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Finding a Niche - Create Your Own Competitive Advantage

You’ve cut out all unnecessary expenses, taken a sharp pencil to your bids to make sure you don’t miss out on any reasonable opportunity, and tightened up billing and collections to maximize cash flow. Now what? What else can you do to weather a continuing slowdown?

Once you’ve covered the basics, your company’s ability to survive lean times often depends on your ability to explore different – even unconventional – approaches. Here are a few ways savvy contractors and subcontractors are responding to today’s challenges:

  • Promoting local government incentives to property owners: Even during times of tight budgets, many state and local governments continue to offer a economic development grants, tax increment financing districts and similar community improvement subsidies. Smart contractors recognize they can provide added value to project owners by helping them explore various incentives and ensuring they qualify.
  • Promoting federal tax incentives: Tax incentives at the federal level can also help push a project forward – and give you another opportunity to add value. For example, the Energy Policy Act of 2003 enables project owners to earn federal income deductions of up to $1.80 per square foot if their new or renovated buildings meet the criteria for energy-efficient lighting, heating and mechanical systems, and building envelope systems, as spelled out in Section 179D of the Internal Revenue Code.
  • Qualifying directly for tax incentives: The Section 179D deduction may also be allocated directly to designers and contractors who make energy-saving improvements on government buildings. (See the “Case in Point” below.) Other incentives are also available to designers, engineers and contractors. For example, some design-build contractors have been able to qualify for the federal R&D tax credit for their design activities related to the functionality, performance, reliability, or quality of building components or designs. (See the “Q&A” section.)
  • Developing “green” credentials: In addition to seeking out tax incentives for energy efficiency, more and more commercial and residential developers are recognizing the marketing advantages and long-term cost savings afforded by “green” buildings. By acquiring professional credentials such as LEED™ (Leadership in Energy & Environmental Design) qualification, you can offer certification – and added value – to an owner’s project.
  • Putting your expertise to work in new ways: If you haven’t done so already, now is the time to determine which industry segments are least vulnerable or, at the very least, which are likely to begin recovering sooner. For example, if you’re a contractor or subcontractor that has specialized in new commercial construction, your crews’ skills might be readily adaptable to retrofitting or repurposing older buildings. Residential builders might look into converting multi-family rental properties into condominiums, or high-end renovations and remodeling.

The goal of such “outside the box” thinking is twofold: to find new revenue sources and to set your company apart from your competitors.