Like other industries, construction companies feel the negative effects of the recent economic downturn. A decrease in new home construction and remodeling projects means contractors work less and make less money. There is hope, however. As the Great Recession recedes into history, the future holds bright possibilities for construction business growth.
Hurricane Sandy might have been inaccurately predicted by scientists because of climate change deniers, but the devastation it wrought promises to create industry job growth, particularly for companies on the East Coast. The clean up and rebuilding process will take several years. Local construction companies can expect a post-hurricane economic boost, but companies across the country can also create growth when they adapt their business plan, services and expenses for today’s economy.
Rework the business plan
In the past, construction companies could count on an overloaded schedule. Today, people choose to spend their money on living expenses rather than on new home construction, renovations or repairs. Contractors must reevaluate their business plan, making time to inspect the services offered, potential market, financial holdings, mission statement and future growth plans. Tweaking the entire business plan accommodates today’s economy and prepares the company to launch into the future successfully.
While reworking the business plan, owners typically analyze expenses. Successful business owners make cuts as needed and plan to grow wisely. To decrease expenses, the company could liquidate unwanted or unused equipment, tools and inventory. Additional cuts include working from a home office or placing employees and subcontractors on temporary or permanent leave. These overhead reduction strategies are examples of wise expense management.
Expense management also extends to construction businesses growth. Owners carefully limit impulse purchases and save money. They purchase necessary tools like excavators at auction and rent rather than buy infrequently used tools. Instead of hiring additional employees, current employees learn new skills. These and other wise expense management tools demonstrate expense management and increases profitability over time.
With a reworked business plan and managed expenses, contractors are ready to focus on relationships and their loyal customer base. Many business owners mistakenly focus on creating satisfied customers. In reality, satisfied customers will hire whomever offers the best price. Loyalty, not satisfaction, is a more accurate indicator of a company’s customer base. Contractors can evaluate loyalty by asking their customers two questions: “On a scale of 1 to 10, how likely are you to recommend our company to a friend?” and “If you gave us a score of less than 9, what could we change to earn a 9 or 10?” Adaptive business owners make an effort to implement the suggestions they receive.
Improve the services offered
Customer suggestions might include changes in the services offered by the construction company. Instead of focusing solely on new home construction, for example, older customers might need assistance renovating their homes for retirement. Successful companies adapt accordingly to their customers’ needs. Likewise, a company eager to navigate economic pitfalls develops an ongoing relationship with customers. They walk through the home and create a project schedule. The plan prioritizes tasks over the next few years. This strategy ensures ongoing work for the contractor, time for the customer to save for each repair and a trusting, loyal relationship based on mutual understanding.
Attract new business
Successful companies cultivate loyal customers while attracting new customers. They overhaul the company’s marketing plan and look for strategies that increase visibility. The new plan might include a heightened social media presence or trade show attendance. Effective marketing is important for business growth and its cost should be factored into the company’s budget as a necessary expense.
Although the construction industry faces difficult financial challenges, the future looks hopeful. Companies will benefit as they adjust their business plan, expenses, services and customer relations for maximum growth in an improving economy.