Oct 20, 2023
This Podcast Is Episode 546, And It's About Seven Sure-Fire Ways To Grow Your Construction Business
Once your construction business is up and running, it’s essential not to rest on your laurels. Successful business owners always look for ways to grow and maximize their profits. We’ve compiled a guide and checklist to help you identify ways to get the most out of your contracting company.
1. Grow your
sales
Contact your best clients.
One of the easiest ways to increase sales is to sell more to
your existing clients. For example, you could try contacting every
customer and offering a complementary product or service they might
need now. You could also determine when clients need maintenance
checks.
Create a client loyalty scheme.
You’re looking to create a customer care program using
customer contact software and implementing a customer loyalty
scheme.
Commence a contact nurturing program.
Can you make more effective use of your database of customers
and clients by maintaining regular contact through newsletters
(physical or email), phone calls, personal visits, or attendance at
conferences and trade fairs? Do you advise them of special offers
or tell them about any products and services they have not
previously bought?
Develop a social media campaign.
If you’re not on social media, now’s the time to start. It’s
one of the most essential marketing tools and one of the cheapest
(and often accessible).
Run webinars/demonstrations.
By doing this, you’re positioning yourself as an expert in
your industry, creating brand awareness and customer trust. It’s
also a great way to network among industry peers and meet potential
customers.
Attend and exhibit at trade shows.
These are important for the same reasons you’d run webinars
and demonstrations, but trade shows also offer the chance to get
your product to new customers, increase word-of-mouth advertising,
and add more to your customer database.
Cross-sell complementary
products/services.
Learn the fine art of cross-selling, which suggests to
customers that whatever they’re buying from you would be of more
value if they purchased a complementary item.
2. Grow by developing
new services
Research new ideas and see if you can update current
services.
You’re looking to identify any new products or services that
a) complement those already existing and b) your customers have
indicated they’d be interested in buying them from you. Any new
product needs to complement what you already sell, not be a
substitute. Otherwise, there is no growth in sales.
Check financial feasibility
It’s essential to ensure there’s a demand and that you can
create the product. Diversifying into new products is a medium to
high-risk growth strategy because new products and services cost
time and money to source or develop.
Test with customers
From friends and family to more formal focus groups, testing
your product in your target market and recording and analyzing the
results is essential. You’ll be able to determine if the demand
exists and if there are changes you could make to the product or
service before taking it to market.
Protect intellectual property
The last thing you want is your brilliant idea and all the
work that went into creating it nixed at the last minute because
someone else beat you to the patenting, copywriting, and
trademarking. Equally, you don’t want to steal someone else’s idea,
so protect your IP and ensure you’re not breaching anyone
else’s.
3. Grow by improving
profits
Improve efficiencies
Technology’s great here – there are many ways you can use it
to make your processes more efficient. So review all your systems
and look for ways they can be improved. The better the system, the
more efficient and productive it will be. Look at your customer
base. Do you have habitually late or non-paying customers? It might
be time to ditch them.
Increase prices
Increasing prices widens your margins and raises the cash you
might need for business growth. You should always seek to increase
your prices over time to improve your profit margins and keep up
with inflation. Make sure you communicate to your customers the
reasons for the price increase. It’s essential to convince your
target market that your products or services are worth the
additional cost, so consider ways to justify a price increase and
focus on the benefits.
Streamline debt collection so there’s more cash coming
in.
Make sure you’re always paid on time. If your customers owe
you money, the faster you can obtain it using effective collection
tactics, the better. Ideally, you want to reduce the chance of bad
debts and pressure on your business’s cash flow.
4. Grow your
capability
Assess your capacity to handle expected
growth.
This is especially important if you need additional equipment
or space. Capacity building is about working on your business’s
ability to do more internally – such as speeding up production or
improving your systems and processes.
Retrain current staff if your business’s growth
requires new skills.
Exploring the available training options is a good idea if
your current staff would benefit from retraining instead of taking
on a new employee with those skills. It’s crucial to discuss
retraining with your team to ensure they can fit it into their
schedules.
Review your technology
What you’re looking to do is determine if you need to upgrade
internal systems or software. Ensure that your systems can
administer your business and that its sales can handle expected
growth.
5. Grow by updating your
construction business model
Develop a strategic alliance to gain shared
advantages.
Consider entering a strategic alliance with successful
distributors or complementary businesses, as you may be able to
expand your business’s reach and win new customers more
cost-effectively.
Purchase a competitor
Not only will you expand your customer database, but you’ll
also get access to their staff and suppliers. Odds are that your
competitor has unique strengths your business can benefit from.
You’ll be able to open up to new and diverse markets as you add
more value for your customers. And, because you already know the
industry, acquiring a competing business should be a safe
investment if everything checks out once due diligence is
complete.
6. Grow staff
expertise
Investigate training courses your staff can
attend
As your business grows, so should your staff expertise. You
and your employees must be well-trained in how to use them. Aside
from in-house training, look at educational institutes and the
courses they offer to determine if any of them complement your
business.
Run in-house seminars on new
technologies.
If you’ve installed new software that your staff will need to
use daily, ensure they’re up to speed by training them in-house.
You might want to get a specialist on the new software to conduct
the training, or if you’re an expert, you can do it yourself. This
applies to any new technology you’re introducing to your
business.
7. Grow your cash
reserves
Free up internal cash.
You want to avoid seeking a loan or outside investment here.
Reduce the number of withdrawals you’re making, or look at leasing
equipment only when needed instead of buying it. If you can achieve
growth without borrowing to do it, so much the better.
Weigh up the risks versus rewards to assess whether
you need a loan.
It could be that there’s no other option than to borrow money
to finance your business growth, but you should carefully consider
whether it’s worth it in the long run.
Final
thoughts
Successful construction businesses don’t rest on their
laurels. You should always be on the lookout for ways to add to or
improve your service, which is where continuous research and
development is essential.
Remember, growing a business takes time and effort, so stay
focused and be patient.
About The Author:
Sharie DeHart, QPA, co-founded Business
Consulting And Accounting (Fast Easy 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. She offers insights on
managing 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 sharie@fasteasyaccounting.com