Mistakes Your Construction Business Should Not Make

Posted on Jun 26 2017 - 5:39pm by Editorial Staff

The construction industry is a major contributor to the U.S. economy and provides employment for more than 6 million employees. It is estimated that there are more than 650,000 employers within the US construction industry and around $1 trillion worth of buildings are erected each year.

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The construction industry suffered greatly during the last recession but has been steadily rebuilding ever since and now many new construction businesses are launched each year. As with all new businesses, some of these do not make it past their first year. However, there are plenty of things that you can do to avoid the mistakes that could cause your construction business to fail.

Failing to write a business plan

This applies to all businesses and not just construction. In every plan, there should be a statement of your basic business concept, the service that you provide and how you will make the business succeed. You need a clear list of specific goals in terms of growth, development, and profits. They need to be achievable and clear so that you, and anyone else who may want to invest in your business, can check how things are going. Each goal needs a timescale.

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Your business plan must include a comprehensive description of the services that you provide and why you are uniquely placed to provide those services in your niche. Finally, there should be something about you and the strengths that you bring to the business as well as a detailed list of your employees. Most business plans are around 15 to 20 pages long and include tables of statistics to support your claims.

Business plans do not last forever. You should continually update and revise your business plan as your business develops.

Starting your business with insufficient money

Construction businesses cannot be started on a shoestring, in that way they are very different to many other businesses. This is because you will need a lot of expensive equipment to provide a service to your clients. Construction plant and equipment is very costly even when you buy used machines. There are also strict health and safety laws relating to construction and you will have to comply with these. You will need to provide personal protective equipment to your workers and devise safe systems of work. This is not optional.

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For this reason, it is very unwise to start off a construction business entirely on borrowed money. It may be very hard for you to make enough profit in your first year to keep up the loan repayments. The interest payments alone could absorb all of your cash flow, leaving you nothing to invest in the business or to support yourself.

It is best to save up some money before you start and then to invest this money in your new business. At least 20% of the total start-up costs should come from your savings.

Forgetting about the rules and regulations

Many small business owners make the mistake of thinking that rules and regulations do not apply to them. This could not be further from the truth. It is your duty to find out what laws apply to your sector. There may be special licenses or registrations that you need to apply for depending on where you are operating your business and what service you provide. You can find out more about this from trade organizations and government websites.

You will also have to comply with health and safety and tax laws. If you don’t, the penalties can be severe and you could end up losing your business.

Not upgrading and repairing equipment

All construction businesses rely on good equipment. If you fail to regularly service, repair and maintain that equipment it will let you down just when you need it. This will result in you failing to provide a satisfactory level of service to your clients. You may even end up damaging their property or an adjoining property or causing an injury.

Investing in high-quality Gehl parts: Skid Steer Loader Parts, Excavator Parts, Telehandler Parts allows you to avoid all of these problems. You will receive impeccable customer service and support so you know that you are getting exactly the right part for your machine. You also get rapid delivery so you can get back on the construction job quickly without upsetting your client.

In addition to repair, you should upgrade to new machines and technologies whenever you can. This gives you cutting-edge technology to provide a top quality and efficient service. It may save you money in the long run.

Trying to please a bad client

Obviously, client satisfaction is key part of maintaining a successful business but you have to accept that you cannot please all of the people all of the time. There will be some clients that you simply cannot please despite your best efforts. It is important to recognize this and walk away from the contract. Some clients make very unreasonable demands and you may end up losing money on the job. This does not make for good business.

These clients put a lot of pressure on you. They take your time away from providing a service to other clients and this is not fair and does not make good business sense.

The construction business is very vulnerable to this sort of client. It can be hard for you to walk away because you may have invested a lot of time and used a lot of materials on a job. You can try to avoid this happening to a certain extent by submitting a clear summary of what you will do and how much it will cost. This can prevent misunderstandings further into the contract. In some cases, you may need to get your lawyer involved to recoup some of your costs.

Taking on too much work

It can be very exciting when the work starts rolling in but it can also be overwhelming. Don’t make the mistake of taking on too many jobs and then letting clients down as this will damage your reputation. Be truthful when you communicate with the client. Admit that you cannot start a for a few weeks. Remember that you may only have one set of machinery and that this may have to be moved from one site to another. This takes resources and ties up your employee’s time.

Choose what jobs you agree to undertake. Every time you are offered a job, ask yourself if you have the expertise and the equipment to complete it safely and efficiently. If the answer is ‘no’ it is best to pass it on to someone else who can do it properly. You could build up a relationship with another construction firm where you pass on suitable clients to each other. This can be very useful for both of you.

Ignoring your customers

Client communication is a vital aspect of building a successful construction business. You must take the time to understand exactly what your client wants. Then you need to be truthful with them about any problems that you have encountered as the job progresses. Construction jobs frequently go wrong. Building work can be very unpredictable. You cannot foresee what you will encounter once the job is underway.

Make it easy for clients to contact you. If they leave a message, call them back quickly. Respond to emails within a few hours. This will reassure them about your service. If they have concerns about the job it may be best to meet them in person, on site, if at all possible. Do not ignore what they have to say but remember that you are the technical expert. You may have to explain to them, in terms that they can understand, why their particular request is not possible.

Be prepared to be flexible with the service that you are providing because clients often change their minds once the work is underway. Build some extra time into your planned schedule to allow for this.

If you receive negative feedback from a client try to get to the bottom of what went wrong. This will prevent you from making the same mistakes in the future and will improve your service. You could actively seek customer feedback in order to fine-tune your service. You can do this by asking for testimonials for your website or via a customer satisfaction questionnaire. Don’t forget to take pictures of successful jobs for your website or ask clients to send them in.

Failing to market your business

Marketing is not just for online businesses. Construction businesses have to be marketed to attract new clients. Word of mouth is important in this sector but is not enough. Set up a great website where you can showcase your best work and tell potential clients all about the service that you can provide. Use clever marketing and SEO strategies to drive traffic to your website and convert these to paying customers.

By avoiding these common mistakes, you can ensure that your business is one of the enterprises that survives way beyond the first year and highly successful for many years to come.

About the Author
Editorial Staff

Editorial Staff at I2Mag is a team of subject experts led by Karan Chopra.