Note: The Beacon blog for Nashville-area home builders appears on the second Saturday of each month. Read all the blogs here.
For home buyers and sellers, a perfect storm is under way:
- Mortgage rates are low. But banks have tightened lending standards, so fewer buyers qualify for a traditional mortgage, says Bankrate.
- Home sales may fall 60% this Spring, and home prices may fall in 2020, forecasts Zillow. These are tough times for contractors, particularly if you renovate residential properties.
- In April, renovations, additions and alterations shrank by one-third compared with March, says BuildFax.
- About 2 out of 5 contractors laid off employees, reports the Associated General Contractors of America.
3 Ways to Keep Your Contracting Business Going Through Today’s Crisis
Most important, you need to:
- Keep strong relationships with customers, subcontractors and employees.
- Manage business risks.
- Find new customers.
Keep Relationships Strong in Your Contracting Business
Stay in touch regularly with all your customers, subcontractors and employees.
Communicate frequently to keep a finger on the pulse of customers’ projects. Watch out for signs that they’re having trouble with financing – such as late payments.
Are your contracts specific enough to protect you if a customer suspends a project? Use the standard AIA contracts to protect your legal rights. Get change orders in writing.
Take the initiative to propose improvements or add-ons for customers to consider. Consider offering better pricing for your top customers.
Even if you have a backlog of work lined up, expect some projects to be postponed or cancelled.
Stay close to the subcontractors you rely on most. They’re vital to the future of your business.
To help you rebuild your business after the crisis, keep your best people aboard. Here’s how you can get a loan from the Small Business Administration (SBA) Payroll Protection Program to help retain employees.
Manage Business Risks
Make sure all your financial reports are current. Study them closely. Do you see any new trends emerging?
Review your cash flow situation. Is there enough money coming in to cover your expenses for the next 30, 60, or 90 days?
If not, it’s time to cut the fat. Postpone purchases. Consider outsourcing tasks.
If you have a line of credit or loans, check in with your lender to head off surprises.
When construction ramps up, anticipate potential shortages of building materials. Consider asking customers for pre-payments to cover the pre-ordering of longer lead-time materials.
Find New Customers
Ask happy customers if they will refer you to others who need renovation work. Add customer testimonials to your website.
Beacon Enterprises LLC plans to do 12 projects, with a focus on the Nashville area, in the year ahead.
If you need financing for a home renovation, reach out to Beacon today. We promise low transaction fees, transparency, great customer service and flexibility.