If you’re looking to grow your construction business, the best time is right now. It can feel like a daunting task, and you may not know where or how to begin, so we thought we’d give you a hand and list some basic strategies that you can quickly put in place. Here are six tips from Builders Coach, Kurt Hegetschweiler.
1. You, your team, and setting goals
Most builders don’t start as business people, but to advance your business, alter your mindset and your habits, and see yourself as a business leader. Embrace the concept of business development, set your standards and your goals, and make the commitment to put in place the changes necessary to set your business up for success.
Ask yourself what you want your business to look like and what needs to change to achieve your business goals? It’s essential to start with a clear vision before implementing an action plan. Equally as important are the people that surround you. Your team should embrace your standards and values, including your subcontractors, admins, bookkeeper or accountant, and legal advisor. With your leadership, the right people in place, and clearly defined roles and responsibilities, changes are easy to implement.
2. Find your niche
When you begin actively market your business, there’s a good chance that inquiries will inundate you, which may be overwhelming. While some inquiries may be precisely the type of opportunity that you want, many won’t be a good fit and not worth your time or effort. Before you move full steam ahead with your marketing efforts, determine your niche or specialization. A clear delineation will enable you to differentiate your business, target specific inquiries, and make your business most relevant to prospects. For example, does your company specialize in renovations and remodeling, custom builds, net-zero houses, etc. Once you have determined your niche, start marketing! For tips on how to get your marketing up and running smoothly, check out our blog titled How to Win More Work in a Competitive Marketplace.
3. Control your finances
Profit and loss, cash flow, margins, and break-even points are crucial to being under control for every job. Using estimating and project management software such as Buildxact will ensure your quotes are accurate with consistent margins across the board. You’re able to gauge your profit and loss and cashflow at any given time on a job.
While using a system to manage your financials is a ‘must,’ we also recommend:
- Price your work correctly and apply a mark-up of 25% for all items (according to Kurt Hegetschweiler, specialist builder’s coach, this is the minimum mark-up)
- Include your cost in all quotes
- Instill a payment schedule for every job and use the progress payments to keep cash flowing rather than floating with your cash
- Build cash reserves — ideally 2% of turnover as working capital — and deposit in a separate bank account
- Forecast a 12–week cashflow as this allows you to make important decisions for your business, like when to add a new staff member or new systems.
- Start by charging for your quotes as this will eliminate any tire kickers and place a value on your quoting process.
4. Systemize your business
Many builders are still using ‘old school’ methods to run their business and are doing things the hard way. Today, it’s harder to compete unless you integrate systems and technology to improve efficiencies and control business.
You may already be using accounting software such as Xero or Quickbooks, and you’ll also find that you can systemize other areas of your business. Buildxact can help you with estimating, simple takeoffs, and project management, while Deputy can track all of your time-tracking requirements. These systems all integrate so that there’s no double-handling. These are easy software solutions that offer increased efficiency and productivity throughout your business so that your staff can work smarter and not harder.
5. Lead Management
When presented with a potential job that is a good fit for your business, take control immediately, and steer the conversation. Communication is the key. To keep an open dialogue, set up a client portal on your website for your potential clients right from the get-go so that they can see first-hand how they will work with you. Or, use a platform like Buildxact to help you with this.
Set expectations and have the difficult conversations with your potential client’s upfront so that they know what will happen throughout the process. For example, communicating changes required or defects at the end of a job let’s them understand the situation.
An open and honest relationship builds trust and credibility, which often leads to repeat and referred business.
6. Seek help, as needed
As the leader of your company, your task is to steer the business that best suits you and the market, and spearheading any change necessary to increase its success.
Remember that you are not required to be an expert in all areas and seeking help to assist you in kick-starting and managing change is appropriate. It will be money well spent, and while you may not see immediate results, be patient because you will undoubtedly reap the rewards in the not too distant future.
In general, it can take up to 12 to 18 months to experience the full impact of the changes you implement in your business, so be patient and stick with it. Consistency is the key.
Here’s to your success!
These are just the six top takeaways from our webinar ‘The Biggest Future Growth Opportunity in the Building Industry Right Now’ that we co-hosted with Builders Coach, Kurt Hegetschweiler.
If you’re interested in finding out more, click here to watch the webinar recording.