It doesn’t take long for a small, reputable contractor to reach the point where they have to decide whether to continue growing the business, or not. If opting for growth, here are four strategic areas to focus on.
Long Term Objectives
The contracting industry is littered with businesses that have no direction. They’re on a mad dash from one job to the next as their bidding machine whirs away in the background. These contractors find themselves exhausted from the race, and when they look at their cash flow they feel like they’re looking at a roller coaster. There is no effective way to channel growth with so much chaos. So, they slog on, trapped in a difficult reality of their own making.
Think long term when setting your business goals.
It’s true that many people hate to plan. And, for most people, setting goals just feels too restrictive. They’d rather avoid goal setting in favor of allowing good luck to deliver what they’re after. The smart ones eventually learn that if they keep operating aimlessly they’re never going to make things turn out as they’d like. That’s when they get around to planning and setting some goals. For construction businesses ready for the challenge, here are some insights.
Think long term when setting your business goals. Once you’ve written down what you want your business to look like in 15 or 20 years, it becomes much easier to fill in what you need to do over the years between now and then, to get to that point. Start with two personal questions.
- What do you call success? Is it profits? Is it having enough money in your wallet to buy most anything you want? Is it creating a legacy? Or, maybe it’s just to have fun doing what you like while making a decent living. If you allow that there isn’t a universal description of success, then you leave room to define your own success — one that is meaningful to you.
- What part of contracting do you like the best? People tend to excel at what they like, so once you ask and answer this question you further define your business based on the role you want to play. It’s perfectly fine if you like to do the work. But, if you never state that, you won’t make the needed decision to hire someone to handle the business side of things.
After you are clear with your answers to these two questions, you’ll stay on track as you set business goals. Next, consider partners.
Wise Partner Selection
You will still need to involve other people even if you’ve decided to be a one-person business making just enough to survive. Sometimes you’ll need helpers, and at the very least you will need suppliers. For those who want to grow beyond the one-person show, you will need employees, subcontractors, suppliers, bankers, insurance reps and bondsmen, just to name a few.
All of these entities become de facto partners because they directly affect your performance. So, it’s very important to choose wisely. More than a few contractors have failed at projects because of someone else. And while you can’t make the right decision every time, you can practice due diligence as you consider who to partner with.
You’ve set your business goals. So when you consider taking on any partner ask yourself how they help to advance you toward your goals. In some cases, the answer will be who they know. In other cases, it might be what they know. How long they’ve been in business, what their track record is, and the types of projects they work on are all aspects to consider.
In construction reputation is everything. You don’t have to have the same values as everyone else, but you do need to have a consistently good reputation.
Guarding Your Reputation
In construction reputation is everything. You don’t have to have the same values as everyone else, but you do need to have a consistently good reputation. Without that you won’t get referrals. And, referrals are the lifeblood of a contracting business. For contractors, reputation depends on three factors:
- Quality leads the pack because people are paying a lot of money for your products and services. At least more money than most other major purchases they will make. If your quality reputation wanders from positive to negative over successive projects, your reputation will be negative. People always remember what didn’t match their expectations more than what thrilled them.
- Timeliness helps your reputation by showing you can finish on time. But, it also tells much more. Finishing on time means you can effectively estimate the work and plan it. It means you can effectively schedule, and that you have partners who also have strong project management skills. It also shows that you can handle the unexpected because in construction there is always the unexpected.
- Delivering value shows you are not just thinking about yourself and your business. It tells people that you are willing to find ways to meet their project needs as well as their financial needs. People don’t want to pay more than they have to, but they also don’t want to have to settle for less than they want. When you deliver value you get the reputation of giving people what they want at prices they can afford.
Nurturing Dynamic, Empowered Leadership
If you are not a one-person shop then you will ultimately depend on others to grow your business. And, some of those “others” will be managers, superintendents, foremen and key people who must also manage the activities of others within your company. Company philosophy flows downhill. If you have an organization with dynamic empowered leaders, you have a company with dynamic, empowered employees.
As your employees go about their daily tasks they can make decisions about those tasks because they are trained, they understand how those tasks fit into the overall business and most importantly they can use their initiative to please your customers. The best decision-making almost always happens where the work is taking place. Empowered employees have the power to make decisions about their work.
Just as a structure needs a foundation, so too does your business’ growth.
The dynamic part of the equation refers to energy. When your leadership is dynamic, it infuses your organization with “can do” attitudes. People are also willing to stretch, and they’re keen to innovate.
Even if you are a one-person show, you will handle all aspects of contracting more easily if you are energetic and innovative. Besides that, your clients, your suppliers and those who work with you will see the light — the light of a contractor who’s got it all together.
There is plenty more to growing your construction business than just these four points. But, just as a structure needs a foundation, so too does your business’ growth. These points will form that foundation.