Bannockburn, Ill.-based Principle Construction has a not-so-secret formula to earning business when construction work is scarce: Treat your customers well. It just so happens that this is a formula that works for Principle even when times are good. Mark Augustyn, chief operating officer with Principle, recently spoke with Midwest Real Estate News about what his company has done to survive the challenging construction market.
Customer service tops the list. But analyzing the economy and planning for downturns comes in high, too.
“We always have to look at the general economy and anticipate what might be coming our way. For the most part, we’ve found that our construction volume lags the economy by about one year. When they start talking about the economy going down, we have about a year before we start to see that with our business. That’s helpful. We can plan. We can look to what might be coming through the pipeline and make adjustments to our overhead,” Augustyn said. “We can make sure we have the right staffing in place to support our projects. The bad news is that when the economy is coming out of a down time, it takes us about a year to recognize that from a revenue standpoint.”
Then there’s the customer-service part. Augustyn exlpains it best: “We are always trying to maintain a strong balance sheet. We always try to be financially responsible so that we can maintain our bonding and insurance capabilities. We make sure that we value our customers. Customers are extra difficult to replace when there are so few of them out there. It’s also about embracing the subcontractor community. We work hard to make sure that we follow through on every component of a project, including paying our subcontractors. Everyone is working on razor-thin margins today. We want to make sure that our subcontractors get compensated when they’re supposed to.”
There are no secret formulas to success in Principle’s approach, of course. But the company’s success in such a tough market is a testament to the value of good business practices.
