Carlton's Corner: Joining Forces with Other Construction Companies

As promised, this edition of my column will explore a strategy that can increase profits for your business.

You basically have two ways to make more money in decorative concrete — you can increase sales or reduce the cost of doing business. Businesses in times like these have a tendency to become paralyzed when becoming proactive would be the best option. One good way to become proactive is to consider a team approach.

One of the many trends in the construction business today is that of combining forces with another company to tackle projects. Let’s break down a few ways that teaming up can benefit your business, especially in today’s limited market.

Unlike a partnership, the teaming I’m advocating is limited to one job at a time, with each participant maintaining its own business identity. There are ways to team up without the partnership thing, so I want to look at a few examples of what has worked for us. Remember, contractors that are creative and proactive will fare the best in today’s economy. The level of teaming can vary — in fact, many companies that teamed up in the last recession went on to form legal business partnerships.

As you will see in the examples below, teaming will allow you to downsize yet still give you the option to profit from large projects.

Saving on labor
My office receives a call a day from laid-off employees looking for a job, so this means companies like yours have downsized. What happens when you land a decent-sized job that needs to be completed in a timely fashion? Combining forces or teaming with another company allows you to swell your labor force until the project is complete and then scale back until the next big project comes up.

My contracting company in California does this at least once per month and it works out great. It has allowed us to scale down in size, saving overhead costs, but still have the power to bid large projects.

For this to work, both companies need to maintain general liability insurance and workers’ compensation insurance. Also, I strongly recommend establishing exactly who does what and for how much before the project starts. Keeping job tasks and billing specific will lead to a much happier ending.

Example one
Here’s one example of a team venture: Last year I received a call from a young man who specializes in concrete counters. He had landed a good counter job but was concerned about how he could complete the installation since his labor force consisted of him. He was looking for a company familiar with decorative concrete that had a knowledgeable labor force willing to help with the installation.

I jumped at the chance for two reasons. One, it provided income to my business, and two, it gave my company exposure in the event that either the general contractor or owner would want my decorative concrete services. (We specialize in exterior decorative concrete.) The young contactor profited, we profited, and the owner got his concrete counters. And yes, the exposure paid off when the general contractor had us bid other jobs he has in the design phase.

Example two
Here’s another example: My office was contacted over the winter to bid a stamped interior for a new church. The project was just less than 20,000 square feet, so we jumped at the opportunity, but there was one problem. The underslab was complex — layers of crushed rock under a welded moisture barrier under a sand base. This type of slab preparation requires a lot of manpower just to get to the concrete placement phase. A large crew was required to set, place and then stamp the new floor.

We just didn’t have the manpower for a fast-track job of this nature. What we did have was enough sense to approach the general contractor and combine forces, with his crew helping with the setup and lay-down of the concrete and our decorative crew taking it from there. Our decorative knowledge, combined with the general contractor’s labor force, helped us achieve one of our most profitable months of 2010.

The floor came out great while staying on budget and schedule. The fact is that we would have lost this job if not for the teaming option.

Example three    
One more example: A relatively large streetscape project came into our office recently. Beside the usual decorative flatwork, this job was unique in that thousands of feet of parking-type curbing needed to be poured, but the owner wanted it decorative. We ran the bidding process through our estimator, but I knew the numbers were coming into too high, at least if we used traditional methods for installation and coloring.

That’s when the idea came up to bring in a crew that specialized in the use of a curb machine and combine our forces with theirs. The end result was a very competitive bid that I’m sure will lead to a great job. To simply view this project as we did projects in the past wouldn’t have worked and probably would have scared the developer into another option that didn’t include me.

I have no way of knowing what type of decorative concrete you specialize in, but it is worth your time to look into ways to team up in order to turn more profit. The days of passing on projects because we don’t have manpower or knowledge are over. Every job must be looked at to see every possible way to create quality and profit. Teaming just may be what keeps your company in the profit zone.

Be sure to take the time to work out all the specifics and responsibilities of each teaming contractor prior to starting the project.
    
Doug Carlton operates Carlton Concrete Inc. in Visalia, Calif. He can be reached at carltondoug@comcast.net.