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Survival Guide for General Contractors at Small Firms


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The construction market's resurgence is good news for firms of all sizes. Spending on construction is at its highest level since 2008, according to the Commerce Department, and the industry's acceleration spans into residential and commercial construction projects. The economy's relative strength and the pressure to increase home construction amid rising housing demand, points to continued construction market gains throughout 2016. 

Margins have grown for subcontractors, as the demand for skilled labor has inflated how much individual subcontractors are able to pay for their work.

With all this growth, it might be easy for general contractors at small firms to get lost in the shuffle. In the cutthroat world of construction, these tinier firms need to differentiate themselves from bigger competitors and deliver a compelling experience to consumers. Smaller organizations may lack the sheer bandwidth of larger competitors, but they are potentially more nimble. Additionally, with their local focus, smaller firms may be able to corner the market on smaller projects that are less profitable for big companies. By integrating technological solutions into their current workflow, small companies can boost productivity, cut costs, and keep pace with major players in the space. 

General contractors at small firms who want to keep up with the shifting construction industry landscape should keep the following in mind:

Margins Stay Tight

The construction business has always been full of slim profit margins, and that's unlikely to change anytime soon. According to Crain's Chicago Business, margins have grown for subcontractors, as the demand for skilled labor has inflated how much individual subcontractors are able to pay for their work. However, the same cannot be said for contractors who have to cope with a range of rising costs despite the increase in construction activity. 

In addition to increasing labor costs, the price of materials has increased for GCs and suppliers. This change makes it particularly difficult for the GCs at a small firm to boost margins higher. While more work is pouring in, it's increasingly important that GCs cut costs where they can and maintain an efficient workflow. 

The Scarcity of Skilled Labor

A substantial decline in the number of skilled workers is one of the biggest problems for GCs, and is a huge contributor to the rising cost of running a business. In an ironic twist, the economic recovery is making it harder for GCs to get the labor they need. Because many industries are currently seeking skilled laborers, individuals who would have previously worked in construction are able to apply their skills elsewhere, according to CNBC. 

GCs may have to accept increased costs for skilled labor, but they can also find ways to attract new talent to the industry. Many millennials lack exposure to construction jobs, but smaller firms can work to recruit these individuals and train them in fields where labor is lacking. Builder magazine recommends reaching out to millennial workers as soon as possible to start training the next generation of skilled labor for the industry. 

Moving Your Marketing Online

As you fight for business in a crowded market, outreach efforts that put your firm in touch with clients are more important than ever. As customers become more tech-savvy, you need to update your online marketing game to ensure the right people know about your services.

While your firm probably has a website, you want to improve that site's standing in search results. You can boost your placement by regularly updating the content on your site. While the services your firm offers aren't likely to change very often, you can post regular updates to a blog. By putting yourself out there and commenting on industry happenings, you make your business more personable, improve your standing in search rankings, and drive more business over time. 

Remodeling Stays Strong

During the recession, remodeling projects understandably took a major hit. Now that people have more disposable income, they're interested in improving their homes again. Remodeling volume sped past pre-recession numbers in the second quarter of 2015, according to data from Metrostudy. The biggest increase was in residential areas where people had high incomes. 

The gains in this market segment point to an opportunity for smaller firms who are well suited to handle remodeling projects that require less personnel than larger construction efforts.

Tech At the Forefront

Any wasted time or effort on a construction site translates directly into diminished margins for a GC. To avoid these expensive issues, contractors should turn to a cloud-based communication and management solution. Procore’s cloud-based construction software stores all the relevant information about a project in the cloud and maintains a paper trail that protects your firm in the event of any legal action. With a cloud-based solution, GCs can focus on the trends that will shape the construction industry in the coming years.

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