Building Strong Relationships and Recession-Proofing Your Business
In a recent episode of the Hammer & Grind podcast, host Brad had an enlightening conversation with Eugene Gershman, a real estate developer and founder of GIS Companies. Eugene shared valuable insights on building strong relationships with contractors, the importance of effective communication, and strategies for creating a recession-proof business.
Here are the main takeaways from their discussion, along with actionable steps you can implement in your own business.
Key Takeaways
1. Building Strong Relationships with Contractors
Eugene emphasized the importance of viewing contractors as true collaborators rather than just service providers. He shared his approach to vetting contractors, which includes:
Evaluating Past Projects: Ensure the contractor has experience with similar projects in terms of size and complexity.
Checking References: While Eugene is cautious about references, he suggests doing independent research and speaking directly with previous clients.
Understanding Contractor Fees: Focus on understanding the contractor's fee structure and general conditions rather than just the bid amount.
2. Effective Communication
Communication is crucial in preventing and resolving conflicts on construction projects. Eugene highlighted the importance of:
Detailed Plans and Specifications: Ensure that project plans are well-detailed to avoid misunderstandings about what is included in the bid.
Open Dialogue: Foster a relationship where issues can be discussed openly and resolved quickly, ideally on the same day they arise.
Building Trust: Choose contractors you can trust and with whom you can have a casual, friendly relationship. This trust is essential for effective problem-solving.
3. Recession-Proofing Your Business
Eugene shared his insights on how to build a business that can withstand economic downturns:
Leverage and Debt Management: Be cautious with leverage. High debt levels can be detrimental when interest rates rise or the economy slows down.
Marketing and Sales: Invest in marketing and sales even when times are good. This ensures a steady pipeline of business and helps you weather economic slowdowns.
Adaptability: Be prepared to pivot if your current business model or product becomes obsolete. Stay informed about economic indicators and be ready to adjust your strategy accordingly.
Action Steps
1. Strengthen Contractor Relationships
Evaluate Past Work: Before hiring a contractor, review their past projects to ensure they have relevant experience.
Build Trust: Develop a relationship where you can discuss issues openly. Consider whether you can see yourself having a casual conversation with them outside of work.
Clarify Expectations: Make sure your project plans and specifications are detailed and clear to avoid misunderstandings.
2. Enhance Communication
Regular Check-Ins: Schedule regular meetings with your contractors to discuss progress and address any issues promptly.
Document Everything: Keep detailed records of all communications, plans, and agreements to ensure everyone is on the same page.
Foster Openness: Encourage an environment where team members feel comfortable bringing up potential problems early.
3. Prepare for Economic Downturns
Manage Debt Wisely: Avoid over-leveraging your business. Ensure you have a healthy balance between debt and equity.
Invest in Marketing: Develop a robust marketing strategy that you can scale up when needed. Focus on building a strong brand and generating leads consistently.
Stay Informed: Keep an eye on economic indicators such as inflation, GDP, and interest rates. Follow reliable sources like ITR Economics to stay updated on market trends.
By implementing these strategies, you can build stronger relationships with your contractors, improve communication, and create a more resilient business capable of weathering economic challenges. Remember, the key to long-term success lies in preparation, adaptability, and maintaining strong, trust-based relationships.
Resources
Grab Brad's tell-all book: The Contractor Profit Blueprint
