how to get the growth & cash you want in 2014
TRANSCRIPT
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Is There Room To Grow in 2014?
$0
$300,000
$600,000
$900,000
$1,200,000
2005 2006 2007 2008 2009 2010 2011 2012 2013
Total Construction SpendingSource: U.S. Census Bureau, Construction Spending Amounts in Millions
Recession Story In The Construction Industry
Good News Bad News2012 and 2013 Overall Growth Growth was tiny increments
Jobs Report Solid for most of 2013 Job losses in December 2013 (Blamed on Weather)
Recovery Numbers Predicted for 2014 Predicted for 2013 & largely unrealized.
Housing numbers are strong. They aren’t that strong.
Industry expected to grow in 2014 Growth numbers are still conservative
Sources: 1.Construction Executive: 2014 Construction Economic Outlook: Is a Real Recovery Ahead? 2.New York Times: Sudden Rise in Home Demand Takes Builders By Surprise 3.AGC of America: December 2013 Press Release On Construction Employment Statistics 4.AIA: Consensus Construction Economic Forecast Report 5.ENR: AGC Survey Shows Contractors Optimistic About 2014 6.CFO.org: Construction Industry: A Recipe For Growth? 7.WallStreet Journal: Cold Weather Hits Construction, But Not Contractors’ Confidence
Good News Bad News2012 and 2013 Overall Growth Growth was tiny increments
Jobs Report Solid for most of 2013 Job losses in December 2013 (Blamed on Weather)
Recovery Numbers Predicted for 2014 Predicted for 2013 & largely unrealized.
Housing numbers are strong. They aren’t that strong.
Industry expected to grow in 2014 Growth numbers are still conservative
Sources: 1.Construction Executive: 2014 Construction Economic Outlook: Is a Real Recovery Ahead? 2.New York Times: Sudden Rise in Home Demand Takes Builders By Surprise 3.AGC of America: December 2013 Press Release On Construction Employment Statistics 4.AIA: Consensus Construction Economic Forecast Report 5.ENR: AGC Survey Shows Contractors Optimistic About 2014 6.CFO.org: Construction Industry: A Recipe For Growth? 7.WallStreet Journal: Cold Weather Hits Construction, But Not Contractors’ Confidence
There Is Lots Of Room For Growth
How To GrowPart 1:
Know Where The Dangers Are
Empower Sales With Options
FIRST
SECOND
Know Where The Dangers AreFIRST
“No one liked the recession, but some contractors are going to hate the recovery, too.”
Thomas Schleifer, Ph.DDel E. Webb School of ConstructionENR Viewpoints: Beware The Recovery
0%
25%
50%
75%
100%
YEARS: 1 2 3 4 5
failure rates
Recovery Makes Things Worse
3xWORSE DURING
RECOVERYTHAN DOWNTURN
ENR Viewpoints: Beware The Recovery
Know Where The Dangers AreFIRST
Financial Struggle To Meet Cash Demands With Small Cash Reserves
Long Recession Made Companies Cash Poor
Strong Economy Will Require Companies To Grow Into New Demand
Growth Eats Cash
Know Where The Dangers AreFIRST
Be open to new opportunities, but don’t over extend your company
Know Where The Dangers AreFIRST
Empower Sales With OptionsSECOND
Economy’s new opportunities will energize your sales people…
But since you don’t want to over extend, you need to stick to your credit policies…
Which makes you the party pooper.*
Empower Sales With OptionsSECOND
Economy’s new opportunities will energize your sales people…
But since you don’t want to over extend, you need to stick to your credit policies…
Which makes you the party pooper.*
*no one likes to be the party pooper
Empower Sales With OptionsSECOND
• Personal Guarantees
• Joint Check Agreements
• Security!
Empower Sales With OptionsSECOND
“We did not have good options for taking on risky customers. We have a lot more options [after using zlien] if we want to work with someone who has risky credit. We have used our security rights many times in these situations successfully.”
Credit v. Sales
WEBINAR: February 12, 2014
1pm CST
Can’t We All Just Get Along?
How To Be Cash RichPart 2:
Meet Growth, The Cash Eater
Hangover Habits From Recession
Hard to Get Capital: Banks & Private Equity Still A Little Gun Shy
Starting Cash Poor: Everyone is starting the recovery cash poor
Longer Payment Terms: Pushing out payment terms trend continuing.
Scaling = Delay: Companies must expect costly delays.Scaling operations in housing market resulting in delays and extra expense. See: NYTimes Sudden Rise in Home Demand Takes Many By Surprise.
Companies that survived the recession are short on cash, and therefore, recovering economy will rely on cash poor companies: ENR: Beware the Recovery.
The recovery may be here, but it’s hard to get equity and financing. Many reports in 2013 confirmed that small business financing is hard to find. Huffington Post. NYT.
It is taking longer than ever to get invoices paid. Sometimes, the availability of cash is the issue. Increasingly, it’s strategy by debtors. WSJ: Big Companies Pinch on Payment Terms.
What Your Company Needs
• Low DSOs
• Consistent & Predictable Cash Flow
• Less Aging
DSOs, aging accounts, inconsistent collections, economic factors…Everything adds up.
Fortune 500 Company 6 Months After Implementing Preliminary Notice Policy
At 30 Days 56%At 60 Days 24%At 90 Days 14%
At 120 Days 5%
At 30 Days 46%At 60 Days 15%At 90 Days 3%
At 120 Days 0.04%
Before After
Percentage of Debt Outstanding: Percentage of Debt Outstanding:
The More You Notice… The less money problems you have.
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25%
50%
2010 2011 2012 2013
Percentage Projects Notice Percentage of Projects Liened
Credit Policy Tips
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