Construction and Contracting Business. Entrepreneur magazine

Construction and Contracting Business

Construction and Contracting Business - Entrepreneur magazine

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Very rapid growth not accompanied by a similar increase in resources. If a business expands too quickly, it often cannot keep up with demand. Quality of work suffers because inexperienced or unskilled workers are hired and put to work with little or no training. Shortages of equipment also plague companies that grow too fast; when several work crews must share one piece of equipment, productivity and efficiency suffer, along with chances for profit.

      

Financial issues. Improper budgeting and estimating, lack of cost controls, poor cash flow, and inadequate project management spell doom for many new businesses. Contractors must have more than creativity and technical skills to succeed in the competitive contracting environment.

      

Poor oversight and control at the upper management and project management levels. When key staffers leave the company, they are often replaced by personnel who are either incapable of doing the work or are poorly trained. When the general economy is doing very well, the pool of skilled laborers shrinks, placing more strain on newer businesses.

Other factors beyond the control of the owner. Economic downturns, high inflation, shortages of materials, or the dreaded “client from hell” can cause serious damage even when a contracting business seems to be running smoothly.

      On the other hand, successful contractors share many similar characteristics. While there is no single formula for success, good contractors combine most of the following assets to establish an environment where success is expected, and usually achieved:

      

Good training for new employees

      

Good relationships with subcontractors

      

Competitive wages and benefits with excellent incentives

      

Low employee turnover

      

Excellent management of financial resources and cash flow

      

Cost controls

      

Accurate job estimating

      

Happy customers

      

Happy employees and/or subcontractors

      

Excellent communications with customers, employees, and subcontractors

      

Hands-on project management

      

Manageable debt

      

Ability of owners and managers to identify potential problems before they get out of hand

      

A cohesive and reasonable business plan

      

Staying on top of changes in the industry from new rules and regulations to the latest in tools and technology.

       tip

      Understanding how clients feel about your services is critical to success. One simple technique is to insert a short questionnaire with monthly invoices or post one on your website. Clients can rate the quality of your work, make written comments, and even request additional services. Making operational changes based on client input will not only help retain current clients, but will assist both sales and marketing efforts. If you are on Angie’s List (which you can register to be listed at www.angieslist.com), you can look at reviews, as is also the case on Yelp (at www.yelp.com) and other ratings and review websites.

      Substandard workmanship is near the top of the list of client complaints. Clients expect the companies they hire to have skilled professionals, so if the work performed is unsatisfactory, trouble is right around the corner. Therefore, it is paramount that contractors properly train their employees and implement a good quality-control plan.

      Often, contractors work inside a client’s home, disrupting normal family life. These clients prepare for the “invasion” and become very agitated if the work does not begin as promised or takes much longer to complete than expected. Contractors can make life easier for all if they implement a reasonable scheduling system and teach their employees to be respectful of the client.

      Little angers a client more than a contractor increasing the price of

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