Q4... What to do?
As we enter the final quarter of 2023, there are a number of ways we can prepare for a successful 2024. As construction industry professionals, our success is highly dependent upon our quality skills and craftsmanship. We must treat our business the same way we approach our trade…by demonstrating our business skills, professional knowledge, and preparedness to craft our coming year with profitability for longevity.
As business owners, the time is right to assess our current situation and make necessary modifications to ensure we are fiscally and operationally prepared for 2024.
Following are a couple of areas to review, which will help you prepare your business for the final push of 2023, and position yourself for a successful 2024.
Finances and Financials:
Much of our ability to manage our companies is directly tied to our financial position. Purchase of materials, hiring of needed labor, ensuring our financial statements will support working capital loans or qualify for surety bonding are all contingent upon our financial position and ability to properly and adequately reflect such.
Profit & Loss statements tell our lenders, sureties, potential clients and business relationships of our ability to manage and accurately report the financial position of our companies. This does not mean we must report numbers with many zeros after the commas; it means we must reflect we understand the cost of business, how to properly price our work, and have the business knowledge to maintain adequate liquidity in our companies (liquidity is viewed as cash on hand and/or available working capital from lines of credit).
Now is the time to:
Review your financial statements and look at your liabilities versus assets, the amount of short and long-term debt you carry, as well as the amount of liquidity you maintain to support work on hand. Generally 10%-15% of your current work in progress added to contract(s) currently pursued is deemed adequate liquidity. These numbers are important to your banker as well as surety company. Ensure you understand them and are easily able to discuss the numbers reflected on your statements if asked.
Potential opportunities for 2024:
Most municipalities have published or will shortly publish their capital improvement budgets for 2024. The volume of public entity work remains high. Of importance to our community are the construction budgets. The City of Austin, in addition to other area public entities, maintain inclusion goals which present excellent bid opportunities for our membership.
You will not be the only ones reviewing potential contracting opportunities for 2024. It is not too early to assess what avenues may be available to you whether at a general, prime or subcontracting level.
Now is the time to:
Review the various available published capital improvement construction project lists for our area public entities. The brief project descriptions should provide you an adequate idea of the inclusion of your trade speciality. Ensure you have maintained communications with your current project partners. Research the General/Prime contractors who bid work with the area public entities to identify potential bid submission opportunities with them. Make contact with your existing relationships to ensure they remain aware of your interest in working with them further. If the time is right, and you are prepared to make the move from a subcontracting role to a prime role, look for projects within your capability and capacity to bid on those levels.