Water well system contractor offers advice for weathering troubled economic times
A key to weathering recessions for water well contracting and groundwater consulting businesses is knowing and implementing basic business practices, said a water well system contractor at the National Ground Water Assn.’s Ground Water Expo and Annual Meeting.
Such practices range from simply knowing fixed and variable expenses and assets and liabilities, to accurate pricing of products and services, marketing and finding ways to value a company’s most important asset--its employees.
“An important question is, ‘How much in sales are you going to make to cover your expenses and make a profit?’” said Roger E. Renner, MGWC, president of E.H. Renner and sons Drilling Co., in Elk River, Minn. “Sometimes a better question is, ‘How much are you going to reduce expenses to make your profit?’”
Renner said business owners should be aggressively proactive in getting on top of their financials and constantly making adjustments where necessary. While most business owners would agree, significant opportunities to trim costs to increase profit are missed, he said.
He offered examples including:
• Reducing worker’s compensation contributions in the event of layoffs;
• Adjust the prices for materials in the inventory if the cost of those materials has increased since the purchase. Otherwise, the customer is getting the advantage of poor accounting;
• Conduct an energy audit, i.e., use light timers and timers on air compressors in contracting businesses;
• Remove unused equipment from insurance coverage; and
• Use GPS in company vehicles to avoid waste in vehicle fuel costs, employee time and wear and tear on vehicles.
Renner also encouraged groundwater industry businesses not to be "pennywise and pound foolish."
“Don’t shut your advertising down,” he said. “You’ll cut your sales down even further. Also, instead of just cutting employees, we add salespeople. Your employees cost you a lot of money, but they make you a lot of money. Employees are the most important asset of a company.”