If you’re in the construction industry, you would think it would be easy to make more money these days. There’s a definite building boom going on. There are all kinds of projects being built. Money is cheap. Interest rates are low. The pandemic got many people thinking about where they really want to live and it wasn’t where they were living. As a result, there’s a shortage of housing, both new and used. 

Yet, it’s still tough to make more money in a boom. Why? Well, all of those market conditions created big demands for builders, contractors, skilled trades and crafts, apprentices and laborers. All the associated industries are busier than all get out. Yet, suppliers, manufacturers, and vendors are struggling to fulfill orders. They can’t find qualified people to staff their factories. Product lead times and backlogs are extended, sometimes for months.  More errors in production and fulfillment are occurring. That affects you.

Meanwhile material prices are volatile. Inflation is kicking in. We saw lumber prices go through the roof a few months ago. Now they’re heading back down. Will they get back to where they were, pre-pandemic? Unlikely, in my opinion. At least not until the next recession comes.

And it will. Sooner or later the market will shift or an event will happen and there will be another recession. You can count on it. Just no one knows exactly when. 

Having been in the construction industry for 48 years, I’ve lived through several booms and recessions. Both are stressful, but the stress of a boom is definitely a lot more fun than the stress of a recession. 

However, sometimes you don’t make any more money in a boom. Why? For all the reasons stated above. Plus not enough help, not enough time to do proper estimates, not allowing for slippages and time delays, and having too many opportunities to know which ones to pick and which ones to avoid. In other words, you’re operating in a target rich environment. 

Here are some strategies for getting through the economic swings…

We live in a free enterprise system where what we earn is determined by the value we bring to the table and the marketplace around us. When times are good, you can charge more. When times get tough, and they will, you have to adapt to the market.

Or the preferred direction to make more money is that you must bring more value to the table and become known for that. Becoming known for providing value is part of your marketing strategies. If your market is not aware of the value that you bring, then your income is at the mercy of the competition with the lowest price. 

I don’t know about you, but personally I like having options and alternatives to choose from. Being at the mercy of others means you don’t have options. Without options, you negotiate from a position of weakness. Your goal is to be able to negotiate from positions of strength with options to choose from, especially during tough times. This is key to business survival and protecting your income. That means having retained earnings, savings and minimal debt.

You’ve got to play the long game in your construction career. Earn your stripes by mastering your trade. Gain experience. Observe what works and what doesn’t. Apply that knowledge to the next job. Repeat. Again and again.

Then take it to the next level by further developing your people skills and management abilities. Go beyond that by creating a business that offers value to your desired clients and customers. Promote that. 

Always remember it’s a low margin, high risk business. Never stop improving. Every little thing. So celebrate every tenth of a point percentage increase in gross profit margin. I’m sure it didn’t come easy. 

The good thing is that there can be a lot of dollars in your pipeline. Just bear in mind that only a few of those dollars are actually yours. Most belong to someone else. They’re just passing through your pipeline. 

If you are clever enough to bid the job right, execute it well and leave your client feeling like they got value from your work, congratulations. You’ve earned a fair profit. That is the nature of this business. 

Every person I’ve seen “getting rich quick” in construction was either a fraud, living off other people’s money, or had family money to start with. Construction is not a get rich quick business.

If you’re a young person who’s been working in the construction industry for the last 8 or 9 years or less, you’ve pretty much experienced only good times. So if you want options going forward, make sure you set aside savings to help carry you through tough times. They will be here someday. Perhaps sooner than you think. Now’s the time to plan for them.

People often think that the end goal is the goal. I can tell you that it’s not. It’s about this journey you’re on called life. 

A career in the construction industry is a 20 mile march, every day. Keep learning, measure twice, cut once, observe the results and enjoy the journey. 

It goes by fast.