Most people start a construction business because they have experience and expertise with a specific trade. Unfortunately, completing construction work and running a business require two very different skill sets. This becomes apparent once the construction business is up and running yet struggling to grow into something bigger. It’s hard for any business to reach the next level, especially if the owner has never done it before. Break out of the rut with these 5 growth strategies:
Run a Tight Ship
A business can’t grow when it’s always getting in its way. Details, like staying on top of taxes, renewing the construction bond annually, and keeping in touch with customers, need to be consistently excellent; otherwise, the business faces unnecessary setbacks. Perfecting the internal operations takes the right mix of staff, processes, technology, leadership, and partnerships. It also takes honesty about what’s working and what’s not. As you get serious about growth, assess your performance on the fundamentals – attracting repeat business, managing employee turnover, earning customer referrals, etc. The goal is to identify issues that could be compromising growth, like an ineffective invoicing system. You might also discover new opportunities to leverage, like asking for more referrals. Well-managed businesses are in the best position to spark growth and sustain it afterward.
Free Up Financing
Unless you have extensive savings, you will probably need to secure financing to buy new equipment or hire more staff. That can come in the form of credit, a loan, equity partnerships, or a construction bond, among others. In all cases, the best way to attract financing is through sound management and consistent performance. Financing decisions are based on credit risk, so any business with a positive credit history will look more attractive to lenders. It also helps to maintain a binder of key financial documents – e.g., financial statements, tax returns, equipment lists, organizational charts, customer references – to show to potential lenders. Investment fuels growth, just be cautious about taking on more debt than the business can handle over the long-term.
Police the Company Wallet
Some construction businesses struggle to grow because even maintaining the status quo is difficult. Cash flow issues are common in the construction industry where costs can be unpredictable and customers aren’t always prompt about payment. Careful cash management helps construction businesses avoid disruptions while building trust with lenders and customers. That begins by avoiding unnecessary expenses, like having to pay a claim filed against the construction bond. The next component is to maximize revenue. Doubling your workload probably isn’t feasible, which is why most construction companies increase revenue by raising rates – but not so high that it alienates customers or prices you out of the market.
Leave Every Customer Satisfied
Customer referrals are gold in the construction industry. Endorsements from satisfied clients (delivered in person or online) can help construction companies attract flocks of new customers. Alternatively, just one negative comment can make any potential customer think twice about hiring you. Therefore, construction companies need exceptional customer service to kick-start growth. The best way to leave everyone happy is to exceed expectations. Deliver everything you promise plus everything you would expect if you were the customer. Then strive to go a little farther. Finding a trustworthy contractor is a struggle for a lot of people, which is why they often become loyal evangelists when someone goes above and beyond. Construction bonds are great at proving your customer commitment because they demonstrate your willingness to take financial responsibility if anything goes wrong.
Get Great at Marketing
Construction business can’t rely only on word-of-mouth to grow. At a certain point, a more formal marketing effort becomes necessary to attract new customers and expand into different markets. Fortunately, construction marketing doesn’t have to be expensive. Setting up social media profiles on Facebook, LinkedIn, and NextDoor makes you a lot more visible online. Branding your business through a logo, uniforms, or a jingle can help to build name recognition. Even something as simple as asking your customers to write online reviews can boost awareness of your business. It’s up to you (or a company you hire) to create a unique marketing strategy, but don’t forget to include the details new customers want to hear – you have extensive insurance, an active construction bond, and a team of experienced contractors. Show people why they can trust you to do the job right.
You might have noticed a trend with these suggestions: the best way to grow into the business you want to become is to perfect the business you already have. Once you get great at managing money, juggling commitments, and delighting customers, growth often happens organically.
As you become bigger, keep in mind that your construction bond requirements will grow as well. Without the right bond, you won’t be able to eligible to work on more prestigious projects. Don’t let this obstacle be what holds your construction company back. Instead, learn all about surety bonds before launching your ambitious growth strategy.