Growing Your Construction Company from Small to Medium
No matter your industry, taking your business to the next level is no easy task. The hyper-competitiveness seen in virtually all professional industries has grown, and will likely continue to grow. The construction industry is no exception to this, even with all the industry-related obstacles like labor shortages, heavy equipment shortages, material pricing, and more.
Growing your small construction company takes hard work, dedication, and a plan. As such, to grow your construction business from small to medium, the right steps must be taken.
As a business owner, there are some common tips to follow and strategies to implement to give your company the best chance of succeeding. To help facilitate this growth, here are some professional lessons and useful pieces of advice that you should apply to your small construction company that's in pursuit of becoming medium-sized:
- Build the Right Team
- Create a Strong Network of Connections
- Effectively Market Your Company
- Prioritize Your Strengths
- Use Rental Equipment for Bigger Projects
- (Re)invest in Your Business
- Set SMART Goals
Build the Right Team
First and foremost, if you want to grow your small construction company into a medium-sized business, you can't do it all on your own.
Being perhaps the most crucial part of growing your small business, building the right team can be tough. You need to surround yourself and your business with individuals who are equally trustworthy, hardworking, and dedicated. In order to find these coveted employees, you have to use your resources effectively.
First, think of people that you've previously worked with who might be open to continuing a professional relationship by joining your company. It is important to note that this kind of recruitment should not be "employee poaching" so try not to steal anyone's employees, as this hiring technique can be considered highly unprofessional and problematic to the image of your company. However, hiring people you already have a relationship with and you know have the skills can be the start of a great team.
Next, there's no shame in using your current network for your recruitment efforts. Ask some connections in both your social and professional networks if there are any individuals who they think might be a great fit for your growing company or want to work at a smaller construction company to build up their skills and get valuable experience. This method could lead to the addition of the strongest pieces of your team and any recommendations from your peers will reflect back onto them.
These don't have to be recommendations for on-site hires either. It could be any up-and-coming talent that can work in office administration, marketing, bid management, equipment operator, or any other role at the company. If you take the approach that every hire you make at your company should be with the goal of leading to more business or more efficiency, you will build a great team.
Next, try using recruitment services like Linkedin, ZipRecruiter, and local talent agencies could be beneficial. When using these avenues, just be sure to carefully select candidates and properly interview them in order to gain a good understanding of what the individual is truly capable of in a professional setting.
The last method that might be an interesting experiment is to create an apprenticeship program at your company. By doing this, you can work with colleges and trade schools to find good, young, motivated, and trainable talent for your company. This young talent will also be able to bring new and refreshing ideas that will lead to modernizing the business, which we will get into more below.
And remember, as the old saying goes, "teamwork makes the dream work".
Create a Strong Network of Connections
Yes, you must build a strong team to grow as a small business, but you also need actual work to do and the means to do it. To find and execute quality and meaningful work, building a strong network of connections is key.
There are a lot of moving parts when it comes to executing your work. That said, creating a strong network of connections throughout all facets of your business will make managing those moving parts easier. In turn, your company will be able to grow with fewer headaches and you won't have to run around trying to find people and companies that suit your needs, you'll already have them.
Creating connections with individuals like architects, property managers, developers, general contractors, and engineers will allow you to create more business opportunities. This is because they are often the people in the industry who are most likely to be in charge of the hiring and managing of construction projects. This makes them useful resources and connections because any familiarity they have with your brand and company in a positive light will give you a leg up when it comes to working with you and giving you a chance.
Meanwhile, creating valuable connections with suppliers, whether it be for tools, equipment, or materials, can help you execute the completion of quality work on the job. This is because you will likely be aware of industry trends such as equipment and material shortages but also because having a good professional relationship with suppliers can lead to better deals and cost savings, something that everybody likes.
As the saying goes, "your network is your net worth".
Effectively Market Your Company
Every company is different, so the advice below might not relate directly to what you're working on right now, but could be something to consider in the future. After all, the methods and resources you have to grow your business are ever-changing but trying new techniques and tactics is never a bad idea.
That said, and as the title of this section suggests, you need to focus on effectively marketing your company. Although you may have heard of some popular marketing tactics like SEO and Facebooks Ads, these methods may not be right for your needs. This isn't to say that SEO and Facebook Ads are ineffective, it's just to say that they aren't the "end-all-be-all" of marketing. Again, as a small construction company in pursuit of becoming medium-sized, a more effective method of marketing might be to focus on creating a strong network of connections, as detailed in the previous section.
Furthermore, although the construction industry is seeing a lot of technological innovation taking place, there's still room for the old-school methods that the industry was built from. That said, when it comes to marketing your company, you may even want to consider trying more traditional methods of advertising. For example, a print-media method of advertising like direct-to-consumer mail with brochures and pamphlets could be an effective way for your company's logo, name, and services to physically enter the hands of potential clients. Even door-to-door sales could work if you're clients are often personal homes. Another more grassroots effort could be selling ads in industry-focused magazines or working with local industry associations, especially if you're looking to be more in the B2B construction market. Overall, the marketing effort you chose to take should be directly related to the clients you're trying to serve.
All that said, it's still worth taking a look at marketing your company through online methods as well. Running digital advertisements on Facebook also has its benefits; you can reach a much wider audience, you can run different campaigns, you can have a more accurate outreach to your target market, and you can drive traffic directly to your website. It may even be worthwhile to hire a specialist to help with your digital marketing campaigns, seeing that these methods of advertising are complex and require technical knowledge.
To reiterate, although this section isn't telling you exactly how to market your company for growth, it is trying to say that you need to carefully choose your method of marketing. Don't advertise your company by using a certain marketing tactic just because it's popular. Market with meaning and be where your audience is.
Prioritize Your Strengths
Although you're in the process of growing your company, it's still a good idea to play to your strengths.
Growing your small construction company to a medium-sized company doesn't necessarily mean expanding the type of work you do. On the contrary, it's a better idea to continue doing the quality work that you've been doing. You want to become known for executing quality work within your specific niche and become the go-to business in your region for that work.
There are many ways that you can go about prioritizing your strengths. First, pitching your company's niche services to general contractors in your area is always a good way to become known for your strengths and potentially acquire more work. Next, try to hire talented individuals that have experience in your specific type of work, as well as those who are eager to learn. Finally, acquire jobs that fit your niche services but are at a larger scale. To grow, sometimes it just means hiring more employees to be able to scale and do more jobs or bidding on projects that provide bigger contracts.
Use Rental Equipment for Bigger Projects
Owning equipment is expensive and takes up a lot of space, especially if it's heavy machinery. And with the price of the material used to make heavy equipment, supply chain issues, and the cost of holding inventory, it's not going to get cheaper. This doesn't even factor in the transportation costs that come with moving that equipment around from job site to job site or maintenance or insurance.
With that said, if executing on bigger projects is your goal for growth, you might need to do more difficult and large-scale work, requiring you to have access to more heavy equipment. If that's the case, something very effective and cost-efficient a growing construction company can do is use rental equipment in your area.
The case for renting equipment is pretty simple: You're only using it when you need it, you don't have the regular costs of maintenance and upkeep, and you don't need storage space. Owning heavy equipment might really only be necessary once every job site you work on requires the same machinery over and over again.
That said, choosing the right rental equipment is a challenge in itself. Not every job and terrain may require the same equipment, which is why it's always important to know your environment. However, using rental equipment is a cost-effective way to execute a larger-scale project without having to fully commit to the purchase of expensive machinery. In turn, with the use of rental equipment, larger projects can be finished and growth can be made without the long-term costs.
At DOZR, we make renting heavy equipment easy with transparent pricing and access to over 15,000 suppliers across North America. If you're wanting to rent equipment, there's no better place to find it than on the DOZR Marketplace. Search now for equipment and attachments near you without all the overhead costs.
(Re)invest in Your Business
All in all, you have to be prepared to reinvest in your business. A company's growth cannot happen without sufficient capital and cash flow. In times of growth, keeping on top of your finances is paramount to either your success or failure.
As an owner and entrepreneur, one of your biggest goals is to work out your budget. That means understanding where and when your company will need to increase or decrease spending within a certain area of the company to grow whether that's marketing, recruitment, equipment, materials, etc. This is one of the hardest decisions because you're most likely already under tight constraints as a small business and need to take calculated risks on what you put your money towards. However, these types of hard choices are necessary for the growth of your business.
Also, by taking bigger jobs that put more revenue in your pocket, it will hopefully lead to having more access to money that can be reinvested into any of the above areas.
Set SMART Goals
Growing your small construction company is your desired outcome but there's no chance of growth if you don't set SMART goals.
SMART goals are; Specific, Measurable, Achievable, Relevant, and Time-Bound. The reason why this is so important is that you must be able to track your growth to know if you're making any progress at all. A great example of a SMART goal for a construction company looking to grow in terms of size and revenue could be as follows; In order to grow my business from $500,000 in revenue to $800,000 in revenue, I need to work on 36 projects in 2022, up from 27 last year. This is just one of many ways a SMART goal would look so it's worthwhile to do some research on SMART goals before taking any further steps.
Growing your small construction company to a medium construction company will take time, hard work, and persistence. But if you consider even just some of these steps, it's guaranteed that the process will be with fewer headaches along the way.