Successful construction companies follow successful construction business models. A business model influences a company’s target customers, hiring practices, funding needs, and marketing efforts. Before we describe four successful construction business models, we’re going to answer the question: what is a business model? We’ll also dive into the best construction bidding websites to ensure that you’re connected to the best subcontractors, for the best price.
What is a business model?
A business model answers the question: What business are you in? It provides the goal and structure for your business. It’s one of the first decisions you need to make when starting a business, as it informs the market, audience, and message of your marketing efforts. It also determines how you conduct your business, where it’s located, your staffing needs, and the amount of financing you’ll need.
Your business model should align with your skills, your employees’ skills, the existing competition, and the available market. Before deciding on a model, you’ll need to assess your knowledge, training, and experience, and find out where your skills best fit into the local market. To learn more, also be sure to visit our post answering the question, “What Is Lean Construction?”
One company can have multiple business plans that they are pursuing at the same time. Generally, larger companies have the resources, both financial and workforce, to provide multiple business models and work towards business model innovation. A small construction company should start out focusing on just one until they have developed a market share and have seen success. From there, they can expand their products or services into other areas.
Succesful construction business models
1. General construction services
General construction companies provide non specialized services to their customers. They may focus on just one customer type or offer generalized services to appeal to a broader market. General contractors are an example of companies that provide general construction industry services. They may focus on appealing to specific sectors of the market, like only residential construction, or may focus on a specific area within the construction sector, like renovation.
General services contractors either hire skilled construction workers, like a project manager, or other contractors to provide services to their customers. Through the use of subcontractors, they are able to provide a wide variety of construction services to their customers.
2. Niche construction services
Niche contractors provide specific construction services that require licensing or special knowledge or training. They often hire workers to provide the necessary specialized skills to perform the work. These companies are hired by general service contractors to perform trade work and specialized work.
Niche contractors are in high demand, but there can be a lot of competition. It’s important to research the demand and state of the market in your local area before starting this type of company.
3. Production and manufacturing
Production and manufacturing companies produce or fabricate materials used in construction projects. They can provide a wide range of standardized and custom products and materials. These types of companies are always in high demand.
Before starting one of these companies, research the products and materials that are in need in the local market. You may find a niche that you can fill with your knowledge and skills. These companies often need a lot of funding to get started.
Suppliers don’t produce or manufacture construction material but are responsible for selling and distributing products manufactured by others. These businesses can be brick and mortar establishments that serve the local market, or an e-commerce site that serves a larger market. Their customers include general contractors and trade contractors that use their materials. They require less money to get started.
How business models influence marketing
Depending on which construction business management model you select, it can have an effect on how you market your business. It affects your target audience, how you deliver your marketing message, and what message you send.
General services contractors market to the general public. The marketing campaign may target only business customers for commercial contracting or homeowners for residential contractors. General contractors may also choose to provide services targeted to specific niches, like healthcare, restaurants, or infrastructure. These companies should target their marketing to these audiences where they get their information. Their marketing message should focus on their knowledge and experience.
Niche contractors, or subcontractors, have a more specific audience – general contractors who can use their services. Their marketing message should be tailored to these companies and describe their experience and expertise. Trade contractors can find GCs looking for their services on lead sites, like PlanHub. It’s an easy way to find work and market effectively to GCs who need them.
Manufacturers and suppliers can market directly to the contractors who need their services or products. They can also target designers who specify their products in project documents. The marketing message should focus on the features and benefits of their products.
Selecting a business model is one of the first steps to starting a new business. It determines who the business’s customers are, which in turn affects the workers they hire and directs their marketing efforts. Contractors looking for work need to be clear about their marketing audience and where they can find them. Free general contractor software like PlanHub connects general contractors and subcontractors. To see how PlanHub can help your company find more work, schedule a demo today.