What’s the best aspect of the construction industry? There’s always going to be work. Whether the project involves building something new, tearing down something old, or improving what’s already there, there’s always work to be found. Construction is often regarded as one of the most stable industries a person can enter into.
That being said, it’s not easy. In the U.S. alone, there are over 670,000 construction businesses, according to the Association of General Contractors. That’s a lot of competition. If you want to start a successful construction business, you’re going to have to differentiate yourself from everyone else in the field while delivering high-quality work.
Not sure how to go about it? Keep reading to discover some helpful tips to grow your own successful construction business.
Craft a Solid Business Plan Before You Begin
Your business plan is your road map to success. Trying to start a business without one is like trying to cook without a recipe in front of you. Odds are, it won’t turn out well. Your business plan is also essential to convince lenders to give you the startup funds you need to launch your business.
What Your Plan Should Cover
At a minimum, your business plan needs to cover the following:
- What your business does
- Your market analysis that includes trends, opportunities, challenges, and insight on your competitors
- A study of your target customer base.
- Your marketing strategy
- Your financial plan, including targets for revenue
- Key leadership in your company, including their background
If you want to make your plan even better, makes sure it thoroughly details your 1-year, 5-year, and 10-year goals. The most common times for new businesses to fail is during those periods. If you have a solid plan to address issues during those times, you’ll be in a much better position to beat the odds.
Only Invest in the Equipment that You Need
Reducing costs while increasing revenue is the #1 goal of any kind of business. In the construction industry, it’s especially important. Construction projects are expensive, not only for the client but for you as the contractor as well. There’s ample opportunity for you to overspend if you’re not careful, and one of the most common areas for overspending is equipment.
Keep the Basics – Treat Everything Else as Case-by-Case
Want to know the three essential pieces of equipment you need? A dump truck, a skid-steer loader, and an excavator. 99% of every project you do will involve those three pieces. Everything else you use will depend on what kind of project you’re doing. That means you don’t have to buy and maintain every type of gear on the market, especially when it comes to vehicles.
Every vehicle you own will be taxed as an asset, has to be insured, and has to be maintained. Fleetanswers.com reported that the average cost in parts and labor was around $2,250 per vehicle per year. If you had a fleet of just 10 vehicles, that’s over $22,000 a year, just to keep your fleet running. You should only buy vehicles that can be used for every project and rent out all others to lower your operating costs.
Build a Team that You Can Lead, Not One You Have to Manage
More than perhaps any other industry, construction relies on its people. It takes skilled, dedicated team members to complete projects on time, within budget, and to the standard of quality, your clients will demand. Many construction firms opt to go the easy route and hire cheap, unskilled laborers to do the work. If you use the same methods, your quality of work will suffer, you’ll constantly be dealing with employee issues, and you’ll always be hiring.
There are two key characteristics that make a great employee – dedication and adaptability. People who work hard no matter what the circumstances are, and are constantly learning new things, will perform well. They’ll pick up the skills they need to get the job done without you telling them to. These are types of people you can simply tell what needs to be done, then sit back and watch as they deliver great results. In short, you can actually lead them, not manage them.
And Keep That Team Intact
As I mentioned before, the construction industry is very competitive. That doesn’t just apply when securing contracts; it also includes retaining top talent. Most job positions in the construction industry are contracted out for each new project. If you want the same great people coming back for every project, you need to pay them well, treat them better, and take care of them. If you don’t, they’ll be happy to go work for someone who does.