In business it is often said that it is better to play the Long Game, rather than the Short Game.
This means it is better to place more emphasis on the long-term benefits that will come to your business as a result of making short term sacrifices. For example, maybe you make a small loss on work in return for gaining a long-term client. Maybe you break even on a project so that you get the kudos and publicity of being associated with it, and use that for your marketing. You get the idea.
In my view that has rarely been a good way to go for contractors and subcontractors, and in these times of scarce work and even lower margins; it’s total madness.
I think you should be playing the Short Game.
What is the Short Game? It is the game where you do work with a short-term mindset in exchange for short term benefits. This means a ‘no sacrifices’ approach regardless of the client. If you are doing work, you get paid. You are not interested in nebulous benefits that may or may not materialise at some point in the future, in return for not getting paid. You also do NOT ‘go above and beyond’ for no good commercial reason.
How can you play The Short Game?
Here it is in three easy steps:
Forget Relationships: It’s the Contract Stupid: Do not carry out work that costs you money, for which you do not get paid, all for the sake of ‘the relationship’. There is no relationship. There is only the contract. Whether it is oral or written, it is the contract that binds you and your client together. You are working under a contract. The client must pay you under the contract.
Often contractors are convinced that this ‘relationship’ is something that is going to deliver so many benefits in the future, that they are willing to incur heavy losses in the present just to preserve it. Bollocks. This is the trap of the Long Game. The industry is just too tight for that now. No relationship is worth that. Why give your client the immediate benefit of your work in exchange for some future benefit? And what is that benefit? More work? If they can’t pay you for this job, will future jobs be any better? It is of course backwards thinking. If your client wants a ‘relationship’ then you ought to be paid in full on this work now, so that maybe you’ll let some go through for less in future work.
In short, rely only on your contract. The contract means you work, you get paid. There is no relationship.
Keep Work Value and Paid-to-Date Value close to each other: Here’s the scenario. You worked for 5 months and been paid for two. Here’s another. You’ve completed $300,000 worth of work and been paid $46,000. Sound familiar? This happens because of long-game thinking. The reasoning is that your client will be so impressed and pleased with your work and at how fast you did it, and how you didn’t make a fuss about a little thing like getting payments, and so you will be rewarded with a huge lump sum payment at the end.
Again, bollocks. The only lumps sum heading your way is the back charge.
With the Short Game, you keep the value of your work close to the value of payments. You pay no attention to long term outlook. If you’ve completed $300,000 of work, then I’d expect to see north of $275,000 in the bank. If these values start to separate then 1) send a notice of dispute 2) take the matter to adjudication under Security of Payment 3) suspend work. But you do NOT keep working.
Do not trade your cash for a work funnel: I know… you gotta keep your boys working. So, you adopt the Long Game by saying yes to a bunch of jobs that don’t pay well if at all and use all your resources, but hey, your guys are all working. And if you make that sacrifice your clients say they’ll use you on new jobs and you rest easy knowing you have a work funnel ahead of you.
Let’s be clear. The main reason that construction companies go under is not because they don’t have enough work in the funnel, it’s because they have too much! And as above, they have allowed the value of work carried out, to race head of the actual cash paid. So, the value of this funnel of future work is a mirage; and a mirage of debt. Playing the short game means you make good money out of the job you have now. And if you do it well, you’ll get another job and then you play the short game on that one too. You make money out of it and if you don’t, you work for someone else.
And sometimes it is better to have some times where there is no work and pay your staff for the down time or allow them to work elsewhere; instead of sinking in debt by actually doing work. I once had a client who stopped work for four months, and avoided crappy clients, and low margin contracts, until the right work came his way. He made more money that year than the preceding two years.
Now that’s Short Game thinking.