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
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