The construction industry is always growing and expanding. It’s followed by a great growth prospect and the revenue numbers related to the construction industry businesses in the U.S. alone are somewhere around trillions of dollars. With all this in mind, it may seem lucrative and smart to try and expand your construction business, and it is, but it requires some learning, organization and careful planning.
We’ve done some researching and we’ve come across some very useful tips, tricks, and practices from construction business experts all around the world. Hopefully, these tips and practices will give you the push you need to start expanding your contractor business, so, without further ado – let’s get straight to it.
Before you embark on a business expanding adventure, you must make sure you understand everything about your company and its employees. Things like employee turnover, customer feedback and referrals, repeat sales, and finances of your business are all an integral part of what you’re planning to achieve. The first step for every expansion is to completely understand where your company is at the given moment.
You will need to talk to your management, personnel, department heads and accounting in order to understand if there are any potential problems or threats ahead. If things are not going well in your company, investing in marketing is a wrong move to make, or if you are not getting any referrals, you need to reassess the situation from a fresh perspective. Evaluating your employees and their skills and personalities during your business assessment can help you a lot, as it will make you understand who is essential for planned changes, and who doesn’t pull their own weight. Find a way to motivate your employees during this assessment, as it may turn out to be a great investment in the future, even before you start expanding your business. Work on your leadership skills, show accountability and professionalism, this can help your employees with their motivation and overall loyalty as well.
One of the biggest challenges of running a small construction business is definitely the source of funding. Almost every small construction business suffers from the lack of a sustainable cash flow. It can get very hard when customers are late with their payments and funding can basically be an unavoidable hurdle on the way to success. Growing a business through owner’s personal resources is never a good idea. You should look for some alternatives instead.
There are various lines of credit, loans, overdraft protection and similar funding solutions for your construction business. If you really want to expand your construction business, you should focus on creating an effective management and putting down quite a lot of time and effort in order to find the best possible bank or a bonding company which can help you out. You will also need to make frequent and detailed presentations in order to show the level of professionalism to the funding companies. You will need to make a presentation from financial statements, tax returns, inventory lists, organizational charts, and you will need to present it to potential financiers in the best possible light, in order to secure the necessary funding.
Try contacting other construction businesses, friends, even family for bonding company or a bank recommendation, and make sure you do a thorough research before deciding on a specific one. You don’t want your business expansion to be the end of your business due to high rates on loans or something within those lines.
One of the biggest obstacles to your business expansion adventure is cash flow. How much money you earn versus your overhead expenses is something that can make or break a company, and unfortunately, the breaking is happening way more often than it should. This is why you need to take special care of your overhead expenses before you increase them. You need to make sure you know exactly where and how you’re planning to work, and you need to do a test of the market so you can get a clearer picture on whether or not to expand or not.
Check out also: Top 8 construction trends for 2018
With that said, there are other things you need to take care of when it comes to your business’ cash flow. First of all, you need to have a great attitude towards your customers, but you also need to make sure your pricing is adequate. You must keep track of projected profits, and you must keep them in line by covering all the necessary costs like materials and labor, but you must also keep an eye out for any unplanned cost escalations. Don’t try to be cheap, but don’t go too high up the pricing tree, as it may lead to losing clients and money. Talk to your clients, do your research and try to find the best possible way to elevate prices without breaking your connections with customers and clients. Make sure your clients understand why you had to elevate your prices, and how does that help them in the terms of quality and their wishes. Securing a steady cash flow is always a challenge, but it’s essential for any expanding construction business.
When planning a business expansion, one thing stands out before anything else, and that’s planning. Without it, almost everything is left to chance, and that simply isn’t the way businesses should be run. Planning calls for a lot of time and effort, but it is an essential tool for any successful business expansion. Sometimes, even the smallest details can cost you quite a lot of time and money if you didn’t think about those when you should. Here’s an example – you’re renovating a bathroom for a client and there’s a small item that’s missing.
It’s usually quite cheap and easy to get, but the renovation is almost completed. Now you will have to get that part, spend more time taking everything apart so you can install what was missing in the first place, and this process will cost time and money. In this scenario, home renovation costs skyrocket because you weren’t prepared. In order to avoid such scenarios make sure you talk with your employees and clients and make sure that you know exactly what to achieve and in what way to do it before you even get to the construction site. There will always be some unexpected challenges along the way, but if you’ve planned ahead, they can only represent an occasional speed bump on your road to expansion.
Wrapping It Up
So, there you have it. These are just some of the useful practices used by construction business experts all around the world. The main point of this article is to help set you on your way and point you in the right direction. Expanding your business is never easy, but it sure isn’t impossible. Prepare for the challenges ahead, consult friends, colleagues, and other businessmen and you will soon be on the path to success. Just make sure you’re always planning ahead, and you will soon reach your business dreams.
Article written by: Ronal Wolf