I know I've said it already, but I need to say it again: Every construction company needs to improve the way they run their business. If they don't, they'll fall behind their competitors. If they don't, they might not be able to outbid anyone else and they might be forced to go out of business. Who doesn't want that to happen?
Technology Transfer
On the other hand, upgrading technology, upgrading employees, and shifting operations to be more efficient overall will lower costs and get the job done faster. However, this requires a significant investment from management. It also carries the risk that it won't work as planned if the change isn't properly planned and executed properly. This is a big risk with almost any major change undertaken in any business, but it's even greater in the construction industry because these types of investments aren't part of the normal cost of doing business.
Change to stay competitive
You end up with a management team that knows they need to change to stay competitive. You end up with a management team that is ready and able to make capital investments, knowing the risks involved. And you end up with a group that understands change is necessary, but can't take the risk and spend because they'll go out of business if the project doesn't deliver the results they expect.
This last group is made up of executives approaching retirement age who should take tax steps to monetize their investments while they still have gains — that is, sooner rather than later.
Rental companies
I spend a lot of time in the equipment rental business and see the top 10 rental companies acquire a ton of other rental companies every year because they are publicly traded companies that need to improve both sales and profits to please the stock market.
For example, Sunbelt is set to make 24 acquisitions in 2023 and continue this trend in 2024 and beyond. Sellers get a fair price and don't have to spend a lot of time and effort finding a buyer. These sellers may have been thinking about selling, but they may not. Either way, if someone knocks on your door with a reasonable offer, it will be very attractive and hard to say “no.” Can you think of a similar program in the construction industry? I would say “yes,” because many companies are unable to make the changes necessary to stay competitive.
The Importance of AI
One of the big questions contractors must consider is how to implement artificial intelligence (AI) to improve efficiency, reduce costs, and increase profits. I've read hundreds of articles about AI and have come to the conclusion that this is going to be a tough question for construction company managers. Some questions contractors should ask include:
Would you like to try an AI program? Can you implement AI with the data available to you? How can you implement AI? How much will it cost? Will it produce the results you expect?
After looking at these programs and examples, I decided I needed to find a source that could present these AI options in an easy-to-understand format so that management could make a positive decision about adopting AI. As it happens, my granddaughter is a technician who installs systems. I couldn't find anything I liked so I asked her for a referral and she said, “We do it.” She sent me the AI page from the website and it was exactly what I needed and maybe what you need too. I wanted to share it with you.
My logic here is to offer readers the opportunity to discuss AI decisions with experts from Connor Group, which is not a CPA firm but is a firm that deals with advanced financial transactions, with AI implementation as its area of expertise.
I reached out to the CEO and told him what I wanted to do: offer contractors the opportunity to speak with an AI person to determine if they are qualified to move forward with AI. If they are, how do they proceed and what information or changes can they generate to improve their bottom line? I believe that if we can create a program that is focused solely on contractors, the time effort required to make AI decisions and set up AI systems will be much more efficient in the months and years to come.
I will be asking Lori Ditoro to include a link to the Connor AI landing page and also to start a Q&A program with Connor, where contractors can submit questions and comment on what questions they are getting and what suggestions they have for readers who need help with AI.
If you have any questions about AI, please contact Connor Group after reviewing the materials on their website. This initial work is free of charge. Connor Group and I provide data for this column based on what they've heard from contractors they've spoken to, also free of charge. Connor will walk you through a decision-making process to help you decide whether to proceed. If you decide to give it a try, it will initiate the billing process, at which point you'll have an estimate of how much it will cost to implement an AI process.
The goal is to talk to and collaborate with contractors to gather information and ensure we have a centralized data set to share with contractors who are trying to make AI decisions, as well as share ideas and methods to make those decisions easier.
What do you think?
I have emailed Lori Ditoro and am working on defining a process for you all to share your thoughts and information. If you are interested in this type of program or would like to contact The Connor Group for more information, please let me know and she will forward the information to me.
