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Saturday, March 29, 2008

Micahel Stone, in his latest Mark Up and Profit e-letter, makes a really interesting point. Struggling contractors, trying to make the ends meet, are heading back to the job sites and picking up their tools to work.

We are hearing from more and more company owners (of the male persuasion) that they are back working part or full time with the tools. We have also heard from many of their wives, who are telling their husbands to read our blog posts and previous newsletters that talk about working with the tools.

Okay, a quick reminder. You do not make money working on job sites. You make a living, and only maybe that. The time you spend working on the job puts you that much further behind in your promotional efforts for your company. Yes, you have bills to pay and yes, yes, yes to all the other reasons you are working with the tools. But tell me this; what happens when this job is done? If you haven’t been marketing your company and selling new jobs, where will your next job come from? The referrals you might have depended on in the past are drying up. Referrals in construction today, based on what I’m hearing from many contractors, are less than 25 percent of what they were a year ago.

You must spend a certain amount of time each day marketing your company, advertising, schmoozing, letting potential customers know you are available to do their jobs. If you do not put in the marketing effort, your financial position will be worse than it was before you put the tools back on, regardless of what you charge for your time.

We are seeing more construction companies fail than we have seen since the early 90’s. It will get worse before it gets better. I personally expect this downturn in the housing market to continue through the next presidential election. If you and your company are going to survive this crunch, you must advertise, schmooze, promote and sell your company daily. That will be the difference between those that survive and make a profit, and those that go away.

I agree entirely with Michael about the importance of focusing on marketing and the business fundamentals. The business fundamentals side of my own business, frankly, is an area where I'm not totally satisfied right now -- we need to get our metrics in place, with clear progress to much better profitability and a healthier balance sheet. Publishing/advertising can do well at the beginning of recessions as some companies, who have never needed to advertise, start spending money (often unwisely). But we need to find more sustainability.

But I also appreciate there are advantages in donning the tools, especially in a downturn. In one of my hardest decisions about two years ago, I dismissed our editor and began doing all the writing for the publications myself. While this measure reflected a desperate survival orientation -- "if there is not enough work to pay an outside editor, at least I can pay myself as a writer" it had some important benefits crucial for the turn-around.

I learned, and got much closer to my market and clients than I could have ever done otherwise. I saw serious problems in client relationships, in the brand and image of our business, and the quality of our product. And in fixing these issues, I also connected with potential clients and sold stuff.l

Now of course we have a full time editor, Ken Lancastle, and shortly we will recruit freelance writers to lighten the load for Ken and myself. (I have continued to assust in writing many of the features in the last few months since Ken joined the company.) But I'll always "put on the tools" and get to work at least a few days a month, even as the business grows to its fullest potential.

Michael Stone is right, of course, you can't stop marketing and promoting your business, even when you get down to earth again -- but you can and I think should integrate the 'actual work' with your skills and the marketing process to achieve your goals. Leading by doing, and doing what you love to do, will help you through hard times much more effectively than desperate and ill-planned advertising spending. Just remember, however, you must do the marketing work even as you do the work itself. And that is where Michael Stone's advice is 100 per cent valid.

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