Strategies for Surviving Your First Year as a Construction Firm
When a firm is just beginning, the business owners can feel a range of emotions. It's exciting to start your own business venture, but it can also be an intimidating process. There are so many things that could happen in the future, especially when the business is new and trying to grow.
Starting a construction firm doesn't have to feel like such a challenge. With the right plan in place, you can take steps to improve its chance of success in its first year. Read on to learn the best strategies for surviving that monumental first year as a construction firm.
1. Form a Business Plan
To get any investor or bank loan involved with a new business, a business plan must be presented. Anyone investing money in the business needs to know how it'll achieve success and reap a positive ROI for them.
After the business starts, it may be tempting to throw out the plan altogether. Some business plans aren't fully developed, so handling the construction firm day by day may seem like the better option. Even as circumstances change, however, it's important to have a vision written down. Written goals reinforce the plan for a business, making it easier to achieve success in your first year.
2. Develop Good Marketing
Any starting business needs to develop a good marketing plan to build their brand. Trusting that news of the firm will spread by word of mouth won't be enough to set a solid marketing foundation.
Along with developing a positive relationship with clients, a new construction firm should create a good website that draws potential clients in. Post client reviews and pictures of successfully developed sites. Link to any social media accounts run by the firm and generate an email subscription platform.
Marketing strategies breathe life into businesses that are just starting out. Develop a good strategy during the firms year of the construction firm to begin and continue the business' success.
3. Keep Expenses Low
The easiest way to run a business into the ground is to spend too much money. During the first year, focus on keeping expenses as low as possible while still building the construction firm's local reputation as a supplier.
One area where things can get costly is when productivity is lacking. Inefficiency can create cost issues for new firms. Use technology to navigate around this potential problem by embracing the use of telematics. Telematics uses technology to deliver information and communication to remote networks. It's been successful in helping businesses maximize efficiency, improve communication and even avoid downtime and maintenance issues.
Construction firms can also look into tools that help improve collaboration and respond to clients. Project management software can help leaders keep work moving and identify potential delays. When a firm is working hard to establish its reputation in the industry, this support can help business owners start off on the right foot.
Whichever tools work best for a business, weigh the long-lasting benefits against the upfront cost. Investing in good technology will keep expenses low in the future, ensuring more success for any new construction firm.
4. Research the Right Insurance
There are many different kinds of insurance available to construction firms, but not every firm needs to get every kind of insurance. It depends on what the business develops and how big it is.
Contractor liability insurance is one of the most basic kinds of insurance a construction firm will need. It protects the business against any accidents, injuries or property damages that happen on the job. It's also a measure of protection against accidental property damage, such as a worker mishandling tools.
There's also the builder's risk insurance policy to consider. It covers any damages on a site up to a point, based on the total value of the structure. The only thing to note is that it won't cover damages that are the result of fault planning, materials or workmanship.
5. Reinvest When Needed
When a new construction firm experiences its first profits, it's easy to spend it all on upgrades to the main office, marketing campaigns or other needed expenses. The key to handling profits correctly is to reinvest when it's needed, only up to half of what's earned.
Leaving half of the profits to cover things like bills, employee pay and hiring will provide a financial cushion for the firm to fall back on. It's always smart to have money set aside for unforeseen expenses while re-investments are made.
6. Network With Your Area
Networking is crucial for every new construction firm to get used to. Building a relationship with other firms in the area will map out both the competition and who to learn from.
The main benefit that comes from networking is that other businesses will spread the word about the new construction firm in town. Learning how to network is an easy way to add to existing marketing strategies with minimal added expense.
7. Put Customers First
Strategizing, marketing and networking can develop a new construction firm, but the daily interactions the firm has with customers are what will establish it as a business to be trusted.
Putting customers first looks like many different things. Always being reachable by phone and email is one way to be present for their needs. A quick response time will also gain more customers, since no one enjoys waiting for days on end for a quote or response to a question they have.
Another way a new construction firm can put customers first is to create a survey for customers to take after a project is done. Find out what they enjoyed and what they wish had been done differently. Not every suggestion will be actionable, but hearing what they want and trying to meet them halfway will result in continuing success for a new business.
8. Stay Flexible
The last strategy every new construction firm can use during their first year is to stay flexible. Always have a business plan and marketing strategy in the works, but don't panic if things don't go according to plan.
Staying flexible will keep a new firm open for business during the moments when things get tough. Disrupted schedules, broken machinery and unforeseen expenses are all part of starting a business. They'll happen no matter how good a business plan is, so flexibility is key.
Use these strategies to survive the first year as an operating construction firm. They'll guide any firm through the challenges of figuring out how to be a business, while opening doors to future success.
Holly Welles is a freelance writer who covers construction and real estate innovations for publishers across the web, including NCCER and Constructible. She also runs her own residential real estate blog, The Estate Update.