APC has weeded through a ton of questionable business advice to identify some ideas that are actually worthwhile. Specifically, a report written for large construction contractors and manufacturers is also excellent advice for residential and commercial painting contractors. You can read the full report from McKinsey & Company here, but we’ve distilled the best advice below.
First, some perspective on what’s happening: The Washington Post reports here that 100,000 small businesses have already closed permanently. Closures will only continue, “shifting the balance of power toward big businesses that have a better chance of surviving the uncertain year ahead by borrowing money or drawing on large cash reserves.”
More than 4 million businesses have received emergency loans from the government, but that’s a small portion of the 30 million small companies in the U.S.
One criticism of the PPP program is that “small businesses have to use three-quarters of the PPP money on payroll in order for it to become a grant that does not have to be repaid. Congress designed the PPP program that way to help save jobs, but it is causing problems when rent or other expenses represent a larger share of a company’s obligations, compared with payroll.”
So, when can we expect the economy to come back? McKinsey & Company’s best-case scenario is this: If the virus is contained and all the economic policy measures have the desired effect, the economy will rebound as soon as early 2021. But if severe restrictions remain in place, the economy may not rebound until 2023.
Unprecedented government aid packages may well spur an economic recovery. But new social distancing requirements may significantly inhibit labor, as construction workers may simply be unable to get to a job site.
They predict the following short- and long-term trends to greatly affect the construction industry:
• Increased Digitization, including working remotely. Use of digital building-information modeling (BIM), engineers and contractors using 4D and 5D simulation to replan projects and reoptimize schedules, and contractors using “online channels for monitoring their employees’ well-being through apps, ordering construction materials, managing scarce resources more accurately, and maintaining cash flow.”
• Off-Site Construction. Building off site, where the environment can be controlled, offers obvious benefits in a future, socially distanced world. Manufacturers will roll-out more prefab options, and contractors will increasingly fabricate off site.
Here are three actions you can take to boost chances for success.
• Adapt to digital. Who knows exactly which trends will take hold in the future, but we can assume it will include greater use of technology. There’s no need to guess which technology will win, but we can’t fight the future. If you’re not comfortable with technology, it’s time to become so. It’s a mindset, and both contractors and workers need to adapt. Pick an entry point, and walk through the technology door. Software, apps, virtual estimates, employee tracking and scheduling…pick one and get comfortable in the space.
• Communicate with customers. Uncertainty and hesitation may pollute the mindsets of your customers, both homeowners and commercial customers. Homeowners will want to know they’re hiring a trustworthy contractor – someone who takes hygiene seriously. Commercial customers understand how disrupted the future may be, with the supply chain (for both labor and materials) being intermittent. Customers don’t want job sites to stall because crews are scare or materials are delayed. Reassure your commercial customers that your workers and access to materials are reliable.
• Shift work off-site. Where and how can you do more work in your shop? Doing so both reassures your customers and allows you to stay on schedule by controlling the environment, workflow and completion.