Anyone who owns a construction company understands that the industry is fickle. When business is good, it’s booming. When it’s slow, it crawls.
Staying power in the building business requires efficient planning and smart management. Here are 10 tips to ensure you’ll still be swinging hammers 10 years from now.
1. Hire great salespeople and train them
Lulls between projects get expensive. Stay busy by investing in salespeople who keep the docket filled with new projects. When hiring sales staff without construction experience, be sure to get them up to speed on how prospecting and lead generation differs in the industry.
Train salespeople to keep their eyes and ears open for projects to bid on. Keeping your finger on the pulse is more effective than cold calling.
2. Leverage word of mouth
Call happy clients to ask for referrals. Word of mouth advertising is still the number one way to drive sales in the construction business. Don’t be afraid to let customers know you appreciate them getting the word out about your work.
3. Don’t underbid
When business takes a downturn, it can be tempting to lowball in an effort to win a job. Taking on a project for less than it’s worth can lead to trying to cut corners to turn a profit, losing money, or both!
4. Be selective
Don’t take every job you can get. Sometimes the smart move is to pass on a project that doesn’t suit your expertise or experience.
5. Find a niche
A general contractor need not be “general.” Specialize in something and word will start to get around that you’re the best at it. Many owners think that finding a niche will pigeon hole them and make it more difficult to find jobs. In reality, this is how you differentiate yourself from competitors.
6. Communicate
There are times you have no choice but to give bad news to a customer or refuse to give in to their demands. Mitigate these situations with great communication. Keep customers in the loop, even when you have bad news.
7. Keep a watchful eye on overhead
Running a construction business means tracking a lot of employee expenses. Gas cards, vehicle maintenance, cell phones, travel costs and so on. Scrutinize expenses and nip waste in the bud.
8. Praise in public, criticize in private
Keep employee morale up by letting your staff know out loud when they’re doing an exceptional job. When you have a disciplinary action to deal with, always do it behind closed doors.
9. Manage cash
Cash flow is the lifeblood of any business. Keep fresh money coming in by keeping accounts receivable in check. There’s a fine line between good customer service and making sure invoices get paid on time. Err on the side of the latter.
10. Focus on quality
In the construction business, clients judge your work year after year. You might get away with cutting corners at first, but it will eventually catch up with you. If there’s one consistent characteristic of construction companies with longevity, it’s lasting quality.
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