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The purpose of this article is to address honestly some of the realities of the current economic situation facing many contractors. However, the principles presented here are timeless and should be followed at any time by an owner of a construction company.

Downsizing is not new to the construction industry. Thankfully, for many contractors there has been little to no downsizing for economic reasons over the past decade or more, unless you are a seasonal contractor. But for many construction leaders the need to reduce their work forces has become all too familiar in recent months.

With the latest "correction" in the economy now in full force without any real assurance as to when it will be completed, we need to review specific efforts that any contractor can take that will position his or her company to be profitable. While the reality of laying off workers is there, we will look at other areas of "correction" that can strengthen your firm's chance to make a profit during these tough times.

1. Assess your company's financial situation.
Nothing is more critical than clearly understanding what your financial strength and position is prior to any capital, human or strategic decision. This can include recognizing your cash and cash flow position, reviewing your account receivables and making a realistic projection for collections, and rethinking future expenditures that can be delayed or reduced.