The future for the construction industry is looking bright. Industry growth is expected for commercial, residential, and infrastructure specialties. It may be time to take advantage of the potential opportunities by expanding your business, but keep in mind: growth contributes to many of the reasons a construction business may fail. Growing your construction firm means growing liability, growing risks, and growing need for employees and supplies; leading to higher expenses and greater threats. Is your business ready to take the plunge? And if so, how do you do it right? Business.com points out some important things to consider.
Is Your Business Ready for Growth?
Before we get to anything else, it’s important to answer one important question: is your business ready for growth? Choosing not to grow does not necessarily mean your business won’t remain successful, as long as your business continues to gain projects on its current scale. Trying to expand when your business isn’t prepared, however, can destroy a business. How do you determine if your business is ready to expand? Check out these questions:
- Do you have repeat customers?
- Are you getting referrals?
- Do you receive consistent positive feedback?
- How well can management handle an increased workload?
- Do you have a clear mission statement that differentiates your construction business?
- Do you have proper training programs and appropriate safety and quality procedures?
- Can your budget handle a greater load?
- Do you have personnel that can follow up and maintain relationships with new, current, and past customers?
If it’s clear that new business and repeat business are expected, that may be a great sign to expand. It’s also important that you notice consistent positive feedback from the work you’re currently doing. Without this assurance, there may be company flaws to address before taking the next step. Also, before expanding, have a clear image and procedures in place to maintain the same level of consistency and quality that your business attained previously. Further, ensure management and the budget can handle a greater workload.
Core Competency Growth is Your Safest Bet
The safest route for growth would be to expand in the areas your business already excels at. You already know both how to perform these specialties and how your work is perceived; it’ll just be on a larger scale. Tackling expansion in an unfamiliar competency is far riskier because your business lacks the prior insight that ensures a likelier path to success.
There are 3 common ways to grow in your core competency:
- Acquire a company that does the same type of job as your business, but in a different location.
- Add a specialty within your core competency.
- Attract higher-paying clients with luxury upgrades.
Use Marketing to Attract New Customers and Encourage Repeat Business
Person-to-person marketing can be very powerful in the construction industry, especially word-of-mouth (WOM), which is one of the best ways to find new clients. Three marketing tactics prove to be particularly effective:
- Bring back previous customers. It’s not easy to encourage repeat business but can be an important marketing strategy.
- Meet the neighbors. When working on projects, have some of your employees introduce themselves and describe the project your business is working on. Have them leave their cards and offer to prepare them estimates.
- Use referral reward programs. For current customers, this can mean upgrades and discounts. For previous customers, this may mean monetary rewards or free handyman services.
It’s also important to form a strong online presence to better keep old, new, and current customers informed. Offer the most up-to-date contact information to make sure you never lose a lead. Websites, in particular should function to turn viewers into leads. Some important features of your website:
- Company statement describing what the company does and why it stands out from the pack
- Customer testimonials
- Project portfolios
- Prominent displays of contact information
- Incentives, like free information, in exchange for customer information
The construction industry often struggles to fill positions with adequately skilled employees. In fact, 2/3 of firms acknowledge difficulty finding workers. How can you ensure a pool of great talent?
- Offer good salaries and benefits.
- Offer a good working environment. It should be safe and have a positive work culture.
- Work with hiring agencies.
- Work with local schools in the form of internships and co-op programs. The less experienced workers are not only cheaper, but you can train them to hire post-grad.
- Hire from other, but similar industries.
- Participate in the Helmets to Hardhats program, which connects military veterans with construction jobs.
- Work with manufacturers to include installation with sales. This frees up some time for current staff.
- Provide continued education for existing employees. This acts both as a selling point for new employees as well as a way to retain current employees, preventing you the cost and time of finding a replacement.
Fund the Expanding Business
A larger business requires greater capital. How can you go about funding? For one thing, ensure you’re not offering low bids for new contracts. Customers are often suspicious of low bids anyway and will often accept higher bids if they ensure higher quality. You should also re-evaluate your current price lists to ensure they properly account for business costs. Further, before expanding, you should ensure a reasonable financial cushion.
The Future of Construction is Bright
As stated earlier, there is an optimistic future for construction, but that doesn’t necessarily mean your business should expand. Ensuring proper financial and talent resources are in places and also ensuring a prediction of consistent business are some pre-reqs for approaching expansion. When you decide to expand, ensure your finances are in place and that you approach the appropriate competencies. Invest time into both marketing this firm and finding talent. If your business is ready to take on the task of expansion go for it. It can have a major pay-off.