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The Exclusive Magazine for the Building Service Contracting Industry Since 1981

Thriving or Surviving in a Post-Recession Economy

Written by  Lance Tullius

As the so-defined “pundits” have declare d the recent recession long over, perhaps it’s as good a time as ever to take stock of its effects, past, and current.

I know that many of you would take exception with the notion that the recession’s over, but for argument’s sake, let’s mollify these pundits’ technical definition of the term, though most of us know we’re still suffering its practical effects.

Recognizing that one of the benefits of operating in the building service contracting industry is its relative (yes, I emphasize the word “relative”) resistance to recessionary economies, the effects of this global recession were, nevertheless, broad and discouraging for many BSCs. Property vacancy rates increased across the board, slashing BSC revenues and profits. In an effort to salvage some of their own bottom lines, facility managers further “put the screws” to their vendors, throwing a bit more salt onto an already open wound. This led to the usual domino effect that so many industries experience in a recession; that being the propensity of some providers to cut pricing, in some cases, below standard cost levels, thus adding to attrition woes of incumbent vendors. Service levels dropped accordingly, tenants became disgruntled, value propositions went out the window, with the end result being that value is recognized solely in the form of dollars and cents, rather than by such other characteristics as quality, efficiency, and added services, amongst other deliverables.

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Eventually things do tend to “recorrect” themselves, yet in the meantime, there’s always substantial fallout. Many BSCs saw revenues decline by in excess of ten and even 20 percent, with profit margins being cut down even further in many instances. Any and all steps were taken in order to simply hang on and survive. Yet interestingly enough, and as is typical with most industries during periods of economic recession, there were BSCs that not only survived in this economy, but actually thrived and continue to do so in the “postrecession” environment. This begs the question: How are some companies able to do so well in an economic landscape shrouded with so much adversity?

In observing BSCs of different types, sizes, service platforms, and market locales, three specific characteristics have stood out amongst companies that have demonstrated growth in revenues and profits in this down economy. They are: • Initiative • Creativity • Persistence

Beyond a doubt, the most glaring characteristic separating these high-performing companies from the rest of the pack has been a calculated initiative to first confront the fact that our economy was in a downward spiral and that it would inevitably affect everything about their business (most notably their customers) and, second, to proactively do something about it, and take that action immediately. One BSC, specifically, approached its most valued customers before the customers approached them, and pushed to engage in discussions with these customers to identify any and all means by which to meaningfully scale back costs. The BSC made no bones about their motive in doing such, countering to their customers during this exercise that in exchange for any price concessions, the BSC wanted an agreement that at some future date or milestone, its pricing would return to normal levels. You say there’s nothing magical about this move, and you’re right. But most business success is not magical anyway; and more importantly, who cares? The fact is these companies were able to enjoy a level of success and independence during the worst economy this country has seen in nearly 100 years.

Beyond initiative, another quality evidenced by these thriving companies has been creativity; notably, the insistence on viewing their business and the competitive landscape from every thinkable perspective. The price at which we offer our service is relatively transparent in that in a fair market all participating vendors set their price given a customer’s stated requirements. The manner and cost structure by which we provide that service, however, is not so. In observing BSCs that have succeeded in this strained economy, their pricing levels are quite consistent with the middle range of their respective markets. Neither do they have the tendency to be on the high or low side of the pricing spectrum. Where they do tend to set themselves apart, however, is in a relentlessly scientific and quantitative approach to how their service is carried out. While they’re, of course, accountable to how they price a job, by no means do they view it as the most important piece to the profitability puzzle. These BSCs have the common quality of viewing every job from the perspective of an engineer, challenging themselves and their managers to find the absolute best, most efficient, and cost-effective way to deliver their service. As you might imagine, these tendencies weren’t simply called upon because these BSCs found themselves in a challenged environment. Rather, they represent a part of these companies culture, the very fabric of the way they’ve always approached their business. And, in perhaps an odd twist of fate, a down economy created an impetus for them to catapult to best-in-class status.

The final common quality observed amongst these businesses was that of persistence. We frequently hear the cliché, “work smarter, not harder.” These companies work smarter and harder. The proper cliché to be applied to these companies is “when the going gets tough, the tough get going.” When we talk of the traits of initiative and creativity, these BSCs act out those traits, and essentially everything else they do, with dogged persistence. And they don’t do so from a comfortable perspective. Curiously enough, considering that these businesses are performing at aboveaverage levels, their leaders operate with a sense of paranoia—in some cases almost as if impending doom lurks just around the corner. You see, they operate with a “tunnel-vision-like” quality, unaware that others are struggling or, more curiously, that they themselves are succeeding. What’s odd here is that by and large these folks don’t know they’re succeeding, which in a bizarre kind of way, perpetuates the manic persistence to keep doing the things that are creating the success.

In closing, some of you may be thinking that I’ve made these companies out to sound like deities, in which they can do no wrong. That’s not the case and certainly not my intent. To the contrary, nothing observed of these companies was along the lines of what you might find in a PhD lab, or of a rocket science nature. No magic appears to have been involved. You might suggest that the three characteristics we’ve made reference to are in some cases innate to certain ones. And maybe they are. But nothing leads me to believe they’re qualities that can’t be acquired. You can do it too!

Lance R. Tullius is managing partner of Tullius Partners in Portland, Ore., an investment banking firm that specializes in providing merger and acquisition and financial/ strategic advisory services to companies in the building service contracting industry. He can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it.

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