Scaling is an important part of any business, and the construction industry is no exception. However, scaling a construction business is no easy feat. It requires careful consideration of various factors and implementing specific processes and techniques.
Are you ready to grow your construction business but find that you’re overwhelmed with work already?
If you are feeling stuck and frustrated about how to move your business forward quickly and efficiently, there are steps you can take. In this blog post, we'll discuss scaling in the construction industry, three of the biggest challenges you may face when it comes to growing your construction business and provide five effective ways to do it right.
By implementing these strategies, you can increase your profits, strengthen your workforce, and utilise technology to ensure that your construction company is growing in the right direction.
For construction companies looking to increase their growth and expand their business, scaling is a key concept. Scaling is the process of increasing the size and scope of your construction business to meet increased demand, increase profitability and to better serve your customers. It involves making changes to operations and processes and ensuring they are sustainable and repeatable.
While building a construction business from the ground up can present several challenges, scaling a business can also present its own set of challenges. From the lack of a plan to finding the right people for your team, here are three of the biggest scaling challenges in construction:
It is essential to create a plan that outlines your goals and objectives as well as how you intend to achieve them. Without an effective roadmap, it's difficult to know where you're going or how to get there. This can lead to wasted time and money that could have been avoided if you had been able to see the bigger picture from the start.
As you scale, you need to hire the right people to help you manage the increased workload. When it comes to hiring subcontractors who are going to help with specific aspects of a project, like carpentry or electrical work for example, it's important that everyone involved understands what their role is before getting started so they don't waste resources later on down the line.
Finding the right technology to support your employees is a major challenge when scaling a construction business. Technology can help streamline processes, improve communication, and increase efficiency within the business. However, it is important to select technology that fits with your current operations and meets all your needs.
The good news is, identifying these challenges is the first step to solving them. It is here that the 5 foundations of scaling your construction business come into play.
To begin your growth journey with confidence and a solid strategic plan at your fingertips, take a look at these five foundations of growing a successful construction business. As you read, try to identify which stage you are in now and which one you think you need to work on the most.
This is a key area. Do you have a clear plan? Have you set out what your turnover targets are for the year?
It’s important to think about the profit margin you want to hit so you know what you are aiming for. For example, if you are aiming for a 30 gross profit margin, and a 15 net profit, what do you want to take out of it at the end of the year?
You might be tired of your subcontractors earning more than you, so have a clear goal in mind and know exactly what you want, this is called knowing your destination. If you know where you want to go and how you're going to get there, then you can put a plan in place.
Two questions you’ll want to ask yourself are “have I got a clear plan of action?” and “do I know how I’m going to get to my target?”
When going through business growth, sometimes you might need to change the type of client you’re targeting.
For example, when you were first starting out you might have been on sites like Checkatrade or MyBuilder but perhaps your construction company is a lot bigger now and those sites aren't suitable anymore, and no longer deliver the type of clients you are targeting, so you need to attract new clients. It could be architects or main developers you now need to attract. So bear in mind that attract changes as your business grows.
As you start to attract, you need to think about what your unique selling point is, this can also change according to who you’re trying to attract. So, identify what makes you different from others and why they're going to choose your construction company over another.
Once you’ve done that, you can build your brand around what makes your construction company attractive to those types of clients. Then ask yourself, what do I need to be doing on social media and on email to make sure that I’m attracting my ideal client to my business and getting more leads.
The third foundation you need to focus on is conversion. It's no good having a lot of leads coming in if you’re hardly converting any jobs.
If you’re finding that your conversion rate is low, it could be either that you haven't mastered your sales pitch, or there may be a correlation between your conversion and attraction, you might be attracting the wrong type of client and not qualifying them right in the first place.
Conversion is key and things you’ll want to focus on under conversion are things like your pricing; are you able to price profitably? Are you able to nurture those leads rather than just sending them a quote and then that's it?
Determine whether you have an actual process in place where you nurture those leads to help them to get to know and like your company. Make sure that your sales pitch is solid, that you are sending out an effective presentation, and that you know what to say in a sales pitch to close that client.
Once you have new leads coming in, you’ve converted them and have a full pipeline with work for the next six months or so; the crucial next step is to deliver.
Delivery is crucial if you want to drive profits into your construction business. You will need to consider what the structure is for your business to successfully deliver. Potentially you’ll need to have a hierarchy in place so that those under you can deliver for you and as a construction business owner you can leverage other people's time. That may involve putting project managers in place and having your admin in order so that you know who's doing what in the business.
Structure is important, so you haven't got crossovers, and everyone knows exactly what their role is. When you have a good structure in place you can think about your on-site operations and look at whether you can set up the ideal site and replicate that every single time.
This will involve working out how to get your onsite team to deliver efficiently so that every day everyone knows exactly what they're doing, they've got targets and they're delivering the way you want them to.
Additionally, your off-site systems need to work efficiently, ensuring the back end is sorted in the office, the office team can order materials on time, deal with the programming, keep on top of the numbers and paperwork and chase debt.
The last thing you want to focus on is Scale. Once you have nailed the first four then you can think about scaling your construction business. In essence, scaling without having the foundations in place is setting yourself up for failure.
Scaling is about moving you up in the structure, so you measure and manage as a leader. That means you sitting at the top, getting your reports, and knowing exactly what's going on in the business. This way, you can have a better overview of the business and stay in control, without having to be too hands-on and caught up in the day-to-day nitty-gritty stuff.
Therefore, you want to make sure you’re attracting super teams, bringing on board the right tradespeople and good in-house teams too like capable project managers and admin staff. Once you’ve got great people on board it's imperative to gain their loyalty, so they stay with you.
Although scaling your business can seem like a difficult task, fortunately, modern technology and software can help you scale efficiently and effectively. By using construction software, you can automate processes, create streamlined workflows and better manage resources.
This not only makes scaling easier but also helps ensure that construction projects are completed on time and within budget. In addition, these tools allow for better communication between all parties involved in a construction project, which can lead to improved customer service and satisfaction.
Successfully growing your construction business requires planning, attracting, converting, delivering, and scaling. The key is to be clear on which one of the five foundations you should be working on next. By following these five foundational elements, you can set the stage for the long-term growth and success of your construction business.
Q1) What does scaling mean in construction?
Scaling in construction is the process of growing the operations and output of the business while maintaining a successful rate of profit. It involves optimising processes, improving efficiency, and enhancing customer experience.
Q2) What is the main purpose of scaling?
The purpose of scaling is to create, deliver, and capture value to ensure the profitable growth of your construction business.
Q3) Why is scalability important in construction?
Scalability is a key concept in construction as it enables construction companies to adapt and grow with changing conditions and demands and remain competitive in an ever-changing industry. It allows construction business owners and leaders to quickly adapt to new customer demands, technological changes, and more.
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