The Business Side: Straight talk for surveyors.
December 1, 2009
“If you stay in business long enough, you will eventually experience business downturns.” This statement is just as true now as it was 22 years ago when I first wrote it in my Surveyors and Engineers Small Business Handbook.
Unfortunately, the downturn we’re experiencing right now is having a deeper impact on our profession than most of the previous recessions in our lifetime.
If you listen to the national news, it sounds like the downturn is all but over. But I’ve been talking to a number of surveying firms around the country, and I’m hearing a very different story. I believe the months ahead--especially during the winter season--will continue to be difficult for those in the surveying business and possibly even worse than the last year.
Why am I taking the space in my column to tell you something you may already know? Because I believe there are things that you, as company managers and owners, can do to positively affect the outcome of your business.
Review Business Structure and Practice
You need to know−at all times−if you are making a profit. Keep current on all IRS payments and withholdings. Consider whether you need to rent or buy cheaper office space. Dispose of unneeded equipment. Leave no stone unturned in reducing cost and making your company more profitable. For example, I recently talked to a surveyor who had a number of older vehicles. While each truck alone was not worth a lot of money, selling all six trucks provided him some welcome cash flow.
Negotiate the Right Fee
In a business downturn, all of your clients are pushing for lower prices because their clients are pushing for lower prices. But don’t take jobs for below cost just to keep employees working.
Make sure you have the right estimate to begin with, and know the least amount you will accept for the work. It is a well-known fact in the business community that if you expect more, you will receive more. Aim high and come out better.
How often have you said, “This is the price, but we may be able to do the work cheaper”? Don’t lower the price before the client asks. If you must lower your price, consider changing your scope of services. For less cost, the client should receive less.
To get the right price for your services, make sure you are negotiating with the right person. Find out by asking if they can sign the contract for the work. Do not waste your time with people who cannot sign the contract. Additionally, always try to negotiate lump-sum fees because it is easier to get the agreed-upon amount. And remember that the client wants to complete the negotiations just as much as you do. You do not automatically get the fee you deserve--only what you can negotiate.
Keep Collections Current
You should always bill the client when you deliver the product. But I know some surveyors who may not send the invoice for a month or more. Believe in the quality and value of your survey. At the completion of the job, the money belongs to you, and you have the right to collect. Follow up on invoices after they are mailed, and ask when you can expect to be paid. Now is the best time to get current on your collection of accounts.
Plan for the Company’s Future
Remember that the only thing related to profitability that you can quickly adjust is your own cost to provide the services. Develop a plan for tracking project costs. Do all your current employees fit into the plan you have for your company in one, five or 10 years? Do you need to do some downsizing? Many of the unemployment numbers today are the result of companies downsizing employees, eliminating whole departments or sending jobs out of the country.
The economy as a whole appears to be turning around, but I believe some markets will never completely return. Many services performed by professional surveyors are now being delivered by other professionals, and clients are no longer in need of many types of work. Sadly, they have found that they can do without our help. Factor these changes into your business plan.
Expand Your Market Outreach
Despite the market changes, work is still being contracted out to surveyors. People with money tend to spend when everyone is short of funds because this practice gives them the best value for their bucks. The key is finding the work and positioning your firm to go after it.
One source of work I am hearing about is related to engineering projects. Some city and county governments are moving ahead with projects that were funded before last year and others that are funded with federal dollars. Most of the surveying is contracted out through the selected engineering firms. In this instance, the engineering firm frequently has the authority to contract the surveying company without bidding. You may be able to find out about these types of projects by contacting and developing relationships with engineering firms in your area or by calling on city governments.
Another source of work involves the use of GPS to collect data for contracted projects such as local governments dealing with sewer, water and road location data. State and federal government agencies also contract this work, and some of it is related to boundary lines. One of the major problems with this type of work is that it does not always go to licensed survey firms. Many people today offer GPS services for the collection of data dealing with GIS and related services, so you’ll need to be competitive.
The oil and gas field is also hot. Much of the work in this market is performed by large engineering companies that contract out survey work.
Additionally, don’t overlook your old files as another source of leads. Many large landowners have always wanted their land surveyed, but the cost has been a stumbling block. Today, GPS allows large tracts of land to be surveyed at a reasonable cost. You may want to dig in your files to locate old cost proposals and revisit them with the clients.
What Does the Future Hold?
I believe the present recession will force many older surveyors into retirement. Most state surveying societies are seeing a decline in membership, and I don’t believe the surveyors who are leaving will be back in the profession anytime soon. Smaller and fewer companies, including many one- or two-person firms, is the future of surveying. The funny thing is, that was the way it was when I started in the business a number of years ago. The same principle holds true: The surveying firms that develop new clients and control costs will survive. Will you be one of them?