With many friends and family in the building industry I did some refresher research on what helped get builders through the Global Financial Crisis in the USA. In Australia it was different as they had the most support from the government by far. So in a way that industry didn’t develop a financial collapse immunity as it was used as the gateway for money to enter the economy and stimulate activity more broadly. This time it will be different. The help will be diversified.
I have put together the key strategies that worked, taken from studies mostly. I must caveat that this is not financial advice because every business has its own unique model, approach, legislation and laws. Employment, awards and the like are also complicated and circumstance specific.
Formally engaging employees
This was used to help hold onto the best of their staff during the GFC. As an employer this may feel counter intuitive because you think you hold the power in the tough times but this isn’t the case as employees look for job security, they are assessing your viability and may be assessing a switch to another employer that removes this anxiety.
Reducing work hours or pays, group wide
This may be collective decision a small team comes to or something higher up in larger firms. It has gotcha’s in law so is possible but technical to make happen (get lawyers to help with this)
Sending staff off to Tafe or Uni
Going from full-time to part-time plus Uni or Tafe reduces your pay run size. It also holds onto the employee and optimises increasing their skills while undergoing reduced workload. This economic issue could stretch for years not months beyond the virus coming and going. There are also government subsidies available so it feels very logical and one I would explore if it was available in the software industry.
This is logical but it’s not time to buy a Ford Raptor, but then again, maybe it is when they cheapen up and you have been prepared for the slowdown.
Keeping a cap on salaries and wages
This may seem obvious but after initial price falls in some products like fuel we will likely see heavy price increases in building materials, tools, food, electrical and just about everything else. This will happen because of 3 key reasons. 1. Restricted supply chains. 2. A falling Aussie dollar (things we don’t make in Australia become expensive) and 3. Inflation which will come if the Reserve banks prints lots of money, leaves interest rates near zero and drops helicopter cash on us all for free.
Taking less work
What? Are you serious? Yes it is smarter to do one profitable job than two loss making jobs because you are desperate and reactive and are just attempting to fill your pipeline in a non selective way.
Review and refocus
Observing Pareto’s Principle you may find that you have been making 80% of your money from 20% of your clients. Or the same may apply to the type of work you do. Maybe you make all your money from doing kitchens and breakeven on entire houses as builder.
Go after more diverse jobs
Contrary to the above. i.e. both proved to work as a strategy in the GFC in studies I read.
I hope some of these ideas help in some way. Engage your coach, advisors and Wolf friends on these matters. Do you remember the Wolf in Pulp Fiction? The Wolf just knows what to do. We all know these types of people. They are very effective in these tricky times. Thanks Nitin P. and Simon M.
Don’t watch this if your queezy. The Wolf at work in Pulp Fiction
Photo by Alexander Andrews