Better Roads Digital Magazine
Issue link: https://read.dmtmag.com/i/134675
Play to your strengths company around; or in a state of "advanced decline," in which it would be difficult to turn the company around. The decline happens in three phases: Initial Decline, Recognition of Decline and Response to Decline. Although the performance of the firm begins to deteriorate during the initial decline phase, the recognition phase is crucial to determine whether the construction company is able to survive or will eventually fail. Simply put, the earlier you recognize your company has the potential to fail, the better the chance you'll successfully turn the company around. Remember, the earliest signs of decline will not only be the most equivocal indicators, they will also be factors that don't affect the financial performance of your company. So what are they? Early signs of organizational decline include: • Excessive personnel • Tolerance of incompetence • Cumbersome administrative procedures • Disproportionate staff power • Replacement of substance with form • Scarcity of clear goals and decision benchmarks • Fear of embarrassment and conflict • Loss of effective communication • Outdated organizational structure If one or more of these characteristics apply to your firm, view it as a symptom of a larger illness. It's easy to dismiss problems that seem small as anecdotal, but they're generally a bellwether of a larger problem. The appearance of these indicators requires a swift response. Rapid response and continuing vigilance Arditi notes that, while Chapter 11 bankruptcy can provide relief for firms after a dramatic financial crisis, turnaround can begin much earlier in the cycle if the company's management can detect the signs of trouble early. These turnaround measures include diversification, forming partnerships or other strategic alliances, taking measures to increase market share or sales, downsizing the company and liquidating some assets to generate cash flow. Keep in mind, if you've had to downsize in response to a company decline, the quality of your personnel is likely to decrease – valuable people may choose to leave the company. Talented managers may believe that being part of a failing company will put a stain on their otherwise successful career, Arditi says. This is challenging in two ways: Not only are you losing talented staff, you must continue on with a less competent team. This can be an opportunity, however, to bring in "fresh blood" – new employees who can observe major dysfunctions within your company with an outsider's view, and help to break the status quo. Even if you feel your company is at the healthy end of the scale, keeping a finger on the pulse of your business is important. Having an early warning tool at your disposal may be the difference in a total failure or a timely turnaround. As a business owner, you should be as comfortable in the back office as you are in the cab of a machine. Most business basics can be learned in time, but be able to recognize your strengths and weaknesses. If you need assistance with a segment of your business, be prepared to find someone with experience. Having someone else do the work will allow you to step back and have a bird's eye view of the business. Accounting – Even if you're good with numbers, bookkeeping takes time. Find and hire a bookkeeper, preferably with experience in construction. If you have an office manager who handles the bookkeeping, ensure they're properly trained. Marketing – If you're good at sales, this might be something you want to handle personally. After all, who is going to speak more highly of your company than you do? If you'd rather just be in the dirt, hire someone to bring in leads, meet with prospective clients, research jobs and respond to RFPs. Superintendent – Many construction company superintendents work their way up through the ranks. Promoting from within is a wonderful way to boost morale, but be sure the person you choose knows how to not only run jobs, but also manage people. Want to know more about how to keep your business healthy? Visit theconstructionuniversity.com for extended information about Dr. Arditi's research along with tips, articles and infographics on a wide range of relevant business topics. And while you're there, read last month's: Are you being embezzled? Construction University is produced by Better Roads and presented by Case Construction Equipment Better Roads June 2013 27 ConstructionU_BR0613.indd 27 5/31/13 12:43 PM