Staying strong through the storm

Brace yourselves for a bumpy ride. Throughout 2009, the value of total construction starts--residential, nonresidential and non-building--is expected to decline 11 percent, and commercial construction starts are projected to fall 21 percent, according to McGraw-Hill Construction Research & Analytics, Construction Outlook Overview, released in January 2009. In addition, the value of the housing market has dropped, credit markets have tightened and consumer confidence and spending is low. Combine these economic drivers at the same time and you have the perfect storm.

The glass and glazing industry has certainly experienced downturns before. For those who have been in the industry for more than eight years, you experienced an economic downturn after Sept. 11, 2001, and the dot com bust. For those who have been in the industry for more than 35 years, you experienced a decline caused by the junk bond collapse and a credit crunch, plus the energy and gas crises in the 70s and 80s. We have all weathered difficult storms in the past. However, here are some steps that should help shelter you from the storm:

Examine your key relationships

Stay close to your banker, be selective of your general contractors and know your suppliers. In times like this, banks have been known to close businesses’ lines of credit. Keep the lines of communication with your bank open so that your banker is familiar with you and your business.

Additionally, get to know your general contractors and suppliers. Watch the contracts that are being awarded and get to know those general contractors. Make sure that your suppliers add value to your company. Don’t just go for the lowest price or submit the lowest bid. Show how value can be added at all levels.

Monitor your company

You’ve heard it before, and it rings even truer in today’s economic climate, but cash is king. Monitor cash flow and eliminate what you can. Collections must be improved and watched. Be discerning about the projects that you are bidding. Only bid if you have a good chance of getting contract and, most importantly, making money on the job. Don’t bid low to keep busy, but to keep revenue. Lastly, watch your indicators including your order book, customer’s order book and contracts awarded, and take action based on these indicators.

Identify your core competencies

Take a look inward and think about your company’s core competencies. Do you have the right people in the right place at the right time? Remember what you were passionate about doing when you built your company and what made it grow, and return to that. Manage your business like you are growing a company. As your management style evolves, don’t forget your foundation and what helped make you successful.

Keep track of the business environment

Examine your business environment and the major drivers, or dominate influences, in your market. Evaluate how these drivers impact your business and consider whether you can control or influence any of them. For example, if you usually bid retail work but only schools are bidding, adjust. Look at networking opportunities in your industry and take advantage of them. Ask yourself how you can expand on those opportunities. As always, understand the value you bring to the market and tout this value at every opportunity.

Know your competitive advantage

Most businesses are built on a unique competitive advantage; something rare, valuable or difficult to imitate that you bring to the market. Within your business environment, define what differentiates you from the competition and leverage it to the fullest. Be creative, think about what you have and use as an advantage over the competition.

We can’t avoid the fact that the perfect storm has hit. By learning more about our businesses and monitoring business decisions, the market and our competition, we can position ourselves to not only ride it out successfully, but also to grow as a business and as an industry. Certainly, there will be difficult decisions to be made throughout the year. Yet, with every challenge a market downturn brings, new opportunity arises. Those who take the time to identify opportunities, develop an action plan and execute on that plan will survive the storm—and it won’t be by accident.