574: What Every Contractor Needs To Know About Successful Construction Companies

Contractor Success Map with Randal DeHart | Contractor Bookkeeping And Accounting Services

This Podcast Is Episode 574, And It's About What Every Contractor Needs To Know About Successful Construction Companies

Small construction businesses have several characteristics that distinguish them from larger firms. These characteristics include having a limited workforce, smaller revenue streams, and a more localized focus.

They are often run by the owners themselves or a small team of employees. They tend to have a more personal approach to their work, as they are usually more involved in every aspect of the project. Due to their size, they are often more flexible and able to adapt to market or project scope changes. However, they may also face challenges such as limited resource access, difficulty securing financing, and increased competition from larger firms.

Over the years, we have had many successful construction clients. The seasoned ones have become lifelong friends and are now retired, living according to their terms. And several are still working according to their schedule with quality, high-paying clients.

Is it still possible to succeed in this industry, given the state of the economy? Regardless of government or environment, what I find common among them are these characteristics:

1. Owners leading by example

The construction company owner or project manager leads by example. They are usually the first to arrive and the last to leave. The owner knows everyone by name, and their presence is unmistakable. They show a strong commitment, setting the standard where they work. This commitment should be easy to understand. After all, if they don't work hard in their own company, how can they expect anyone else to take their business seriously?

2. Simple business structure

They operate a simple and open business structure, encouraging easy access to the owner for every employee. They value the contribution of each employee, many of whom are allowed to influence aspects of the construction business that would ordinarily be denied to them in a large hierarchical company

3. Communication among employees

Staff receive information as soon as the owner does. Goals, problems, and concerns are discussed openly. Feedback on issues is encouraged, and staff are asked to contribute their ideas for improving and overcoming difficulties. It is often this aspect of open communication that staff appreciate the most; it is unique to small construction businesses, whether you have only one or two staff.

4. The crew is carefully chosen

Staff is recruited very carefully because the contractor owner(s) recognize that they are the lifeblood of any small business. Staff are hired because their knowledge, skills, and abilities will benefit the organization rather than because of friendships or family relations. They are carefully chosen, nurtured, and trained to help the crew members and the organization from the relationship.

5. Staff commitment and loyalty

All staff are very committed and loyal. Good performance is rewarded with praise, extra responsibility, and money—poor performance is not. Poor workers are consistently removed as they upset the rest of the team. Organizations whose staff show optimum commitment and loyalty have a source of competitive advantage that is hard to copy or beat.

6. A unique service (or product delivery that goes with the service)

Most successful construction businesses have unique products or services, such as designs, products, systems, or some other aspect that sets them apart. This uniqueness is an essential source of competitive advantage and one that many companies work hard to sustain, adapting and innovating their products or services as their competition catches up with them.

7. A specific customer focus

Successful small businesses specifically focus on their customers and clients and are geared to supplying them with exactly what they want. This focus means adopting a market-led approach, with the owners and their managers consistently looking for ways to solve their client's problems and improve their products to match their client's requirements.

8. Prompt follow-up

On occasions when an inquiry or complaint is received, successful construction company owners actively follow up and solve them as quickly as possible. The results are promptly reported back to the client or customer, and in the case of complaints, measures are put in place to reduce the likelihood of similar issues reoccurring. Successful small businesses view complaints and problems as opportunities for growth and improvement.

They work with a construction accountant

They hire the best people to do their job in-house or outsourced. There are several valuable lessons that construction business owners can learn from accountants, and the successful ones know and appreciate the value they bring to their business.

Construction accountants are experts in financial management in their industry. They can help trade business owners understand their company's financial health, identify areas for improvement, and develop strategies to increase profitability.

Additionally, construction accountants are skilled at analyzing data and making informed decisions based on that data. They help construction business owners track their progress toward goals, identify trends and patterns in their financial data, and make data-driven decisions to benefit their businesses.

Since delegating their financials to us, our clients have told us that they have more time to focus on what they're good at and love to do. We help them stay compliant with tax laws and regulations, which is one of the common causes of a business's owner stress come tax time. By working with us, you can ensure you meet your tax obligations and avoid costly penalties. You can also gain valuable insights and support that will help you grow and succeed in the long run.

Final thoughts

Embodying these traits and improving your practice are essential to succeeding in your construction business. A solid plan that clearly understands your target market and competitive advantages and a detailed financial system are also necessary. Focus on building meaningful relationships with clients and suppliers, providing high-quality work, and staying up-to-date with industry trends and technology.

Additionally, it is crucial to have a skilled and reliable team in place and continuously invest in their professional development. You can build a successful and profitable construction contracting business with dedication, hard work, and a strategic approach. And, of course, a construction business accountant who will guide you along the way.

PS

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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. 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 [e-mail]