You might be excited about your new business venture but hold your horses. About 50% of new businesses don’t make it past the five-year mark. Being successful in construction or any business takes more than enthusiasm.
Are you planning to start your own construction company? How likely are you to succeed? Read on to learn our 8 tips on how to start a construction company and be successful.
Business Plan for Success
Without a business plan, you are trusting your business’s success to luck. A business plan is how you turn your entrepreneurial dream into reality. Here’s how to write a business plan for success.
Clearly identify your target customers. To do this you need to research your market. Understand the demand for your services and from that determine what you can expect your business to earn.
Your business plan should also identify what services your business will provide. This will help you determine what equipment you will need. Check the cost of equipment for sale and you can start to identify the cost of establishing your business.
Add the cost of labor and other running costs to your capital costs and you are beginning to understand the cost of setting up and running your business. Don’t forget insurance, licenses, and marketing costs.
If the potential income exceeds the costs you may have a basis for starting a business. If they don’t consider other business models before committing to making any investment.
Understand Your Customers
It’s essential to understand your customers if you hope to win new business and to retain customers. Much of your future business may come through recommendation, so meeting and exceeding customer expectations is important. If you don’t understand that expectation you can’t hope to meet it.
Understanding your customers is much more than understanding their construction needs. It’s also about understanding how they want to be communicated with and marketed to.
The construction business might appear to be about materials, equipment, and the hard skills of construction. In actual fact, it’s soft skills like listening, planning, and selling that make a great deal of difference. It’s the soft skills that build customer confidence and win contracts.
Recruit and Keep the Right People
Delivering quality construction is down to people. Attracting and retaining good people is key to your success. There’s a shortage of talent so you need to compete for the best people just as hard as you compete for new business.
Don’t compromise on standards. When recruiting, hiring the wrong person can undermine your business, lose your customers, and lose your money. Even if you have to pay a little more, make more effort, and spend more time engaging people, it’ll be worth it for the contribution they make.
Keeping the right people isn’t as easy as it first sounds. First, you have to know who your good people are. Get to know you people and measure their performance.
Performance management will help you assess the contribution your people make to business success. Set your people’s goals and check on how they’re doing. Train them, give them feedback and reward them for good performance.
If you can, give your people a stake in your business. Aligning their interests with yours makes for a win-win relationship. If they can’t have a financial stake in your business at least consider a share in the profits when you make them.
Obtain Licenses and Permits
Licenses and permits might seem expensive and a bureaucratic headache. Even so, don’t think that you can operate without them.
Failing to hold the right licenses and permits can lead to fines, loss of reputation, and ultimately failure of your business. It’s really not an option to avoid them if you hope to have a long-term sustainable business.
If anything, be proud to advertise that you comply with all regulations. Be just as keen to hold appropriate insurance and membership of trade and professional institutions. This all builds confidence in your credibility and reliability and that matters for customers and suppliers too.
Your understanding of your customers and the wider market should help you determine how you need to market your business’s services.
Consider whether you need a sales operation. Perhaps you should be advertising or have a web presence. Social media might offer you an effective marketing opportunity.
Whatever approach is appropriate for your market and your services, do it effectively. Set goals and measure your performance against them. Be prepared to change your approach if it’s not getting results.
Don’t Overstretch Yourself
Many profitable businesses fail because they overstretch themselves. Growing too quickly or failing to manage cashflow can kill your business even though you have a strong order book.
Guard against biting off more than you can chew by reviewing your business plans. Make sure that you have the finances in place to pay your bills when they are due.
Master Project Management
Planning is key to profitable construction. A construction business that excels at project planning is likely to be successful.
Make sure your people are thoroughly trained in the latest project planning techniques. Use planning tools and software. The analytics provided by project planning software can help resource and cost planning as well as scheduling.
Practice Risk Management
Risk management is an approach to business that seeks to mitigate the threats to business success. Focus your attention on those threats that are most likely to arise and that have the greatest impact.
Think widely about the potential risks. They may include safety, reputational risk, cybercrime, customer business failure, employee theft, or fire. Having a plan for the most significant threats might save your business from failure.
That’s How to Start a Construction Company
These new construction company tips may help your business survive the tricky first few years. Learning how to start a construction company starts now but it will continue as you overcome the obstacles you face. Building a sustainable business is a continuous process.
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