Weathering the Tough Economy

As the economy took its toll on contractors in the Continental U.S., Alaska had yet to feel the same impact. Wintering in Arizona and summering in Alaska, Jeff James had a preview of the changing economy his Anchorage, AK, company would see in the coming years. While living in Arizona, James was able to think ahead and make strategic changes to the operation of his company, 1-800-Asphalt, in preparation for the future economic challenges.

With 12 employees, 1-800-Asphalt provides services including 15% sealcoating and 85% paving to 15% commercial clients and 85% residential clients. James primarily completes patching, sealcoating and paving of driveways.

With half of the state’s population located in Anchorage, James maintains a service area of the city. He has completed some work as far as 160 miles away in a small Alaskan community. Although the majority of his work is residential, James has completed one project and is continuously looking for new projects through the federal government.

According to James, the federal government has a certain amount of set-asides on different contracts. These mandates require a certain percentage of procurement money to be spent on contracting and services to go toward set asides. These set-asides range from women-owned businesses to disabled veterans. 1-800-Asphalt completed one project due to the disabled veteran with a service connected disability status.

It has completed one set aside project taking place in 2010. The project was for the Veterans Administration and located at a national cemetery. It required bid bonding, performance bonding and material bonding. James and his crew sealcoated 100,000 square feet.

Although 1-800-Asphalt has only completed one set-aside project, James regularly checks the projects posted. “In order to find the projects you have to look at the website daily to see what jobs are coming up,” he says. “The biggest tip I can offer others is that the bigger the government agency the more intimidating it is. The smaller the agency, the more personal things are, but when you get to the higher agencies you hardly communicate with people. Everything is done via fax, e-mail with hardly any communication.”

Contractors that fit the criteria must have their businesses registered to be certified to bid on work. “First you have to do the foot work and get on a base where they can look to see you are registered with the federal government agency called CCR [Central Contractor Registration]. Then, if you are a veteran-owned business you have to be on CCR as well as the VA [U.S. Dept. of Veterans Affairs] list. With the VA you have to redo some paperwork every year, and they don’t notify you about completing the paperwork.”

Although there are several steps that must be completed before bidding for specific government projects, James encourages contractors to push through the papers to complete the necessary steps.

Preparing for the Alaskan economy

James winters in the continental U.S. allowing him to be proactive on the changing Alaskan economy. “Alaska has a false economy, and a lot of its economy is based on the oil fields,” he says. “Here you don’t visually see what’s going on with the economy. I didn’t feel the economy change much until last year, and I think it finally hit us.”

He was able to watch the changing economy of Arizona the past few years. “A few years ago the economy was going well, and everyone was buying houses and getting loans,” he says. “All of sudden it turned upside down. There was a lot of brand new construction, but now it is here and they’ve never had a tenant in the building.”

James saw the struggling economy in the south, and knew it would take a while to reach Alaska. The preview of a struggling economy allowed James to create a plan for his company in Alaska. “I thought the economy was going to get bad, and I wanted that edge to make the phone ring,” James says. “I thought it would ring by using 1-800-Asphalt, and it did. The year after I purchased the phone number I had to hire a full-time estimator. I used to be able to supervise the crews, dispatch the crews, and do estimates. Last year my estimator did 600 estimates from May to October.” James is using the phone number for the fourth season.

Like many contractors, James has made several adjustments to fit the struggling economy. “You need a crew that works more efficiently and gets the job done faster,” he says. “You don’t want to pass it on to your people and make them more responsible, and you don’t want to push your crew too hard and talk too much about profit margins. If you have good people they are already doing the best they can.”

While James encouraged his crews to find more efficient ways to complete the projects, he also encountered challenges with pleasing his clients. Due to the struggling economy, 1-800-Asphalt encountered more difficult clients.

“It was almost like people didn’t want to spend their money, and they complained about getting the work done,” James says. “It was hard to keep people happy. I’ve always tried to go back and fix something even if it wasn’t our fault.”

Completing those repairs even if it wasn’t 1-800-Asphalt’s fault was squeezing the profit margin, but James believes in taking care of his clients ensuring their happiness with a project. “They’re going to talk to their friends and say if we did a good job,” he says. “For probably 10 years most of my business was word of mouth. You have to keep that integrity and ethic until things change.”

Utilizing new forms of marketing

It is fairly standard to have a Facebook page or Twitter account, and the capacity at which these new forms of social media marketing are used vary from contractor to contractor. With James and his wife as administrators, 1-800-Asphalt maintains an active Facebook page.

“During the day I get out of the office and go into the field to check on jobs,” he says. “If I’m driving by a job the guys just completed I’ll stop and post it to Facebook. If I’m talking with a customer I’ll mention adding us on Facebook, and I’ll tell them we’d love to see their comments. They can also see the work we do.”

Along with his posts to Facebook, James also encourages his employees to post pictures of completed projects. James has one truck driver that takes pictures regularly during projects and posts the photos at night when the work day is finished.

Another new marketing platform 1-800-Asphalt is breaking into is utilizing QR codes. A QR code is a matrix barcode that is readable by various smartphone applications and redirects users to a specific web page. “I just purchased some warning tape that we use on driveways after we are done paving,” James said. “It’s a 3-inch tape that says 1-800-Asphalt with a QR code that directs users to our website. I am trying to take advantage of the new technologies people are using.”

Keeping it personal

Maintaining one-on-one communication with clients and potential clients continues to be an important part of business for James. While he has noticed the decrease in personal attention from his own vendors, he remains focused on providing his clients with a personal touch.

“We are still trying to keep this personal,” he says. “You can still talk to someone. If you have a complaint you can talk to me, the estimator, or the foreman when the job is being done. We try not to delegate tasks and take care of things until the job is done.”

Along with providing personal attention, James has been able to keep up with the growing demands of providing fast-paced project bids. “Because of the way information is being done now, a personal connection seems to be missing,” he says. “If your business is like mine, don’t lose the personal touch.”