10 reasons construction companies go out of business – Infographic

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Reasons Construction Companies Go Out of Business
10 Reasons Construction Companies Go Out of Business

Starting a company within the construction industry is certainly a huge challenge. There will always be a number of obstacles and issues to overcome. In some cases you can do this successfully, while in others this won’t be possible. Unfortunately, countless construction companies went eventually out of business due to numerous mistakes and/or bad estimates.

There are many factors that could lead you to close your business, some of which could be summed up below:

1. Starting for the Wrong Reason: Before you begin your effort, make sure that you are ready to sacrifice your precious time and capital for it. Don’t start a business just because it sounds cool. It won’t work. Only with a strong and proactive attitude you will be in the end able to overcome the numerous difficulties and problems along your way.

2. Insufficient capital: Now that you are sure that you want to proceed with putting together your own business, you want to focus on your cash flow. It’s essential that you elaborate a detailed estimation of the required budget for your daily costs and a solid plan of action. In US, 21% of businessmen have ended up to use their personal credit card in order to cover the financial needs of their business. That’s probably the worst thing you can do!

3. Improper Planning: Try to stay one step ahead from competition, by creating a strong strategic business plan. This will prevent you from experiencing any potential waste of financial or time resources.

4. Poor Management and Leadership: In order to establish a top performing plan of business, you have to combine a plethora of capabilities. Strong leading and management competences is without doubt significant prerequisites, if you want to reach your goal.

5. Expanding Too Quickly: Attracting more attention to your business is, of course, something positive but sometimes it can be proved dangerous. That’s why, you shouldn’t take more responsibilities/projects than you can handle. Otherwise, you will end up providing low quality services or completing projects with serious delays. Take one step at a time and avoid being too ambitious too early.

6. Failure to Advertise and Market: Having a good product/service is never enough. You need also to find an effective way to sale it. In that sense, establishing a solid online presence is highly advisable. Start using social media and make sure that you connect with your targeted audience in a smart and engaging way.

7. Lack of Differentiation: Find what makes your company unique in comparison to your competitors Many companies never cared enough so as to find and communicate to their audience what was their Unique Value Proposition (UVP) and as a result they ended up out of business.

8. Unwillingness to Delegate: Avoid keeping every little task to yourself and start passing on  work smartly. By sharing duties across all the team members, you can concentrate better on those tasks/issues that truly need your attention.

9. Unprofitable Business Model: Always try to be prepared for the tough days, as well. You can achieve this, by carefully conducting market-research and by putting together a thorough business plan. Never hesitate to ask for advice from more experienced people within your field.

10. Underestimating the Competition: Put some extra time on analyzing your competitors. Try to learn about their strong and weak points. Based on those, elaborate a strategy that will offer you the upper hand.

Focusing on those points will boost your company’s effort and will help you to keep your business running. Soon enough you will see a serious change on how your business performs, as long as you follow those suggestions systematically.

Infographic Design by Jenny Yi Lou


1. https://smallbiztrends.com/2016/07/small-companies-fail.html