Only 37.6% of construction companies that started in March 2011 survived 10 years later, according the Bureau of Labor Statistics. The industry has the highest failure rate and up to 25% of companies fail within their first year of operation. When so many businesses in the industry are failing, it pays to look at what the successful companies are doing. To help you avoid becoming a part of this statistic, we’ve put together the following keys to running a successful construction business.
1. Do good, quality work
While this may seem obvious, come contractors try to get by cutting corners and providing low quality work for low prices. This isn’t the path to business success. Project owners and general contractors want quality construction, and contractors who provide that will quickly be in demand. In addition, you must put your customers first and ensure that they are happy with your work and your service. Negative reviews and word of mouth can quickly lead to no work and no money.
2. Take care of your employees
Second in importance to how you treat your customers is how you treat your employees. With the current labor shortage everyone is looking for workers, so you’ve got to step up if you want to hire the best and brightest. Make sure you are paying a living wage that is competitive with other companies in your local area. Include as many benefits as you can, like health insurance, retirement, and vacation time. Another key is to provide a path of advancement so workers can increase their skills and pay. If you don’t have an internal training program, partner with your local union, trade school, or higher education facility to provide a structured program. It also pays to have an inclusive, supportive company culture. This will make work enjoyable and provide motivation for workers to stay with you.
3. Take care of your customers
No matter who you work for, a project owner or general contractor, you want to make sure they are happy with your work and your overall performance on the job. This may include providing all necessary documentation when requested, working with the superintendent on scheduling, or providing additional work or services when asked. Overall, you want to make things as easy on your client as possible. A good attitude and a willingness to work together can go a long way to securing an on-going profitable relationship.
4. Always be looking for the next project
Successful contractors plan ahead. You’ve got to complete today’s work and find work for tomorrow, as well. This means you must always be marketing your company, even when you are busy and have work lined up. Not all marketing requires action. You can passively market by having a website and publishing regularly on social media. The key is to make sure potential clients can find you when they need you. If you find yourself without work in your pipeline, then it’s time to aggressively market. This could mean calling past clients, cold calling potential clients, or searching for new leads on bid sites like PlanHub.
5. Always be learning
Staying up to date on the latest industry news, products, and techniques will ensure that you are providing the most efficient services possible. You can educate yourself and your employees by attending conferences, webinars, and other training courses. Providing training for your employees is especially important to help them grow their skill set and advance their position.
6. Adopt new technologies
While the construction industry has been slow to adopt new technology in the past few decades, many companies are finding they need to embrace it to stay relevant in the industry and attract younger workers. Since many of these workers have grown up with technology, they are more comfortable with it and expect the companies they work for to use it. Tools like BIM and electronic material take-off can help companies become more efficient, reducing costs and increasing profits. If your company is still relying on outdated tech or manual processes, you may have a hard time recruiting young workers.
7. Manage cash flow
There’s more to running a construction business than just maximizing profits. You need to manage your cash flow as well to ensure that you have money available to pay your bills when the time comes. In order to know your cash flow needs you need to keep accurate financial records. Adopting and using accounting software specifically designed for the industry will help you forecast your costs and project your cash needs in the future. With this knowledge you can proactively address potential cash shortages by delaying payments, acquiring financing, or working with your customers to expedite payments. Accurate financial reporting also improves the accuracy of your estimates, leading to more profitable projects.
Now that you know what it takes to be successful in the industry, how does your business stack up? If you need to improve on a couple of these, now’s the time. PlanHub can help you find leads for new work, find quality subcontractors, and improve the accuracy of your estimates, all of which lead to business success. For a demonstration of how PlanHub can help you build your business, schedule with us today.