Being an employer comes with great responsibility, the success or failure of your business doesn’t just affect you, it affects the livelihood of your people, the people that joined you on your mission, that have been with you in the trenches and that put their blood, sweat and tears into helping you build your business. One ill-informed decision, action or inaction can bring it all down in the blink of an eye; this is especially true for the employers operating in my beloved Construction Industry.
In construction, where profit margins are notoriously low and cash flow monopolised by the larger contractors who dictate harsher than harsh payment terms, the demise of smaller contractors and young construction upstarts, is almost inevitable. Hell, even the big boys aren’t immune, just ask Carillion and the hundreds of employees who lost their jobs in that shit storm. Construction is a minefield where even the ‘Bear Gryrlls’ of the industry might fail to survive. The stats don’t lie. Every year the construction industry consistently has one of the highest numbers of insolvencies of all industries.
So how can you avoid a cot death of your construction baby and make it out of infancy and into its adult years and beyond. Here are the three main factors:
1. Have a clear why.
Every construction company that is well established and has achieved long term stable success has a clear why. That is, the reason they do what they do i.e. their mission. Your why attracts the right people to your mission like a magnet and because they believe in your why they are fully invested in what they do not because of the promise of a bonus payment but because they are inspired. An inspired team working towards a common goal is a powerful force and one in which you should try your utmost to cultivate. Understand why you started your construction company and build everything around that why and watch your people and your construction business thrive. For example my why and the reason Zoomtal exists is to “help growing construction companies reach their full potential by improving the lives of construction professionals” This why drives everything we do and say.
2. Be Selective
As a young and ambitious construction company it’s easy to fall into the trap of bidding for every contract opportunity you come across but this is one of the worst things you can do as a contractor in construction. Most of the times in Construction we sell on price and squeeze our profit margins so much that we’re losing before we’ve even started the project. We naively think the higher our turnover the better, but turnover is a vanity metric and it’s profit that is king and profit that we need to focus on. Don’t fall into the trap of winning work on price. Use your estimators and your sales team wisely and only bid for projects where your expertise and not your price will make a real difference.
We must also be selective in the clients we choose to work with. Like projects, all clients are not made equal and you should aim to work with the best clients only. By best, I don’t mean the biggest or most prestigious. I mean the ones that pay you on time and pay you what you’re due. The clients that you look forward to working with and go the extra mile for and the ones that make you feel like you’re part of the team and the wider project mission. Don’t hesitate to trim your clients, get rid of the toxic ones that mess up your cashflow and lower your morale and focus on nurturing your relationship with your best customers and building relationships with new ones. Narrow your focus and define your ideal customer and only go after the target customers that fit your definition.
3. Be commercial
Having an established and well aligned commercial team is a huge factor in the success or failure of a construction company. The commercial team should be the life blood of all construction businesses. Beefing up your commercial team should be a high priority for any director of Construction Company that doesn’t just want to grow but that wants to grow right. You need great estimators working with construction savvy business developers to win the work at the right price, Quantity Surveyors to help maximise profits, drive cashflow, mitigate losses and protect your commercial position, planners to help you properly programme the works and establish entitlement of extensions of time and claims and dispute specialists for when things go tits up. Above all you need a flexible means of procuring the right skills at the right time and the ability to be able to call on and call off the skills as and when needed.