The current construction market is tough! Competition is increasing as profit margins are shrinking. Most construction owners and managers face heavier demands and workloads as they handle more tasks with fewer resources. From project meetings, negotiating subcontracts, and estimating deadlines to ordering materials and handling constant customer calls and cost cuts, managers run harder just to keep up.
When the economy gets better, demands of customers and workloads will keep growing, likely without a matching increase in margins. Taking on more projects doesn’t automatically lead to higher profits. Every new job demands more management, systems, crews, equipment, and time. In competitive bidding environments where low-price competitors dominate, winning more work at lower margins only increases stress as well as the risk versus profits.
CHOICES TO GROW
As a contractor business coach, I take a look at how my clients do business. What makes them do well and what causes them to lose money. When they are not performing well, I encourage them to look at new ways to run their company. Most contractors are stuck doing the same things over and over for the same type of clients on the same type of projects. I encourage them to look at new systems, software, people, management strategies, and how they supervise, manage and perform work.
But the big thing I push is to find better projects and customers to work for. I have several civil contractors who mostly build roads for cities and state entities. These jobs are open to any contractor who can bond the contract. Therefore, there is always lots of competition and prices are cheap to win work. By getting these contractors to expand their thinking and look for new opportunities, projects and customers will improve their bottomline. Anything new requires change. But only new strategies will allow for finding better chances to build loyal customers who don’t only rely on low price to award contracts.
NEXT LEVEL
When ready to move to the next level of success, owners and company managers and are faced with two choices:
They can stick to the same approach, bidding on the same types of jobs against the same competitors, and keep struggling.
Or, they can make strategic adjustments. This involves strengthening your management team, adding new project types against less competition, finding better customers with ongoing work, and implementing innovative ways to grow and improve profitability.
PROVIDE MORE TO ACHIEVE MORE
Today’s customers want more than just basic construction services. They expect greater value, higher quality, faster schedules, innovative solutions, and a higher level of expertise. Many want services that reduce their involvement and risk, including project management, maintenance, and technical support. Contractors who offer expanded, value-added service portfolios have an edge over those relying only on low-price bids and performing the minimum required. Contractors can grow their business and profit margins by providing additional solutions tailored to client needs.
General Contractors: Expand services to include pre-construction management, value engineering, design coordination, city approvals and permitting, design-build and value engineering options, safety excellence, quality control programs, and long-term property management. Also work hard to improve the proposed schedule to reduce the project owner’s overall costs.
Masonry and Concrete Contractors: Add guarantees, structural certifications, rebar, embeds, waterproofing, specialty finishes, and exterior building maintenance programs.
Site Earthwork, Utility, Concrete, and Paving Contractors: Diversify and incorporate overall site management, site concrete, offsite utilities, specialty finishes, drainage solutions, utility company coordination and design, annual maintenance, emergency services, and landscape care.
Electrical Contractors: Offer engineering, utility coordination, equipment wiring, periodic inspections, energy audits, and holiday or specialty lighting.
RETHINK HOW YOU DO BUSINESS
The old ways of winning work and building successful projects are no longer enough. Profitable business growth now depends on smart adaptation. Find and serve better customers by offering more with an ongoing approach. Expand services beyond basic requirements to solve real problems which add value and build customer loyalty. Focus on quality and efficiency, not just quantity. Define strategic priorities, target the right projects and customers, and continually refine your approach to building trust and relationships.
STEPS TO A MORE PROFITABLE FUTURE
- Analyze your business systems and team to identify areas for improvement.
- Take clear steps to differentiate your offerings. Propose new value-added services, target customers who appreciate them, and build solutions rather than just complete jobs.
- Test new ideas incrementally. Start by trying and introducing one new service, going after one new client, or exploring one new project type.
- Partner with your clients for shared growth, instead of just supplying services at the lowest price.
BE A RESOURCE, NOT JUST A PROVIDER
The construction companies who thrive in today’s competitive market are those that act as partners and trusted advisors for their customers’ long-term needs. Combining technical excellence with strategic innovation, you can become a trusted resource rather than commodity provider. As you grow, seek opportunities which will guarantee both customer satisfaction and profitability. Remember, success comes from doing things differently and better than your competition.
for more information
George Hedley CPBC is a certified professional construction business coach, consultant, and speaker. He shows contractors how to double their profits, grow, get organized, and get their company to work like a machine! He is the author of Get Your Construction Business To Always Make A Profit! available on Amazon.com. To talk, start a personalized BIZ-BUILDER program, or get his free e-newsletter, email gh@hardhatbizcoach.com. Visit his YouTube channel to watch his videos. To download online courses or get his contractor templates, visit www.constructionbusinesscoaching.com.