Tips to Keep Your Business Strong—Even When the Market Isn’t
Table of Contents
Be Selective, but Strategic when Bidding Work
Manage Labor Smarter
What Should You do if You bid a Job but Find You’re Short Manpower?
What Should You do if You Find Yourself With Too Many Workers?
Diversify Your Work and Revenue Streams
Get Smart About Purchasing
Track Everything, Especially in Tough Times
Grow Your Network and Marketing Efforts
Final Thought: Uncertainty Can Be an Opportunity
As you know, financial ups and downs are part of the job for electrical contractors. But with economic uncertainty in the headlines, you should be prepared to make changes to recession proof your electrical contracting business and address any challenges you may face.
There are many factors that make running an electrical contracting business challenging: Rising material costs, labor shortages, delayed or canceled projects, increased technology requirements, and changing regulations. If you have been through a downturn or a recession before, or even if you haven’t, there are smart steps you can take to protect your business and keep it strong enough to weather any economic storm. You may even be able to develop new opportunities for your business.
We are experts in electrical estimating and our experience working with electrical contractors has allowed us to learn important lessons we can pass along to you. Our guide to how electrical contractors can recession proof their business combines our field experience with practical strategies you can use to keep your business healthy any time, but especially now.
Be Selective, but Strategic when Bidding Work
When you face uncertain times, you may be tempted to bid on every job that comes your way. But more isn’t always better, especially if you’re bidding on projects outside your core expertise. Here are some key questions to ask once you’re ready to bid on new types of jobs.
Bidding outside your comfort zone? There are risks and rewards.
Pros: You might discover a new niche that’s surprisingly profitable, such as hospitals or EV stations. New types of jobs can challenge your team and help you grow.
Cons: Unfamiliar job types can bring hidden costs like added travel time, complex security procedures, or the requirement to hold frequent meetings with the construction managers. If you’re not accounting for these costs in your estimate, your profits can easily get eaten up.
Tip: Before bidding on new types of jobs, talk to other contractors who’ve worked on similar projects. Use electrical estimating software to make sure your estimates include the correct labor hours, materials costs, as well as markup for unknowns.
Manage Labor Smarter
Labor hours are often the biggest item in your job estimate. Getting manpower estimates wrong can make or break your profit on the job. If your estimate includes too little manpower, you risk falling behind schedule. On the other hand, overscheduling your workforce means costs rise and productivity could slide.
What Should You do if You bid a Job but Find You’re Short Manpower?
Getting bigger jobs can help you thrive when the economy is slower, but sometimes you have to expand your workforce very quickly. Here are some low-risk solutions you can use.
- Build relationships with competitors or subcontractors to share skilled labor.
- Stay in touch with union halls or temporary labor agencies who can provide skilled workers for your last-minute needs.
What Should You do if You Find Yourself With Too Many Workers?
A slowdown in the economy often means projects are approved more slowly. It’s critical that you have the right number of workers for jobs you do have, rather than work that’s not yet scheduled.
- Be careful not to overstaff short schedule jobs because this hurts your labor curve. When extra workers don’t have enough work to do, they may be less motivated, which risks a higher turnover.
- Use the opportunity to evaluate the performance of your team. You can retain your most skilled workers, although you may have to reduce your overall number of electricians.
Diversify Your Work and Revenue Streams
When large projects slow down, steady income from smaller or service jobs can keep you afloat. If you’ve built a business that services larger jobs with a long schedule, you can keep paying the bills by bidding on different types of jobs that will provide cash flow for slower times.
- Add service work: Maintenance and repairs keep revenue flowing when new construction stalls.
- Bid smaller jobs: They may not be your usual bread and butter, but they offer flexibility and fast turnaround.
- Explore new markets: Solar, EV charging, industrial, and infrastructure projects are growing sectors with long-term potential.
Get Smart About Purchasing
Materials prices are all over the map. If you end up paying more for wire and fittings because a job was delayed, those higher costs can eat away your profit. To keep your materials costs as low as possible think about managing your purchasing differently. An electrical material pricing service ensures you can create bids with reliable and accurate materials prices. You can also use recession proofing strategies like bulk purchasing, vendor relationships, and good forecasting can help you weather material price spikes.
Buy in bulk when you have multiple jobs. Use your volume to negotiate better rates.
Stockpile key materials if your financials allow, especially if prices are expected to rise.
Warehouse wisely: A well-organized warehouse lets you buy low and hold stock safely. You can even think about sharing warehouse space with fellow subcontractors.
Send material lists to multiple vendors and negotiate the best and final offer both before and after you win the job.
Track Everything, Especially in Tough Times
The more visibility you have into your business, the better decisions you can make. This is the reason it’s critical to audit your past estimates so you can identify where you made planning errors and make corrections in your estimating process for the next time.
It’s also always a good time to make sure you are aware of some key measures of your business success. Here are the metrics that it’s most important to watch:
- Inbound quotes (volume and dollars)
- New project pipeline
- Backlog vs. labor capacity
- Accounts receivable and payment timelines
- Cash flow and payment schedules
These indicators help you understand when to market harder, reduce pricing, or adjust scheduling to keep your business moving in a positive direction.
Grow Your Network and Marketing Efforts
Now’s not the time to go quiet. Use a slow period to connect, market, and grow your relationships.
- Stay active in your network: Referrals and insights are more valuable than ever.
- Track your marketing ROI. Know which channels drive the most leads and double down on what’s working.
- Follow up on open quotes and use quote volume as a signal to target your marketing.
Final Thought: Uncertainty Can Be an Opportunity
The electrical contractors who come out ahead in tough times aren’t always the biggest. Often those who survive and thrive are the ones who are adaptable, strategic, and informed.
To prepare for any economic downturn, you can use this opportunity to make improvements to your bidding, strengthen your team, and explore new ways to serve your market. With the right strategies, tools, and insights, you can protect your business, move into areas that provide more security or better profits, and thrive in the electrical contracting sector.
About Enlightenment Companies Your Estimating Specialists
For the past 25 years Enlightenment Companies has been helping our customers with their project estimating needs. We use the latest software, experienced estimators and industry leading customer service to provide estimates for jobs big and small. Use when you need us or use us for every job you bid. We are here for you.
How Our Process Works
We make it easy so you can focus on growing your business!
Submit your plans to us
We provide an estimated time and cost
Project completed by one of our experience estimators
You receive a comprehensive bid report
We review the final product with you and make any adjustments
Visit our site at: www.electricalenlightenment.com
Call us at: 440-793-6000