Situation: A company’s major competitor is closing shop. When this happens the company will be the sole large local service provider. Municipal and many large projects require multiple bids. The CEO is concerned that out-of-area companies will underbid the company’s union scale operation. How do you maintain your position in a changing local market?

Advice from the CEOs:

• If your municipality has union scale wage rules, find a way to monitor wage compliance of out-of-area operations. These companies may say that they pay union scale, but the municipalities and others won’t have the staff to monitor them. This will be up to you.
• Talk to local elected authorities and impress upon them the importance of supporting local businesses. Remind them of wage compliance problems that localities have seen in the past. Suggest that they look at local content requirements to help keep business and business revenue funding in the local economy.
• Emphasize the maintenance aspect of your jobs. If a local company both builds and later maintains the project, they will know the subtleties of the design and will be able to provide better and more cost-effecting ongoing maintenance.
• Educate clients with monitoring, measurement and compliance checklists that highlight the benefits of using local contractors and maintenance service.
• If the other company approaches you about buying his business focus on the ROI produced by the other company’s costs and profits, but under your pay-scale. If this looks promising, have a conversation with the owner and see what he wants. Prompt the owner to talk and listen carefully to what he has to say. If you don’t want to buy the full business, there are other options:
  • Hire his key employees on a $/hour plus commission basis on retained sales.
  • Purchase his customer list, or giving him something for any maintenance contracts that come over to you within a set time period.

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