Construction business is not easy as it has many pitfalls where you lose money, but with careful basic steps this business can gain speed on making your living with profits. To be successful in this competitive industry there are couple of things that need to be done right all the time and master certain skills that you would be using in this industry almost every day. Here are the summarized points on how to become successful in construction business
1.Hands on Experience
Five years of broad experience, which relates to general and not specified contracting experience is must for starting a construction business. One exception for this is you are concentrating solely on one specialized area and no other. This in general is called niche and this comes with a warning as niches can be either highly profitable because of the demand or can take away all due to new technical innovations, new products or simply a change in society. Success can be achieved in the contracting business by gaining experience in general contracting. General experience draws many befits such as selection of competent individuals and rejection of incompetent ones, choosing right tools, deciding on the time required for completion and layout an appropriate timeline for the project to complete in time. The best experience can be gained by doing the projects ranged from small to medium size. Large projects may pigeonhole you into niches. If your business is niche, then there is no need to worry and if it belongs to general contracting, then you might have to hire individuals where you cannot perform in this kind of projects
2.Good Accounting System
The numbers don’t lie. Accounting system is another important factor in making success out of a construction business. Until you have a good accounting system you will not be able to calculate if you are making profits on your jobs. A good accounting system not only helps you identify the things that went right on your job, but also realize the mistakes done. Business owners unfortunately pay less attention towards this as they fear that a good accounting system will make up for higher taxes. Having no accounting on every penny spent is like believing your gut way too much and flying blind. A bad accounting system not only spoils your business, but also takes away your living, leaving your family in trouble.
With your hands on experience in the industry, as said earlier, you might have come across many factors and hurdles related to construction business, which will transform you to a manager from a regular technician. To create an effective business you must have an understanding of the procedures in your business. You need to have a well-defined product process with related checklists that allow you to drive your workers to accomplish the tasks. This process not only helps you complete the task in time, but also eliminates any human errors. You need to develop a process for each job and each task. These processes defined and the related checklists should be put in writing and filed. These files should include, but not limited to
- A signed contract copy and change orders
- Budget for the entire project and for the change order.
- Accounts for income and expenditures
- To-do list summary
- Process summary for each task and related checklist
- Letter of completion signed by the customer along with testimonials and other contact information of the customer used for marketing or referrals with the consent of the customer.
4.Well-Formed Business Partnerships
A well-established group of competent subcontractors with relevant work experience in home remodeling is crucial in creating a job success. Success of the job is dependent on the team effort hence it is important to have a network of businesses/ individuals, who understand your business process and help you in completing every job in an effective way. In a nutshell, efficiency and competency makes profit on each job.
5.Managed Project Bidding
Even if you are the best skilled business in your area or best managed Construction Contractor with talented and stable workers you might still run out of luck in making your business a success. The reason for such loss is by underbidding. This generally happens when you rely way too much on your gut or choose unverified estimates rather than choosing a fail-safe process in checking the costs involved in the process of completing the home improvement job. The pitfall in this is missing the details. Many constructing companies/ contractors make a mistake by estimating the costs wrong as they either don’t have the correct details or missed few of them. Before bidding on the home improvement job, understand the job details, the cost of each task involved in the job, which must be checked and rechecked. Always remember the rule: measure twice, cut once. This is absolutely applicable in the bidding process. Your assumptions and estimations should be vetted not once, but twice at least during bidding process.
Referrals play a key role in construction business as most of the customers come by the way of referrals, but referrals alone are not enough for efficient marketing. You would need the following to make your marketing a successful one
- Have a website that includes customer testimonials
- Join networking groups to build connections
- Join civic organization
- Provide assistance to local non-profit groups/communities (Maximum two)
- Participate in regular process of bidding to achieve jobs, a non-referral way
- Weekly mailing to customers
- Business cards to give away instantly, job site signs where possible, other stationery should be made available
- Advertise in online portals, local newspapers, yellow pages
- Customer testimonials in written to show other customers
- Company/ Business brochures
7.Keep up with the advancements
However good your work is, a delay in completing the work on time will cause a bad reputation. As everyday advancements are common these days, upgrade your tool kit to the latest ones to complete your work on time. When your tools seem old or breaking down, it is advised to buy the new advanced tools. These new tools not only save your time, but also save you from cost of repairs each time the tool breaks down.
8.Hiring right people
More often than not, the things we do well are the things we enjoy doing and the things we do badly are the things we hate doing. Your skills and experience might have made you learn a lot of things about work, but you still have your areas of weakness. For a successful business it is important to complete the home remodeling job successfully and a job includes different areas of work, which you might not be an expert. For the same reason, hire an individual who is best at your weakness, which help you complete the job in time with perfection and the customer would surely be happy with the work.
9.Document your work
Your job includes working in different areas and get successfully completed in time, but there will be mistakes and corrections made during the process. At times, a mistake might have cost you a lot.Learn from your mistakes and document them in your work files along with the success stories that caution you. It is important to never repeat these mistakes.
Customers only see the price you gave them and that is in the contract, but it is often that you come across change orders during the work. Change orders are caused by many factors and it is important to cost out every change order as if you were costing out the job. Many construction businesses/ contractors unfortunately do a poor job in addressing the change orders. They are reluctant to address the same to the customer in an effort to avoid confrontation. Process a change order by preparing a checklist for each task and date of completion for the same. Make the customer understand the changes and get the document signed else you may not get the full price for your job. It is a must to address the reality in the change order occurring during the bidding process itself before the contract is signed. The customer should be made understood that a continuous change order would cost more money and time. A customer may not intend to makea change order if it is understood and the construction businesses/ contractors can be confident while confronting the customer if it happens.