If you are looking to grow your construction business, the best time to start is right now. It can feel like a daunting task and you may not know where or how to begin, so we thought we would give you hand, and list some basic strategies that you can start putting in place. These are some take-outs from our webinar ‘The Biggest Future Growth Opportunity in the Building Industry Right Now’ that we co-hosted with Builders Coach, Kurt Hegetschweiler.
1. It all starts with you and your team
Most builders do not start out as construction business–people, but if you want to fast-track your business, then you need to first alter your mindset and your habits, and see yourself as a business leader. Embrace the concept of business development, set your standards and your goals, and make the commitment to put in place the changes necessary to set your construction business up for success.
What do you want your business to look like and what needs to change in order for you to achieve your business goals? You must have a clear vision before you can start on your action plan.
Equally as important are the people that you surround yourself with. Your team must share your standards and values. This includes everyone from your sub-contractors, administrators, bookkeepers, to your accountant and solicitor. When you have the right people in place with clearly defined roles and responsibilities, and with you leading the team, changes are easy to implement.
2. Find your niche
When you actively start marketing your construction business, there is a good chance that you will be inundated with inquiries which can sometimes be overwhelming. Some inquiries may be exactly the type of opportunity that you want, while many will not be a good fit and not worth your time or effort.
So before you go full steam ahead with your marketing, find your niche or specialization. This will help differentiate your construction company, narrow down the type of inquiries you get, and make you more relevant to your prospective clients. For example, you may specialize in renovations and extensions, heritage builds eco-friendly houses, etc.
Once you have determined your niche, start marketing! For tips on how to get your marketing up and running, check out our blog titled How to Win More Work in a Competitive Marketplace.
3. Get your ‘financials’ right.
Profit, cash flow, margins, break-even points … you must have these under control for every single construction project. Using estimating and job management software, such as Buildxact, will enable you to ensure your quotes are accurate with consistent margins across the board, and that you are able to gauge your profit and cash flow at any given time during all your projects.
While using a system to track your financials is a ‘must’ for construction businesses, there are also other things you should start doing to achieve success in the construction industry:
- Price your work properly by applying a mark-up of 25% for all items (according to Kurt Hegetschweiler, specialist builder’s coach, this is the minimum mark-up and you should never go below this figure)
- Do not forget to cost yourself into the jobs you quote
- Have a payment schedule for every job and use the progress payments to cashflow the job rather than your own finances.
- Build cash reserves – ideally 2% of turnover as working capital that you put in a separate bank account to help with construction business growth or continued operations, especially during slow and difficult periods.
- Have a 12–week cash flow forecast. Knowing this allows you to make decisions for your business, eg. when to add a new staff member, when to put new systems in place, etc. to remain competitive in the construction industry.
4. Systemise your business
A lot of builders are still using ‘old school’ methods to run construction companies and are doing things the hard way. In this day and age, you just cannot compete unless you implement the right systems and technology to improve efficiencies and take control of your business to dominate a niche market.
You may already be using accounting software such as Xero or MYOB, but you will find that you can systemize most areas of your construction company. Buildxact can help you when it comes to estimating and job management, while Deputy will take care of all your time–sheeting requirements. These systems all integrate with each other so that there is no double-handling. That is the type of efficiency that you need to set up so that your staff can work smarter and not harder while increasing productivity and handling many construction projects. This will go a long way to go after prospective customers and improve your sales process to win more jobs.
5. Take control of your leads
When you are presented with a potential job that is a good fit for your business, take control immediately and steer the conversation and the process. Communication is the key.
- Start by charging for your quotes as this will eliminate any tire kickers and will also place a value on your quoting process.
- Have the difficult conversations with your potential clients upfront and set expectations so that they know what will happen if, for example, a variation is required during a job, or there are defects at the end.
- Set up a client portal for your potential clients right from the get-go so that they can see first-hand how they will work with you. Buildxact can help you with this.
Being open and honest and showing that you are in control builds trust and credibility and leads to repeat and referred business. It helps you convert your leads into clients, and once you have won a job, it protects both you and them, and helps ensure that your jobs are delivered to budget, on time, and most importantly for you, that they are profitable.
6. Get help
As the leader of your company, you are tasked with steering your business in the way you want it to go and spearheading the change necessary to increase its success.
Remember that you are not required to be an expert in all areas so get the right help to assist you in kick-starting and managing change. It will be money well spent and while you may not see immediate results, be patient because you will certainly reap the rewards in the not too distant future.
It usually takes about 12 to 18 months to experience the full impact of the changes you implement in your business, so grab the bull by the horns, get the help you need and stick with it. Consistency is the key here. A great team is the secret ingredient to make a business successful.
Work with your team to beef up your online presence and offer online options to help with customer satisfaction. Construction companies that embrace technology set themselves up for success and are more likely to navigate the many changes that can take place in the industry.
Here is to your success!
These are just the six top takeaways from our webinar ‘The Biggest Future Growth Opportunity in the Building Industry Right Now’ that we co-hosted with Builders Coach, Kurt Hegetschweiler.
If you are interested in finding out more, click here to watch the webinar recording.