Those who have been in the construction industry long enough to remember the hit it took in the Recession of 2008 are understandably getting nervous as economists begin to predict another recession that will hit in or around 2020. Is there anything that can be done about it? Signs point to five steps construction companies can take to lower their chances of being affected.

1. Keep Cash Always on Hand

One of the most important things a construction company can do is to ensure they have cash on hand. If they have enough to get through a temporary downturn, then they are more likely to be in good shape. This may mean taking out additional construction loans while the market is still strong in order to prepare for a potential downturn. If work does go down, then the funds can be used to pay operating expenses, including loan payments.

2. Don’t Overestimate What to Expect from Backlogs

Today, many construction companies have backlogs of as long as 12 months. They often assume that this will keep them safe, but this was not the case in 2008. In that case, projects companies were counting on ended up put on hold or canceled as financing become difficult.

3. Retain Your Best Employees

One of the issues that is currently plaguing the construction industry is the lack of qualified personnel. If the sector slows down, some companies may feel compelled to let go of their employees with the highest salaries – which often means their employees with the most experience. This will only mean that when the sector picks back up, they will be missing good employees again. The best workers are required to get through any downturn.

4. Know Your Real Costs

There the costs you budget and your real costs. Any company could tell you that they want to get these costs as close together as possible, but not all of them take the steps necessary to make that a reality. The truth is that as work gets scarce, prices for supplies and other overhead costs may rise. Know what the real costs are and you can budget more easily and accurately.

5. Get into the Niche Fields

Just because the industry as a whole is in a downturn does not mean that each individual sector is facing a similar issue. Look at the types of projects that tend to be strong even through a recession and consider focusing your attention on them. Not only will you increase the chances of continuing to have work, but specialized work can often bring in more profit.

At Fund Control we are here to help construction lenders keep a close eye on their loans and provide optimal service to their clients. Call us now at 800-625-5972 to learn how we can help.