After years of strong growth, construction companies in many parts of the country are seeing an economic slowdown. And, of course, contractors in many parts of the country are entering their seasonally slow period. The good news? This gives you a moment to breathe. You can focus on your business, not your building.
Here is some of the best advice from construction industry experts to help you move in the right direction.
Step 1: Polish Your Internal Organization
First, sit down and take a look at your business. It might not take as much time as you think, but it should be dedicated, uninterrupted time. Try to find answers to the following questions.
- Are you getting repeat sales?
- Is your business financially stable?
- Do you receive customer referrals?
- What is the level of customer feedback and do you ask for feedback?
- What is the rate of employee turnover?
Have honest conversations with management, key personnel, and accounting heads. Pay attention to their feedback; it will allow you to know the present state of your business and to make prudent decisions going forward.
Remember that if many things are wrong internally, then all the marketing efforts could go to waste. Similarly, if your customers are not satisfied and are not referring other people to your business, then in-house cleanup should be the first step to grow your construction business.
During your internal assessment and re-organization, you should evaluate existing skills and personalities and ensure that only people with the right skills and experience are part of your team.
Good employees are motivated to lead and do not need supervision. After you recruit new employees, make sure to train them on your organization’s operations and to instill your vision and work ethic into them.
Similarly, you should know your limits and bring on board professionals who can help you to do the right things and to avoid costly blunders. Hiring experts can also help you to maximize returns from your efforts and grow your construction business. This may be a good time to work on skills that you want to develop. This can be as simple as finding good audiobooks for your commute or as big as going back to school for an MBA.
Step 2: Attract More Funding for Your Operations
Small-scale contractors usually lack the financial muscle to support their expansion. In fact, many small businesses usually struggle to sustain good cash flow and frequently find it tough when customers delay their payments.
This may be a good time to set up or change your line of credit, overdraft protection, bonding or bank loans for expanding your activities and growing your business steadily. You should also implement spending control solutions (like Bento) to eliminate waste and make your precious dollars go farther. To attract funding, you should apply effective management practices in order to achieve an attractive profit margin. You should also put in a lot of time and effort in searching for the right bonding company and a reliable bank.
One thing to do now is update the presentation deck on your firm’s strengths to potential sureties and banks. The business portfolios and plans to be presented to financing institutions must include the following documents.
- Financial statements (for current and previous year)
- A list of current and past jobs (indicating the financial returns from the jobs)
- Tax returns for the past 3 years
- The company’s organizational chart
- An inventory list of your company’s equipment
- Photos of completed jobs
- References and customer lists
The goal of your presentation should be to demonstrate your level of professionalism and to persuade the surety companies and banks to finance your business.
Step 3: Spend Your Finances Prudently
It takes money to make money, right? The life and growth of your construction business depends immensely on a seamless cash flow. In fact, many construction businesses usually fail because they cannot cover the costs of the overhead they are already committed to.
Contrary to popular belief, the lowest bidders in many construction projects usually lose out because many customers often associate the cheapest bids with poor workmanship and low quality materials. Hence, raising your prices can help you to get the requisite funds for expansion. Take a look at your actual expenses relative to your pricing to see what a project costs your business, then test price increases. Of course, you may find segments of your business where your profits are large enough that it makes sense to reduce prices, especially if these segments naturally lead to repeat business.
Step 4: Establish Exceptional Customer Service
Small construction businesses succeed best when they seek and find clients who fit seamlessly within their mission and who they can easily satisfy. Construction companies also expand swiftly when they have established strong customer service teams to help them build long lists of happy clients who can refer new clients and make repeat purchases.
Indeed, if you want your small business to grow, you should focus on exceeding the expectations of your current customers in order to reduce customer turnover. Retaining clients who can make repeat purchases will help you spend less in marketing as you will not be in the unending frenzy of finding new clients to replace current ones.
Besides, exceptional customer service will encourage customer feedback and allow you to work with your present clients to define new service and product opportunities.
Step 5: Make Effective Marketing Your Priority
Small construction businesses cannot grow if they cannot gain new clients and expand to new zones. Therefore, to grow your construction business, you should invest sufficient funds in branding and marketing.
For instance, you should have your construction firm on Facebook, Instagram, and LinkedIn. These sites will let you off show recent projects and build relationships with potential customers. Pay attention to Yelp and other consumer rating sites. Revise your website, paint your company’s truck to match your shirts, print and email postcards, and initiate a customer referral program, and offer an incentive to those who refer prospects to your company.
Embracing internet marketing and putting effort into developing new contacts and leads will help to grow your business swiftly and steadily.
If you’re looking to grow your construction company, there are a few things you should focus on in the field and in the office. Tie construction schedules to budget durations, make correct estimations, and secure sufficient operating capital to support bonding and growth. With these tactics in mind, small construction businesses can gain more customers and expand their market share, encourage their customers to spend more money per contract, get repeat contracts with the same customers, and have their clients spread the word about their quality of services.
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