As a boater I am often confronted with making a go/no-go decision regarding whether to take a trip. We boat on Lake Michigan, which is a very large body of water that can become very angry at a moment’s notice. On the other hand, my boat is large boat and more than capable of handling some pretty rough water. In addition, I am a proven captain and my maintenance regime ensures that all systems are up to the task when needed. Those factors all go onto the risk/reward balance scales, along with how much we desire to visit a particular destination and what our comfort level is likely to be once out on the water.
If you are facing a large installed sales project--be it multifamily work, a subdivision development, commercial construction, or anything equally ambitious--you need to think like a boat's captain. Your vessel is your physical business: Its inventory, operational capacity, administrative capability, financial reserves, sales ability, realistic profitability expectations, and such. Your capabilities as the leader of that organization--the captain of the installed sales ship--come into play as well.
Furnishing both material and labor on a large project can tax even the strongest of companies if you are not careful. You are bringing material for the job and paying laborers for work that may not be invoiced/paid for 30, 45, or 60 days. Can you financially afford that leg of the voyage?
Consider Your Cargo Hold
Do you have the capacity, both physical and financial, to stock material needed for a large project? Do your vendors have the product readily available in case of shortage, or will special orders and backorders cause you to be back-charged for failure to perform? Does your yard have the capacity to maintain your day-to-day business and also take on the added pressure of a large project?
Logistics play a big role as well. How much time will be consumed on each run to the project? Can you combine deliveries with a pick-up/return run, or is the driver and truck lost to you for X hours each trip? Can you stand the loss of opportunity should it arise?
Physical inventory is one thing; financial strength is another. While inventory levels and cost of carrying the inventory are a given, you can’t afford to be caught short without critical inventory in stock. As you are no doubt aware, most contracts carry a clause for delay of progress with hefty fines associated. Purchasing your normal levels for historical business is fine, but the added demand for a large project can cause the bank account to groan in protest.
How's the Crew?
Continuing our boating theme, your capabilities as a leader or captain are also called into the mix. And it's not just your capability I'm referring to here, but that of your entire crew. If your day-to-day business is already causing you sleepless nights, you don’t want to enter this storm. However, if you have surrounded yourself with capable, trained and empowered people, you can guide them and ensure success.
Those people include a critical group: Installation labor, much of which may consist of temporary workers. Do you have ready access to the number of installers/carpenters needed for the project? Are they properly trained? Have you established a supervisory chain of command? Do you fully understand the necessity of meeting payroll every week, even though you may not invoice until the end of the month?
Bear in mind that for everything you do, your entire operation will be called upon to perform at its maximum level. Your people, your equipment, relationships with buying groups and suppliers and the relationships you have with current customers.
If you venture out, do so with commitment. Sometimes, though, your best course of action is to sit at the dock, enjoy a cocktail, and watch the sunset.