Stay focused on your employees and stay informed while taking one day at a time.
By Gary Shawver, MGWC, retired-2021
In the November 2021 issue of Water Well Journal, I wrote about the difficulty of doing business in today’s climate of supply chain issues and a shortage of personnel to keep one’s business operating.
Since I wrote that column, it has become obvious these problems are not going away soon and are much likely to get worse. So, what is one to do?
The business environment moving forward is going to be difficult and a climate not all of us have been through before. I am not going to tell you I have a crystal ball for the future because I don’t. But what I can tell you is one must be a student of history to understand the winds of change, and even then, the times we live in are like no other.
While history tells us what other generations went through, there are a lot of facets that go with a particular time in history. What I want to focus on in this column is the economic part that will affect the operation of your business.
Determine Where Future of Your Business Will Be
I believe it is fundamentally clear that the supply chain issue is not going to get better in the foreseeable future. Nothing in the articles I have read by well-respected authors who understand what all is involved in the supply chain leads me to believe this.
Once supply chain issues begin, they don’t rectify themselves overnight. Simply look at ordering a submersible pump and all of the items that must go into the supply chain to get it manufactured—much less get it to you. If one item of this chain is broken, it cannot be completed.
Now look at the vehicle supply chain—a simple chip can keep the vehicle from being completed and sold!
Where am I going with this? First, you must have an idea where the future of your business will be. If things continue to deteriorate with supply chain issues, trying to drill a new water well for a home in the country could be a real challenge for a couple of reasons:
- Look at all the items needed to complete that new home. The long list may cause people to not consider the home after all.
- You may not be able to get all the materials to drill that well or maybe you don’t have the parts to get your rig going to drill it for the customer.
If that scenario seems plausible to you, then you need to focus on keeping your customers going who may need repairs to their water systems. That will at least provide you with income and your customers with a service. You should be focusing on getting supplies and materials that will allow you to keep your business going for at least six months to a year.
You may also wish to stock up on parts for your vehicles, service trucks, whatever else that can keep your fleet functioning. Even now as I write this (mid-January), it might be a push to start this focus. But better late than never.
The downside is that it is going to tie up some inventory and cash, but you will most likely end up using all the items you purchase.
Supply Chain Impacts Price of Truck Tires
Here’s an example of what a forward-thinking contractor has done. Seeing what was coming, the contractor purchased 150 large truck tires last summer in 2021. The general manager of my former company told me the same week he could not get any off-road large truck tires for their rigs or service trucks, only highway tires.
Those type of tires are certainly better than nothing, but the point is if there are labor shortages in the tire industry or material shortages, you are going to manufacture the item that sells the most—and large truck highway tires always sell in this country. The trucking industry is what is keeping this country going right now.
One of the most important things you need to do—while inflation is running rampant and shortages of labor is a key issue for all businesses—is stay focused on your employees.
I purchased some 20-inch tires for one of my pickup trucks last fall. Then a few days before writing this column, I went to purchase another set for my other pickup, which were 18-inch tires . . . $250 more!
I checked a couple of places. I could still get them, but the supply chain is now driving the prices. So, remember if you purchase tires and they’ve increased more than $250 from the last time, if you don’t adjust your pricing accordingly, that is lost profit!
While I wrote in my November 2021 column that the general manager of my previous company told me he ordered two 2022 one-ton pickups, it turns out he was told he was only going to get one and he wasn’t sure when that was.
If you have an existing vehicle, you may wish to look around and purchase a similar vehicle to what you have for a backup or for parts to keep your other vehicle running.
I have read articles of a company cannibalizing parts from other vehicles in their fleet to keep some trucks operational. Or if you know the weak points of your existing vehicles, purchase more of those parts to keep on hand to keep your vehicles running. As of this writing, used vehicles are up 37% this year! That’s astounding.
Planning all of this while still trying to do day-to-day operations of your business can be overwhelming. Keeping up with all the changing prices can also be overwhelming.
If you do not have an administrative support staff, you may want to re-think your operation and focus on the one area that is easiest to manage and at the same time is going to be your most likely source of revenue in these times. I would venture to guess it will be the service side of your business. People who have wells are going to want or need their pumps repaired.
I would encourage you to talk to your staff about these issues if you have not already done so. Tell them you are focusing on working to keep things going and to provide services that will ensure your business will continue to operate.
If things continue to deteriorate on the supply chain and shortages get worse, I also encourage you to make sure your facility is secure to prevent theft and to secure both your equipment and inventory. Invest in a security system if you do not have one. That is, if you can get one.
If you buy fuel regularly from one or two suppliers, you may wish to buy ahead and lock in both fuel quantity and price. There is some risk in that, but again, I don’t see fuel prices going down any time soon.
But one of the most important things you need to do—while inflation is running rampant and shortages of labor is a key issue for all businesses—is stay focused on your employees. Be sure you are taking care of them financially and otherwise. Keep up with what others around you are paying and don’t let good employees find work elsewhere.
Finally, do not let these times overwhelm you. It is easy to let everything bog you down. Focus simply on one day at a time and stay tuned to what is going on in our industry and the world around you. Stay in touch with all your suppliers and your fellow contractors.
Gary Shawver, MGWC, retired-2021, is vice president of Shawver Well Co. Inc. in Fredericksburg, Iowa. He has been in the water well industry for more than 40 years and is a Master Groundwater Contractor. He served on the NGWA Board of Directors. Shawver is semi-retired, having sold his business to his employees. He can be reached at firstname.lastname@example.org.