The Recession of 1990

In 1987 the stock market dropped an unprecedented 22.6%. In 1989 the rate of inflation began to increase. The Federal Reserve, in all its wisdom, decided to let interest rates increase to combat the inflation. Then the Gulf War began and oil prices went sky high. Throw a failing Savings and Loan industry into the mix, and you’ve got the ‘perfect storm’ for a recession. 

 

Tile SetterHow Did This Affect Our Company?

Our four year old company was running four crews at the time. We were one of the leading remodelers in our town. The real estate market went soft. The phone stopped ringing. And we had to make tough decisions. 

We quickly shifted from paid employees to 100% subcontract. This allowed us to control our overhead. We used people when we needed them. And when we were slow, our bottom line remained stable.

 

Being Flexible

The reason we succeeded with this new model is because we already had a great relationship with all of the trades we worked with. We spent time with them on each job. We got to know them and learn the names of their family members. We knew their pet peeves and eccentricities. In short, we cared about our subcontractors.

 

Acknowledge Your Subcontractors

Subcontractors, whether you have staff or not, are a monumentally important part of your business. They have their own business, and work on other jobs, but when they are on your projects they need to represent you, not their own company. This can be a sensitive point, yet you can get past it easily if you will show your trades some love. Get to know them. Let them know that you understand the value they add to your business. Cultivate them so that they know how you expect them to act when they are on your jobs. Acknowledge them and they will in turn do their best work when they are working on your projects.

 

How To Get The Best Service

We were never the biggest contractor in town, yet we always got priority service from our subs. Why did they place our jobs in front of other contractors when other contractors accounted for the majority of their revenue? Because we cared about them. Truly cared. Of course, that’s only part of the equation. 

While other contractors were paying their invoices 30 days or more after being billed, we had a strict payment policy which our subs loved: Invoice us by Wednesday and get paid on Friday. We were able to do this because, due to our payment schedule with our clients, we were always ahead. We never believed in “financing” our client’s projects. We worked using their money. 

All these are important points, yet they alone wouldn’t be enough to tip the scale. Another point that is key to your success with subcontractors, is, in a word, scheduling. We scheduled jobs from the outset, and sent Work Orders to our trades telling them at least two weeks in advance, when they should be on the job. Then we updated them often, checking to see if they were still on schedule with us. 

And finally, when they arrived on the job, we were ready for them. We optimized their time so that they could complete their job as efficiently as possible. This increased their margins on our jobs, which in turn made them want to give us the best service possible.

 

A Simple Formula

Follow these simple suggestions then let me know if this has resulted in greater satisfaction among your subcontractors, whether you are given priority service, and whether it has affected your bottom line. 

Show them some love – get to know everyone who works on your jobs

Pay them promptly – this alone speaks volumes

Schedule your projects in advance – realize that your subs are working many projects. Give them time to fit you in on the day of your choice

Be ready when they arrive – make their work as efficient and as pleasant as possible. 

 

Wishing you the best of fortune, Randall

Randall S Soules
Remodeling coach, adviser, and educator
Randall@scientificremodelingsystem.com
ScientificRemodelingSystem.com
My one-on-one coaching will take your remodeling business to new heights!

This article was written by Randall Soules, creator of the Scientific Remodeling System, showing you easier ways to advance your business, raise your profits, and improve your life, through the use of superior  remodeling processes. If you would like to learn more about this eCourse, click here.

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