Yaneek Page | Don’t ignore the signs for when to pivot your small business

QUESTION: I operate in the construction sector but mainly residential renovation and remodelling. The problem is that each month the pandemic goes on, the worse it is getting for my business. In the early days of the pandemic, last year, it was not that bad because I had a large amount of money owing to me on the road, and collections kept me going for three months.

Unfortunately, once collections slowed down, it got pretty bad. Business cut by at least 50 per cent. The size of the projects is smaller, and what is killing me most is that it is taking longer to get paid. Also, I find now that customers will start the work and pause several times due to cash constraints. I feel like I am going in circles and am very frustrated. My accountant advised me to take on commercial projects, but I have built a brand that I don’t want to stray too much from my core, which is my specialisation. Our new financial year starts in October, so I would appreciate your input on our budget planning for 2022.

– Frustrated, Kingston

BUSINESSWISE: I understand your frustration, but don’t lose hope. In fact, I have some good news and ideas that may change your perspective and, hopefully, the course of your business in the short to medium term to achieve better financial results.

The good news is that as challenging as your preferred subsector may be at this time, your overall industry, the construction sector, is a beacon of light in the current economic environment. The data shows that despite significant economic contraction across several industries in Jamaica, the construction sector grew by an impressive 12.6 per cent in the first quarter of 2021 over the same period in 2020.

For perspective, the tourism sector contracted by over 56 per cent for the corresponding period.

In fact, in commenting on the economic outlook for Jamaica for 2021, the Director General of the Planning Institute of Jamaica, Dr Wayne Henry, expressed great optimism for the sector specifically. His comments were published in a Gleaner article on June 3, 2021, titled ‘Economic Rebound Continues as Construction Holds Firm: “We have seen consecutive quarters of growth in the construction industry even as other industries have been affected negatively in the context of the pandemic. We anticipate positive out-turns for the construction sector going forward.”

The fact is that you now enjoy a very enviable position to capitalise on the industry with the largest growth in the country at this time. What your accountant has likely been encouraging you to do is to focus on the big picture, which is that you have the skills, certification, experience, industry knowledge, credibility, and even crucial infrastructure and organisation to exploit this extraordinary opportunity.

This may be a hard pill for you to swallow but necessary bitter medicine to awaken you from your slumber. You continue to ignore the signs that it is time to pivot your small construction business at your peril.

It seems the biggest hindrance to the viability of your business in these challenging times is your timid leadership, specifically your refusal to pivot outside of your specialisation despite every signal that the current path is leading the business off a cliff. You could do more marketing, try to attract more residential customers, but the reality is that that market is not likely to rebound for now.

Consumers are losing jobs, seeing reduction in income due to salary cuts and rising prices. It is likely that many of your potential and existing customers are operating in the majority of industries that are facing decline. The options are limited, and by your own admission, you are running out of time and money.

I understand that change is uncomfortable. It is true that you will have to expand capacity, seek out collaboration and partnerships, adjust operating procedures to include, for example, commercial contract bidding, subcontract service criteria, and the attendant investments, requirements, insurance costs, legal, regulatory and risk-management considerations.

It will be hard, but so is the position in which the company now finds itself. As the managing director, you have to go where the market is and where the money and confidence now reside. You have no choice but to strategically pivot your operations in the current condition or face certain closure due to an extended cash crunch.

One love!

Yaneek Page is the programme lead for Market Entry USA, a certified trainer in entrepreneurship, and creator and executive producer of The Innovators and Let’s Make Peace TV series. yaneek.page@gmail.com