world it’s a foregone conclusion that boom times will be followed by some belt-tightening. In fact, a substantial drop in demand is so predictable, that it even has its own label: “the slow season.”
As such, just as how wise farmers realize that the time to start adjusting for winter is when the faintest chill is in the air vs. when inches of snow cover the ground, successful contractors know — or need to know, if they aim to survive and thrive — that intelligently preparing for the slow season is arguably the most critical effort they’ll make all year.
Unfortunately, many hard-working and highly-skilled contractors — particularly those who are newer to the field — make one, some, or quite often each of these four major mistakes when preparing for slow season:
1. They dramatically reduce or eliminate their marketing efforts.
Not only is disappearing from the marketplace radar a mistake as slow season approaches, but it can be fatal because that’s when contractors have the greatest opportunity to generate brand visibility. When they “plant seeds” through marketing that start to grow for a few months, they’ll be ready to take on new clientele when needs for their services increase again!
2. They don’t correctly manage offboarding.
Many contractors downsize as slow season approaches — such as reducing the size of their operations team, or letting some of their project managers go. While this is understandable and typically doesn’t take anyone by surprise, just like all other businesses contractors should have a legitimate offboarding process that involves exit interviews. This can reveal valuable insights related to recruiting, retention and performance management.
What’s more, this pleasant discussion can make a positive impression on outgoing staff, and incentivize them to join the roster in a few months when demand spikes.
3. They don’t reconnect with existing customers.
Every contractor knows that repeat business and word-of-mouth referrals are both essential for survival and success. However, as demand starts to dip and contractors have more time on their hands, many of them fail to use this opportunity to reconnect and check-in with existing customers. While an in-person visit is ideal (though perhaps impractical), even a phone call or hand-written letter can make a lasting positive impact — and translate into more revenues and referrals in the months ahead.
4. They don’t make strategic investments that increase capacity.
Contractors know that capacity and profitability are connected; i.e. the more they can offer and the faster they can offer it, the more revenue they’ll generate. Yet, many contractors don’t make strategic investments as slow season approaches, because they have limited working capital and want to preserve as much as they can.
However, a consequence of this decision is that contractors are either obligated to make strategic investments during busy season — when vendor and supplier prices are usually at their highest and selection is at its most limited — or, more often, they neglect to make investments during busy season because their attention is consumed by open projects and an ever-growing task list.
The way out of this vicious cycle is for contractors to increase — rather than preserve — their working capital as slow season approaches, so they have maximum leverage (cost, choice and time) when making strategic investments. Then when busy season resumes, the enlarged capacity and resulting profitability will more than offset the total cost of borrowing. It may even happen with a single project!
As the old saying goes, you have to spend money to make money, and the approaching slow season is, quite surprisingly to many contractors, the best time of year to illustrate this business truth.
To learn more about increasing your working capital as slow season approaches — so you can position your contracting business for measurable growth and profitability in the months and years ahead — contact the National Business Capital team today or fill out our two minute application. We proudly support contractors across the country through business lending and business line of credit opportunities so that you can weather a slow season or capitalize on a busy season!