How to get your construction business ready for growth

How to get your construction business ready for growth

 The Canadian construction industry is expected to rebound from the small downturn in 2020 due to COVID-19, with a forecast of a record Compound Annual Growth Rate (CAGR) of 8.5% by 2024. In British Columbia, even though there was also a slowdown in the construction market, it is set to return to growth this year. This growth, however, varies from one province to another.

As a construction business owner, you will want to take advantage of this market and grow your business, profitably. In order to do this, you need to make sure that your business is ready to grow and that the systems in place are scalable. You will need to ensure that you have all the systems and possibly people in place to do this so that you can respond to these new opportunities as quickly as possible.

As a business owner, you want to respond to these new opportunities as efficiently as possible. One of the first things that you need to do is to evaluate your business as it stands right now. By looking to see if it is operating in the best possible way, you can determine if you need to streamline your business by decreasing any unnecessary expenses and also if you are being cost-efficient.

One way to do this is by practicing lean project management methods as well as industry best practices. By implementing lean management practices, your business will be able to maximize its value, while minimizing waste. Following your industry’s best practices will not only show in the high quality of your work, but it will improve or solidify your reputation.

You always want to have a sound financial strategy in place. Not only so that you can always maximize your profit margins, but if you are looking for possible future investors, you want to be able to show that you have systems in place for future growth.

This can start with figuring out what your fixed costs are and what your flex costs are, and if you can minimize any unnecessary ones. Your fixed costs will include your insurance, worker’s compensation, and any required overhead. Those may be harder to slim down, but it is worth reviewing.

Your flex costs can include how many people you employ and your equipment. When you are looking at equipment, it may be more practical to rent equipment, especially if you aren’t using it all of the time. You may have better uses for the capital that you would be investing. You, as the business owner, need to determine if it is more financially sound to own, lease or rent your equipment.

As a business owner, you want to make sure that you have the right people in place. Whether or not you have employees or need to hire people, you need to know that you are hiring correctly. This means that you are creating a team of dependable, knowledgeable, and skilled individuals. With these people in place, you won’t need to micromanage them to ensure the work is getting done, you will be able to manage and grow your business.


When streamlining your business, you may decide that it makes more sense to have these people working with you, as independent contractors. You may decide to not hire much staff at all, and your team will be better made up of sub-contractors. As well, outsourcing portions of your business cannot only save you time and money, you will end up having a specialist complete the work for you.

For example, you may decide that it is better for your business to outsource your bookkeeping and payroll to a bookkeeping specialist. Not only would you be confident that this work is being done correctly, but it will also help you to run your business more efficiently. As well, you may decide to outsource other work to businesses such as an architectural technologist or engineer. This would be no different than hiring a plumber as a subcontractor, as they are still part of your team.

A large expense in the construction industry is the materials that you use for your projects. As a business owner, you want to set up the best possible terms with your suppliers. Many suppliers will offer you 30 days to pay, and they may offer you a discount if you make your payment early. These terms are worth negotiating and will benefit you as your business grows.

You also need to ensure that you have well-planned terms with your customers. Depending on the size of the project and how it will take will both factor into the payment terms. Your cash flow is key when running your business, and even more imperative when getting ready to grow your business. When you are expanding, don’t increase your workload if it doesn’t increase your profits. Even though you want to expand your customer base, you need to make sure that you are still making money.

As a construction business owner, you need to determine what your key market is. Is your preferred market custom high-end homes or multi-family units. Do you have a specific neighborhood you want to focus on? Once you determine this, you need to market your unique selling proposition. In other words, what can you do, or provide to customers that others can’t?

While it is important to specialize, it is also important to not have a narrow focus. In years like 2020 with COVID, many companies had to learn to be able to bring new value to the table in a short period of time, as well as be adaptable. Whether in commercial or residential construction, it is important to keep that flexibility in order to minimize your risks. By having this focus now, before you scale your business, you will be able to be proactive and prevent as many problems as possible. It can also help you to seek out new opportunities as you grow your construction business.

As a small business owner, customer service and communication are key. In the construction industry, it is important not only to have your jobs run smoothly, but a happy customer can lead to a great referral. By keeping the lines of communication open, your customers can let you know not only what you did well, but what you need to improve on. No one really likes this kind of feedback, but when you are looking at growing your business, this will help you to improve.

In today’s era of technology, a potential customer can research you as well as your business in minutes. These potential customers can also see how other customers have rated you. Not only do you want these great reviews, but you also want your customer’s referral.

When you create your team with sub-contractors, they will also be a great source of referrals. When they are part of your well-managed business, it will be an easy decision for them to make.

As a construction business owner, you want to get- and keep- your name out there, especially when you are looking at growing. By being active in your community, as well as networking, you are creating positive relationships that can help your business to grow. This should be part of your overall marketing strategy, in addition to keeping your business name out there through the many social media platforms available.

Whether you are new to construction or have been in the industry for decades, you need to keep up with, and embrace, the ever-changing technology available. By using available software and automation, you can easily set your business up to be scalable, as well as profitable. Not only as a business owner in general—but as a small business owner in the construction industry, it is important to be able to know how to use all of these different technologies.

Long gone are the days where you need to print multiple sets of blueprints to provide to your team. Not only is this not efficient, it is also an unnecessary expense. Many construction business owners have already transitioned over to digital plans and if you haven’t, you need to embrace this technology.

Digital plans not only allow for easy collaboration, but they also allow you and your team to easily access drawings and specs. This way, you can communicate and make any changes that are necessary.

There are numerous software programs on the market that can assist you with anything from estimating your projects through to project management. When you have a program that can not only provide you the job costs, but accurate material take-off lists as well, you are saving not only time, but money. You will also notice a reduction of extra material ordered and waste on your job sites.

Another popular technology in both residential, as well as commercial construction, is 3D modeling software. This is beneficial not only with the collaboration and design component of construction, but it can assist with more cost-effect and accurate work completed on your job sites. For example, an excavator can be outfitted with a GPS device connected to a nearby computer that will provide accuracy when working on elevations, grades, or excavation depths.

In any case, understanding and using technology is integral for growing a construction business. This industry is in a unique position to leverage both traditional and technological business strategies. However, small business owners need to have a good grasp on—and use—both of these strategies in order to ensure growth. At the end of the day, making sure the accounting is in a position to provide revenue and growth for the business is of the utmost importance.

Need help from an expert?

Figuring out how to be ready for growth can be overwhelming. Let one of our experts at Valley Business Centre help. For over 30 years, Valley Business Centre has been providing comprehensive bookkeeping, payroll, and tax services to our clients in Whistler, Squamish, the Sea to Sky Corridor, and metro Vancouver B.C. areas. Valley Business Centre provides reliable and effective services to all clients.

Disclaimer

This article is written for informational purposes only. It is current at the date of posting and changes to laws and regulations may result in the information becoming outdated. It is not intended to provide legal, tax, or financial advice. It is recommended that readers get advice from a tax professional before making any final decisions.


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