What have Successful Contractors done to Weather the Economic Climate? Hanover Surety

From the Desk of: Mary Jeanne Anderson, President, Hanover Surety

The challenge for contractors in this economic

environment is to not only survive but to actually

thrive. Financial management is the key. There is

a new discipline needed in acquiring work at a

reasonable price and terms balanced with the willingness to make

overhead cuts when the work does not materialize. Taking work below

cost just to generate cash flow is not a sustainable option, even if

that is what the competition is doing. It is not easy, and many contractors

will not survive because they took work too cheaply, fell victim

to unreasonable contract terms or did not make the necessary overhead

adjustments in time. Operating within the terms of the contract

is important regardless of past relationships and practices. A contractor

needs to be particularly attentive to collecting money when it is

due and not forbearing on collection, as getting behind in collecting

money—only to find the funds are not forthcoming—can lead to a

chain reaction of problems. Relationships between owners and contractors,

generals and subcontractors, will be tested, but the contract

terms will define the relationship in the end. Navigating the recession

successfully will require good advisers, including independent agents

with a surety specialty, a construction-focused CPA, a banker who

understands the business and a contractor-oriented attorney. Add a

flexible and knowledgeable surety company and team to the equation

and contractors will have the benefit of the best advice available.