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Top Ten Factors In Building A Successful Construction Company

thedoo
September 27, 2017

It's not easy to lead a construction company. There are many pitfalls and ways to lose money, but if you follow a few basic steps, you can not only live but become very rich too. Many successful construction companies have learned that there are definitely things you should always do and certain skills you need or acquire to make it in this highly competitive industry. In this article I will summarize what is needed to be a successful construction contractor in their order of importance.

Key Factor: Hands On Experience

Do not even think about starting a construction company unless you have a wide (general, non-specialized) building experience for at least five years. The only exception to this is if you plan to specialize in one area and one area. We call this a niche. Niche's can be very profitable, but they can also go away, change or replace technology, new products, industry changes, or social change. The best chance of success in the general contractor is to gain experience with everything. This overall experience has many advantages. It gives you the ability to identify and hire skilled people, to compete incompetently, to evaluate good work product and to identify poor work product. Probably the most important thing you give is the ability to switch from technician to manager. The best experience comes from small to medium-sized construction companies that you need to be a jack of all the actions. Larger companies tend to push you into niches. That's good if your business model is a niche, but if you start a construction company with a number of construction subjects with just a few niche areas, you'll fail unless you're weak.

Second Key Factor: Outstanding Accounting System

If you do not have a good accounting system, your construction company will eventually fail. This CPA has seen this too often than I would like to tell. With good accounting systems, you can judge whether or not you want to earn a job on the basis of a job. Ging instinct is dangerous and fed with risk. A good accounting system helps you identify what business you do on each job, as well as the mistakes you made. Songs do not lie. Unfortunately, my experience has shown that most construction companies pay little attention to their accounting system. There is an fear that the correct accounting will impose higher taxes on the entrepreneur. For example, cash is received on a job and cash paid out, unreported in an effort to avoid tax. What a mistake. I do not care how well your feeling is on each job, if you do not take into account every penny on each job, you can be sure you're blind and lose money on any job. You will go out of business and your family members will suffer. If you decide to start your own business, you must act as a professional business owner, ie creating a good accounting system. Failure accounting systems lead to litigation, failure and bankruptcy.

Third Key Factor: Effective Management

If you have experience in industry forged for many years (at least five years) To work in all facets of the construction company, you can transition from technician to manager. Effective management requires that you have sound procedures on many aspects of your business. Well-defined workflows, along with accompanying task-specific checklists, enable you to build your employees on every aspect of a job within a job. You should have a workflow with accompanying checklists for almost any important job within a job. This eliminates human error and enables you to make corrections before the job has been officially completed. It is a construction company owners # 1 management tool. You must develop a process for each job and every task. This process must be in writing and stored in a binder for each job, along with the task checklist. The task checklist must be calibrated. Your workbinder must contain the following:

Tab # 1 – A copy of the signed contract and any change orders.

Tab # 2 – Budget for the job. Budget for each change order.

Tab # 3 – Income and Expenditure Accounting. The revenue section contains the bid price of the order, received as deposit, or if the phases of the project have been completed and received for change orders.

Tab # 4 – Overview of the task list.

Tab # 5 – Task # 1 Process Overview and Checklist.

Tab # 6 – Task # 2 Process Overview and Checklist.

etc.

Last Tab – Client unsubscribe letter on completed work together with the standard certificate signed by the customer, stating the customer's name and contact details, along with the permission to write the testimonial marketing as a reference for potential customers. You send copies of each testimony to a separate binder that you take in every perspective. This testimony binder can be the only one that distinguishes you from your competition. It gives the prospects that you take customer satisfaction very seriously and can make the difference. This allows prospects to reach previous customers to obtain credentials. It also shows the prospect that your business is highly organized and well managed.

Fourth Main Factor: Strong Business Partnerships

A stable competent subcontractor who has years of experience working with each other. is crucial to the success of a job. Each job is a team effort and has a strong network of skilled individuals / companies that make you available for each job, and understand your business processes makes each job much more efficient. Efficiency and Competence = Profit on any job.

Fifth Important Factor: Process Bidding Process

You can be the most capable, best managed construction company with a stable talented subcontractor and still go out of business if you have no strong process of bidding every job. You can lose your shirt if you have immersed a job. How is this happening? The most common cause of intercession does not do your homework and relies on your intestinal or unverified estimates, rather than failing a safe process to check that all costs are checked within each task. The devil in every construction is in the details. The bidding process closely resembles your business plan for each job. It must identify every task, every price and cost must be checked and checked before you get on the job. Where many construction companies go wrong, estimating the cost of tasks is incorrect. These incorrect estimates are caused by inadequate assumptions about the tasks and associated costs that result from the non-accurate verification and re-verification of each task and cost. It's a tough process, but you have to get the bid well. Your assumptions on each task should not even be viewed at least twice. You know the rule: measure twice once.

Sixth Key Factor: Marketing

Everyone in the construction company understands the importance of referrals. Most of your potential customers come through reference. But references are not enough. What should be part of your marketing tool?

1. You should have an active website containing customer presentations for and center.

2. You must join a network group.

3. You must become a member of a social organization.

4. You should provide valuable assistance to local community nonprofit groups (one or two will be good enough).

5. You should have a regular process to provide jobs that are non-referring

6. You must have a process for direct mailings all week.

7. You must have business cards, stationary, jobsite characters.

8. You must advertise on the yellow page's or local newspapers.

9. Customer Observation Binder (listed above).

10. You must have brochures.

Seventh Important Factor: Stay Current With Technology And Replace Old Equipment / Tools

You need to upgrade your equipment and tools to stay with technological changes. This will not only improve the efficiency but also the quality of each job. You also need to replace old equipment and tools to complete each job efficiently and in a timely fashion. You will know when it's time for new equipment and tools when the old equipment and tools begin to break at a rate that causes long-term delays. Failure of equipment / equipment may cause cost overruns and result in late completion. No matter how good the quality of your work is, miss delivery dates damage your reputation.

Eighth Key Factor: Renting Your Flaws

No matter how much experience you have and how skilled you are, there are certain things that each of us do well and certain things we do badly. Most of the time, the things we do well are the things we like to do and the things we do badly are the things we hate. A skilled business owner will hire people who are stronger in areas where the business company has weaknesses. For example, one of my clients was almost no longer in business because he did not have to call to collect claims. My advice to him? Hire someone who is expert in collections. He took me on my advice and eventually became his collection expert his partner. His business is now blossoming. Hire your weakness and pay attention to your business boom.

Ninth Key Factor: Document Errors and Errors

This must be included in your job for workflow / task sheets. You must learn from your mistakes. Errors should not be regarded as anything other than an experienced experience. Document the bad experiences and integrate them into your job process and task list binder to never repeat them.

Tenth Main Factor: Modifying Orders

Most contracts contain language related to change orders. Change orders are caused by many factors beyond the scope of this article, but let me know that you must charge each change order as if you were going to pay the job. Then you must process the change order (specify each job and specify a completion date for each task) and include a task checklist for each new task that results from the change order. Finally, you need to understand the customer and unsubscribe from the change order or you will not collect your full price for the job. Many construction companies are doing a bad job in addressing change orders. They are reluctant to mark and shine with the customer to avoid a confrontation. The reason? The reality of change orders is not raised when you are on the job. Customers only see the price you gave and that is in the contract. You must address the reality of a change order that occurs at the beginning of the bidding process and before the contract has been signed. As a customer from the outset understands that change orders often occur and that a change order will increase the price of the job, you will be less shy to confront the customer when it occurs.

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