We've said it before, and we'll say it again – this has been a
challenging few months for all of us, but there is no better time
to think seriously about your business.
We all understand the economy has been tough for construction
owners. I know you have made severe adjustments in your lifestyle
and your businesses; however, remember this too shall pass because
there is nothing new under the sun.
The key to building value in your construction business is to
plan the process in a systematic way, whether you're aiming to grow
your business in any economy or groom it to get a better price from
a buyer. In this article, we have compiled a few tips to create
value in your industry.
1. Looking through the
eyes of buyers
Whether you just
want to build a more substantial business or looking ahead to the
day when you might want to sell it, it helps to think of your
business through the eyes of a buyer. Aim to:
2. Work on
The longer your business has
been operating, the easier it could be to sell, provided it has a
solid track record. Aspire to:
3. Develop reliable
A strong history is
reassuring, but buyers will be more interested in the future. Make
Show evidence that your
main markets are growing or at least stable rather than
Demonstrate you've taken
steps to change your market position, if
4. Nurture a stable client
A well-managed client
database is one of the most valuable assets as it can be used in
many ways for marketing and gaining referrals. Try to:
update your client database.
customer retention rates and customer referral rates.
Implement a client loyalty
program and referral incentives. Buyers will want to know that key
customers won't leave if you do.
5. Secure your cash
Stable future cash flows are
critical to the value of a business. Buyers will want evidence of
reliable revenue streams coming into the business. Aim
Start building more
diversity and, therefore, resilience into your customer base if
you're too reliant on a few major clients.
Look for ways to develop
more revenue streams by adding extra services or products, and lock
in stable revenues through customer loyalty programs and
6. Refine marketing
tactics that work
Buyers will want to know what
tactics have worked best for your business. Ensure you:
Document your marketing
strategy and your promotional tactics for the next 12
Demonstrate how you measure
all marketing to identify the best and eliminate what isn't
Identify what you're doing
to expand your markets and distribution channels.
List some still unexplored
areas that could offer potentials, such as a better website or
social media marketing.
7. Maintain tight
management will show up in your credit history – something you can
be sure a buyer will check out. Plan to:
Keep improving your money
management skills through cash flow and profit forecasts and budget
Show you understand and
monitor the key performance drivers in your
Demonstrate that you have
credit management under control and that your average debt
collection time is at least as good as the industry
8. Develop great business
Excellent business systems add considerable value to any
business because they allow you to spend more time working on your
business rather than in it. They also make the transition to new
ownership much more manageable. Make sure you:
- Prepare your business as if
you're planning to franchise it.
- Start building an operating
manual that documents all processes in simple, easy-to-understand
- Show how good systems enable
faster training and help staff cover for absent
9. Grow your
A buyer will see significant value in an established and
respected brand that differentiates your business from competitors.
- Work on developing a brand
that captures the essence and unique selling points of your
- Take any necessary steps to
enhance or reinvent your branding.
10. Protect your
Intellectual property can add considerable value to your
business, but only if it's well protected. Ensure you:
- Protect your logo and brand
as a trademark.
- Consult a patent attorney or
IP expert about protecting any designs, inventions, copyright
material, or other IP that will add value.
11. Build strategic
Strategic alliances can be significant sources of growth and
added value. Be sure to:
- Consider what additional
skills and resources you lack to exploit opportunities you're
- List and approach businesses
that could help you gain work that your business couldn't usually
- Contact businesses that have
more extensive distribution and sales channels.
12. Lock-in key
Dedicated and experienced staff can be a crucial asset in
buyers' eyes, especially if they've helped you create a valuable
business. Plan to:
- Ensure you provide
opportunities for career progression and use incentives to align
pay with the value that your staff creates.
- Make your business an
attractive place to work. Right working conditions and competitive
wages will help to retain skilled staff.
- Look for people who can
create value for your business and managers with transferable
skills who can help you build growth.
Consider consulting with a construction accountant for basic
construction bookkeeping or accounting insights to understand the
fundamentals of business financial management better. The knowledge
you gain will feel empowering and can help clarify discussions with
Your knowledge, combined with professional support, is the
best way to create a sustainable and valuable construction business
for years to come.
About The Author:
Sharie DeHart, QPA is the co-founder of Business
Consulting And Accounting in Lynnwood, Washington. She is the
leading expert in managing outsourced construction bookkeeping and
accounting services companies and cash management accounting for
small construction companies across the USA. She encourages
Contractors and Construction Company Owners to stay current on
their tax obligations and offers insights on how to manage the
remaining cash flow to operate and grow their construction company
sales and profits so they can put more money in the bank. Call
1-800-361-1770 or email@example.com