Those companies that are surviving have cut overhead and stayed alive based on some solid customer relationships developed over the years and enough resiliency to adapt to the new challenges in the marketplace.  But will that be enough?  Many leading experts are saying that the surplus in housing, office, retail and industrial market supply do not paint a rosy picture for construction activities to bounce back anytime soon.  

In the public sector, companies that were prepared or had operated in that market niche and have maintained a good relationship with their bonding companies are finding work.  But what about the private sector contractors who can't bond $20 million government jobs? What do you need to do to survive?  There is an answer, but the consequences of not knowing what to do and where to look will be devastating.  So let's do a little accounting 101 to find the answer. 

First, if you are meeting minimum revenue requirements that allow you to break even (for more information on how to calculate this, send me an email at rrogers@projecttechnologysolutions.com and I'll send you the formula with directions on how to apply it), the key is to lower your expenses.  Well duh!!  For those of you that answered in this profound manner, let me ask you, "Would your rather have $100 more in revenue or cut your expenses by $100?"  Which will affect profit more?  Well let's see.  Assume you are currently generating $10,000 in revenue and increase your revenue by $100;

Revenue up                               $10,000                         $10,100

less: 

    Direct costs @ 85%                 (8500)                            (8585)

    Gross Profit                                 1500                              1515

less:  

Net Profit                                        $  900                              $915

Percentage Increase in Profit                                               1.67%

So, for every $100 in additional revenue, you net $15;  this is because every dollar of revenue requires you to spend $.85 in variable costs (direct labor, materials, subcontracted costs etc.) to produce that dollar;

Now let's see what happens if you save a dollar in expenses but Revenue stays the same.