Crunch Time Approaching...

That's right.

Things are going to get scary pretty soon.

I haven't done a single tender since the last one I posted about back in March! 

Even people who aren't in business know that it's a numbers game and the more you tender the more likelihood of securing work.

So, what's the problem?

Well, I've been working on my marketing stuff since I started working with Simon (Nov last year??).  I've got all that down pat, I think. 

I'm getting out there and meeting architects (who are my primary source of work) and getting myself and my company known as best I can.

I'm calling as many private individuals who require building services as I can.

But nothing's moving, nothing's shaking.  Simply nothing is happening.

The architects are pretty much all saying the same thing; it's quiet.  Will include you on the next tender...

But when is that next tender going to come around?

So, what do I do?

Do I start looking at renovations, additions and extensions? 

Sometimes I think that maybe I should.  But then I remember the countless tenders I did for these types of jobs and the number of jobs I won (not!!).  I'm simply not competitive in that sub $600k market. 

Do I adjust my methodologies so that I become competitive in that market? 

Well, I just don't know.  That essentially means working for very little and taking on monumental risk for the privelege of doing so; not to mention the requirement to take on multiple projects at any given time because your model becomes about volume not margin.  I understand why so many builders just don't take on renovations, additions or extensions; it's hardly worth it.  I look at the last renovation job we completed and the reward was certainly not commensurate with the effort and resources it took to get the job completed within the time frames required.  And it was really stressful too; very different to building a new home from the ground up.

Do I look at establishing multiple arms to the business, thus generating multiple revenue streams?

There's small works, there's project/volume homes and there's insurance work.

They'll all take time and  money to establish.  And even though they all work on a lower margin higher volume model, you're spreading your risk across multiples of smaller jobs instead of one or two larger jobs at any one time, so on the surface it would appear to be a much better option than branching into reno's, additions and extensions.

The small works has the potential to whittle away my Home Warranty Insurance limits so that if I do get a nice, big, juicy home to build I may end up not having sufficient Insurance to take the job on anyway (the Home Warranty Insurance set up in this state is a disaster, and the subject of many a future rant from moi!).

The project/volume home idea is very attractive to me, and the more I day dream about it, the more it's growing on me.  But, the time it would take to establish is lengthy; I need to come up with house designs (and various options for each), inclusions lists, get a stable of project home trades, then start a whole new marketing push to a different market.  It's do-able, but it will take significant human resources (ie - my time...which we all know is limited as it is).  The costs, I expect, would be minimal because I wouldn't go the whole hog and build a display home.

So, what about insurance work? 

Well, I have done a little bit of investigation...but it has been limited.  Why?  Because when I call the insurance companies to speak to the most appropriate person who awards builders with these contracts, no one knows who to connect me to!!  

Is that a joke, or what??

So, I'm at a bit of a standstill when it comes to that.  I don't quite know how to move forward with it.

I've had a look at some of the builders who are exclusively insurance builders and it would appear that their technological set-ups are pretty sophisticated.  In time I would need to do something similar if I were to go that path....that's if I even get there, that is!

So, what do I do?

Well, I just don't have an answer.  At all.  And that's what worries me most.

I recall reading a book about Richard Branson, and there was a story about him being on his last legs financially.  What he did was go and borrow some money and buy himself an income stream.  That's right - he went and bought himself another business.  Each time he was in strife he went and got himself into debt and new business.

Should we take that approach?  Should we go and buy another business that's generating cashflow that can keep us liquid during this slowdown? 

So, what's the answer?  What do I do?

I just don't know...and the fact that I don't know is freaking me out....alot.  I'm half tempted to embark on all 4 approaches so I don't miss something, but that's just dumb thinking brought about by panic on my part.

I was talking to a friend of mine last week and told him of my recent rough times and I was telling him that ultimately I'd like to get back into property development and that this contracting business is simply a means to achieving that.  Having experienced contracting I'll never give it away; we'll always continue to do contracting even when we're back doing our own developments.  But, the ultimate goal was to get back to doing my own thing, just not on a scale as big as what I was doing it before my downturn.  I was saying to him that a total cost of complete of around $5m is about all I'll do.  That's very manageable and I can do it largely on my own with very little staff.  I just need the money to get going again, which is what the contracting is supposed to provide.

He asked me the question "have you considered equity funding/partnering as opposed to debt funding"....well,  of course!  But where on earth do I find these people?

He claims there's stacks of private money around with no where to go....but I just don't know where to look for this private money.  Where is it?

I've previously gone down the road of seeking investors, but investors are a whole different kettle of fish with a totally different mentality to equity partners.

So, if I had a genie in a bottle in front of me granting me 3 wishes, one of those wishes would be to have the funds to do my own developments again so I don't have to burden myself with the anguish of constantly trying to source work in an environment that simply isn't conducive to people spending their money, thus providing me with the work.

I wish this selfish bloody labor federal government of ours would do the honourable thing and call an election so the Libs can take control and get this country running properly again! 

That would be my second wish.

And my third wish would be to win the OzLotto $70m jackpot being drawn tonight!  LOL


Till next time...