The single best negotiating strategy in the world is that of having a full sales pipeline.
In other words, if you have plenty of work then you can afford to walk away from a negotiation that is not good for your company.
Since the recession, far too many contractors have not been walking away from negotiations.
They have been too concerned about lack of work to set a realistic minimum level and stick to it. In fact, many are reported to be submitting bids below cost.
While this might seem like a short-term solution, it is not. Unless companies take work at realistic prices they are just delaying the inevitable and probably making the final few months more painful.
Either take work at realistic margins or don’t take the work. Then face the fact that your business cannot compete as it is and change it.
PwC tell us that more than 5,500 construction companies have become insolvent since July 2010. While sad for the people whose livelihoods have been taken away, it does mean that competition has reduced.
And although the forecasters are telling us that this year will be worse than last year and there will be another fall in 2013 before it starts to get better, we should put this in context.
If the forecasts are right, at the low level of 2013 the market will have the same level of activity as 2003 and a similar expectation for growth in the following years – but with less competition.
As I remember, the industry in 2003 was full of optimism.
Ok I’ve simplified the situation, but my main point is that in times of recession it is the weak companies which fail. The good companies restructure themselves and improve the way they do business.
There are plenty of examples. Recently half-year profits have been announced by Persimmon (up 65 per cent) and Carillion (up 69 per cent).
One of the contributors to their success is strong marketing. So rather than take contracts at stupid margins, review your business.
What are your company strengths and how can you use these to differentiate yourselves from your competitors and add value for your customers?
Consider the sectors you work in: if they are in decline, what niches are there that show growth and in which could operate?
Having identified where to focus and the benefits you can offer, are you promoting yourself effectively?
It does not need large marketing budgets to do this. With PowerPoint and Keynote you can make attractive and informative company profiles and project stories.
Keep your website up to date and use a blog to tell people about your successes, with examples.
LinkedIn will allow you to build a network of contacts, keep track or locate past decision-makers and inform them about your activities.
If you work with the homeowner, consider using Google Ads and Facebook.
And finally, look to build your sales pipeline. You need to have at least three times your sales target in your pipeline to be comfortable.
Take time each day to identify opportunities where you have a real chance of success and work on building relationships.
The recession is tough, but those companies that focus on serving their customer and delivering value will survive and be stronger.
Chris Ashworth, founder of Competitive Advantage Consultancy, provides sales and marketing services to the construction industry. He is a member of the Green Construction Board Promotional Working Group and serves on the organising committee for the Chartered Institute of Marketing Construction Industry Group (CIMCIG)