Feb 23, 2024
This Podcast Is Episode 564, And It's About Common Construction Business Pitfalls And How To Overcome Them
Construction Company owners like you have probably experienced
life-changing events in the past few years, as many of our clients
did. Are you struggling to keep your construction business afloat?
Do you find yourself facing the same issues over and over again?
It's common for construction businesses to meet various challenges,
but if you're not addressing them properly, they can quickly become
pitfalls.
1. Poor Cash Flow
Management
One of the biggest challenges for construction businesses is
managing cash flow. You need cash to buy materials, pay workers,
and keep your business running. However, you may be in a cash
crunch if you don't correctly deal with your cash flow. To avoid
this, you should create a cash flow forecast and regularly update
it. This will help you anticipate cash flow issues and take steps
to address them before they become a problem.
2. Failure to Adapt to
Market Changes
The construction industry is constantly changing, and if you
don't adapt, you may struggle to keep up with the competition. For
example, if new regulations are introduced, and you don't adjust
your business practices to comply with them, you may lose out on
business. Keep an eye on industry trends and be willing to adapt as
needed.
3. Poor Project
Management
Construction projects are complex and require careful planning
and execution. If you don't manage your projects correctly, you may
experience delays, cost overruns, and other issues. Ensure you have
a solid project management plan and that everyone on your team
understands their role.
4. Lack of
Communication
Communication is vital in any business but especially
important in the construction industry. Your team must communicate
effectively to ensure projects are completed on time and budget.
Ensure everyone on your team understands the importance of
communication and has the tools they need to communicate
effectively.
5. Failure to Invest in
Technology
Technology is transforming the construction industry, and if
you're not investing in it, you may fall behind. For example,
construction management software can help you streamline
operations, reduce errors, and improve communication. Explore the
different types of technology available and determine which can
help you run your business more efficiently.
6. Not
Delegating/Outsourcing Tasks
As much as we all might like to think of ourselves as
superheroes who can handle anything and everything, the truth is
that we're all human. Sometimes, even the most capable among us
need a little assistance, and that's nothing to be ashamed of.
Knowing when to delegate tasks can be one of the most important
skills you can develop as a leader or even a responsible
adult.
Knowing when to ask for help – whether from family members,
friends, co-workers, or specialists – can save you time, reduce
stress, and improve the quality of the result. So, if you feel
overwhelmed by a project or task, don't hesitate to ask for help.
It might just make all the difference in the world.
7. Listening to Bad
Advice
When you're a small construction business owner, you get used
to people giving you advice. While the advice is almost always
well-intended, it's not always good.
These are usually the top two tips that well-meaning
people give to construction business owners:
- Never turn down a paying customer
Money is a good thing. But that doesn't mean you should say
yes to everyone who enters your door. Not every person who
approaches you is suitable for your business. If your gut tells you
something is off—maybe the person is very demanding or constantly
questions your prices—it's in your best interests to say no.
It's not necessarily about the client, either. You might be
very busy, and taking on another project means you'll give them
subpar service or use your valuable personal time.
If possible, turn them away graciously by explaining that
you're very busy and cannot give them the attention they deserve.
Consider recommending another business for them that they could
turn to.
Don't say "yes" to everyone who walks through the door just
because they're a paying customer.
- The customer is always right
It's often in your best interests to address an unhappy
customer and their needs. But some clients will never be happy, no
matter what you do, especially in the construction industry. It's
okay to try to make things right with them, but you risk word
getting out that you'll bend backward to make customers happy. That
encourages more unhappy people to come your way. Or it encourages
people to find reasons to be disappointed so they can get
additional benefits from you.
If it's a normal part of a routine that customers constantly
complain and get some reward, you need to examine your business. If
the customers are correct, then it's time for some changes. If they
aren't right, stop treating them like they are.
When someone offers advice on your construction business, ask
what credibility they have to share their insights. Have they owned
their own business? Do they know the industry you work in? Have
they learned lessons you could learn from? Was their business
similar to yours?
Final
thoughts
Running a construction business can be challenging, but with
proper planning and execution, you can overcome common pitfalls.
The truth is that owning a construction business means you must
continually adapt and innovate to thrive.
Remember, just because someone offers advice doesn't
necessarily mean they are relevant to you. And just because they
provide the advice—or just because it is a common saying—doesn't
mean you have to follow it.
Contractors like you need results - not advice. Let me know if
you want to discuss how you can operate and grow your construction
company.
PS
We offer free resources to
help you save time and money that you can download and print
now.
About The Author:
Sharie DeHart, QPA, co-founded 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 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