The global spending from the construction industry is projected to reach $14 trillion by 2025. With this industry poised to experience growth even in the years to come, there will be more opportunities for contractors.
Do you think you are cut out for this industry but you have no idea where to start? Do not worry. In this article, we shall discuss some things you should know before starting your contracting business and how to succeed in the industry.
Adopt Best Business Practices
How a business is run, determines how successful it can be. Construction companies are incredibly vulnerable. Though profitable, this industry comes with risks that can ruin your business instantly.
To begin with, it is important that your business is registered and insured. Accidents can occur at the site leading to damage of private property, injury to personnel and even death.
As you work to establish your business, focus on customer satisfaction and ensure the quality of your work is never compromised.
If you are window installer for example, go for the best brands that will serve your customers for a long time. Happy clients are the best and cheapest form of advertisement.
They will recommend you to their networks, and the quality of your work will demonstrate your capacity as a contractor.
From the word go, it is essential to adhere to the highest professional standards. Mind how you dress and be courteous and professional when communicating to prospective clients.
The first time a client reaches out is crucial. It gives them an impression of what to expect from your company. If they cannot access you or the reception is cold, they may be put off.
Ensure that someone is always available to answer the phone line. If you cannot afford to have a permanent hire for that, redirect the calls to your phone.
Ensure that you respond to messages and emails promptly. If clients cannot reach you, they may find you to be unreliable and move on to another contractor.
It is also important to cultivate favorable relationships with your clients. The following are some tips that can help you here:
- Be honest and conduct yourself with integrity
- Give realistic project expectations and over deliver
- Give every client special attention and keep them posted on developments
- Acknowledge mistakes and make the necessary corrections
In the same breath, avoid giving unrealistic expectations to clients. You will just be setting yourself up for failure and ruin your chances of landing long term clients.
Construction companies are cash sensitive. Being profitable is great, but even then, your business can collapse if you do not pay attention to cash flow.
Before you accept any additional job, ensure you know the impact it will have on your cash flow.
Factor in the costs and have a clear picture of your overhead costs.
Create a budget to help you monitor your overhead costs. It will help you identify the inflows and outflows of your business. Cut unnecessary expenses or raise your rates if the money going out is more than the inflow.
Try the following strategies to avoid cashflow challenges:
- Keep track of due payments and send friendly reminders
- Offer incentives for prompt and early repayment
- Have a penalty system for late payments
- Spread out costs
- Look for the best prices for supplies
- Process change orders quickly
- Accept electronic payments
It is important to remember to factor in low season as you make financial plans.
How will you pay your employees during that period? To manage your finances properly, you can try using accounting software. You should also have a line of credit in place in case of emergencies.
Finding Your Area of Specialty Can Greatly Boost the Chances of Success for Your Contracting Business
Many construction businesses are competing for the same clients. How do you set yourself apart from your competitors? Find an area you are good at and build your business around your strengths.
Alternatively, you can identify an underserved market segment and focus your attention there. Also, you can identify the services other independent contractors do not offer and start from there.
Though it may be tempting to do all sorts of jobs especially as you start, selecting a niche will be beneficial in the long run.
Clients prefer dealing with contractors who have dealt with jobs similar to theirs. By specializing, you will be in pole position to land jobs that fall within your area of expertise.
Selecting a niche will benefit you in the following ways:
- Your proficiency in that area will continue improving, and with time you will be identified as the go-to company for those services
- As an expert, your business will be relatively more profitable than other contracting businesses as you might be able to charge higher rates
As you choose a niche, ensure to do adequate research on existing competitors and the actual size of the market. It should be big enough to offer you a constant flow of work and allow you to scale up.
Build Your Company Around a Great Team
The people you choose to bring on board to help you achieve your business goals are crucial.
Your employees will interact with clients a lot and will play a significant role as to how your brand is perceived. With the right team, your business can grow in leaps and bounds.
Hire people who are dependable, knowledgeable and more talented than you are. It is also essential that they are trustworthy and can perform at high standards even under minimum supervision.
This will assist you in alleviating the need for micromanagement and allow you to focus on growing the company.
It is important that you lead by example. Rather than manage them, exemplify the work ethic you expect from them and show them you trust their ability and decision making.
Along with the work ethic, work hard to create a cohesive team that cooperates seamlessly.
As a great leader, your team will be committed to you and the business. Have them take the success of the company as their own. Reward great work and promote employees as the business grows to retain your best talent.
Have a Marketing Plan
Marketing is an essential part of a business. It not only allows you to secure new clients but also retain your current client base as well as access more profitable jobs.
In the beginning, you should also take up a marketer’s role. Inform everyone in your social circles of your new venture. Your first job will likely come from there.
Embrace technology to create awareness about your brand. Digital marketing strategies are relatively cheap but can produce exceptional results.
Have a professional website where your clients will find you online. It should be easy to navigate and Search Engine Optimized for it to rank high on Search Engine Results Pages (SERPs).
Step up your social media game to complement your website. Display all your projects for your viewers to see how good your work is and post regularly to keep your followers engaged.
Even as you embrace technology, do not ignore traditional marketing channels. TV and radio ads on local stations will alert locals of your services. You can also try billboards and signposts around your target area.
As a contractor, referrals are a great way of getting new clients. Therefore, it is essential to create a broad network.
A good way is to build working relationships with other industry players such as architects, and even other contractors specialized in different niches. Referrals from other professionals will make it easy to convert leads.
Know How to Choose the Best Customers
Being a contractor can be stressful as it is. Ideally, you would like to land all the customers. However, certain clients can make you miserable while you work.
A client has the right to know the progress of the project at every step.
However, there are some who will want to micro-manage you and deny you space to do your job. Additionally, there are people who might complicate issues in order to delay or evade payment.
The hard truth is that there are good and bad clients. You will be better off spotting the latter early on and avoiding them.
Find a Mentor
Challenges are bound to arise along your entrepreneurial journey. Mentors are a great way of avoiding such problems or reducing the impact they will have on your business.
Also, a mentor can give you connections to reliable vendors and investors as well as give you valuable insights pertaining to the industry.
- Other benefits of having a mentor include:
- You will get help in identifying market gaps
- With a mentor, you will be more confident of the viability of your business
- They will help you develop a broader perspective
- Their experience will increase your chances of success
- A mentor will give you access to their network
Finding a great mentor is easier said than done. However, with the right approach, you may be able to convince a suitable candidate to agree to guide you on your path.
Join an Industry Association
As you venture out as a contractor, it is vital that you join industry associations. These are perfect for networking and learning the crucial developments in the industry.
Other benefits include:
Under an association, your team will benefit from necessary hands-on training to help you meet government regulations and remain in compliance. This will be important for long term growth.
2. Group Purchasing power
Associations will help you cut on costs. By coming together with other companies, you will have a greater buying power.
Many construction associations have a technical department that offers support to members so that they adhere to the national standard construction regulations.
By joining an association, you will always be aware of developments that may affect your business on time. This will help you come up with contingency measures or capitalize on opportunities.
Outsource If Need Be
As your business grows, handling all the aspects of management will become more and more strenuous.
Trying to do everything yourself will limit the growth potential of your company. You can sub-contract tasks that are not core to the business such as managing social media, cleaning, customer services or making travel arrangements.
Additionally, you can outsource key functions that you are not strong at. For example, you can outsource accounting services if you are not comfortable doing your taxes.
In most instances, outsourcing can save you some major costs and a lot of inconveniences.
However, it is important to ensure that you are working with the right entity. Do your due diligence before you engage any company to ensure that you share the same values with them.
Monitor the Progress of Your Business
Your business should have goals based on market projections from the onset. It is crucial that you monitor the progress in relation to these goals every step of the way. Conduct a comprehensive assessment and find out:
- If your business is financially stable
- What sort of reviews you are getting from clients
- If you are getting repeat clients
- How many customer referrals you get
- The employee turnover rate
- Your conversion rate on leads
From time to time, check your accounting records and go through your website and social media channels to find out how your business is doing.
Engage with clients and employees to find out the areas that might need improvement. Try making the necessary adjustments early on. It will be difficult to change perceptions once they stick around for long.
Why You Should Always Be Prepared as Contractor
A contracting business can be very profitable with the right execution.
However, it requires a lot of attention especially as it grows. No matter its size, your level of preparation can make or break your company.
Though you cannot plan for everything, ensure that all the controllable aspects of your business are always in check.
Another important thing to do is to be creative with your designs to attract a wide range of clients. The Pro Gallery is the perfect place for contractors, clients, designers, and homeowners to meet and exchange ideas.
Make a reservation to visit our showroom for a glimpse of the latest remodeling designs.