Responsible for building nearly $1 trillion worth of structures each year, the construction industry is an extremely competitive sector, with more than 650,000 employers overseeing more than 6 million employees, the Associated General Contractors of America reported. Further, between April 2015 and 2016, spending in the construction sector rose 4.5 percent, an increase that is no doubt cutting into profit margins and making it more difficult for firms in this industry to grow, according to the AGC.
Successfully growing a construction firm involves a multifaceted approach that includes techniques like upgrading technology, boosting working capital, hiring better workers or leasing equipment. Unfortunately, there can also be numerous obstacles to expanding a construction firm, from a lack of skilled labor to an inability to quickly scale operations. However, by implementing some of the tried-and-true tips and techniques listed, you can potentially expedite your construction company’s expansion.
By following these four tips, builder-owners and managers in the construction industry can potentially grow their companies in the coming months and years:
- Embrace technology
While many builder-owners and managers at construction firms keep their ears to the ground and their fingers to the pulse of their industry, there are still those in the sector who remain committed to antiquated methods of conducting business.
Cloud-based enterprise platforms can boost interdepartmental communications and break down the silos that would otherwise inhibit collaboration and data sharing. By moving all your processes to a cloud-based solution, you can also turn any work site into a mobile office, effectively eliminating unnecessary travel times and costs. Further, cloud-based networks reduce the amount of data entry needed to share this information, since all the records are kept in a single repository that’s accessible to every team member in real time.
When combined with the growing ubiquity of the Internet of Things – the sensors, transmitters and other data receivers connecting static devices – constructions firms that are unwilling or unable to make these technological upgrades will ultimately see their market share and profits take a hit.
With a small investment in new technologies, construction firms can see big savings.
- Attract the right talent
For any construction company to grow, additional staff members are needed to handle the increased workloads. According to the most recent data from Accordant Co and the AGC of America, 71 percent of construction firms surveyed anticipate adding more workers to their company in 2016. Six percent of respondents said they planned on cutting positions during the year.
In addition to nearly three-quarters of construction firms making plans to hire new individuals, the mass exodus of baby boomers from the workforce into retirement has created a dearth of experienced laborers. Without the best possible talent on the job, construction firms can easily see projects extend past deadlines and beyond budgets. Worse, hiring unskilled laborers to fill the gap can lead to the building of subpar structures.
Respondents to the Accordant survey suggested increasing base pay rates, offering bonuses and boosting contributions to employee benefits to recruit the most qualified team members. However, Accordant noted how these responses were nearly identical to what respondents said for the 2015. This means even after 12 months of raising pay rates, attracting the best talent will continue to be a major problem for the construction industry.
Thankfully, a working capital loan acts as a quick and easy way to get the money you need to entice the best possible employees.
- Utilize equipment leasing
Running a business is expensive. There are a host of costs and expenses that must be paid for regardless of whether any revenue is coming in. A good way to continue delivering high-quality construction offerings while simultaneously reducing overhead is taking advantage of the many benefits of construction equipment leasing.
Leasing equipment for the construction industry provides a wide range of ways for firms in this field to ensure they remain competitive and profitable. Leasing equipment eliminates the total upfront cost of the machinery needed to complete any construction job, thereby freeing up capital that can be invested elsewhere.
Best of all, most equipment leasing contracts let construction firms upgrade the machinery every year. This ensures your company has access to all the latest and greatest construction equipment available, letting you remain competitive in an increasingly crowded field.
- Obtain a working capital loan
Sometimes cutting overhead expenses can only take your construction firm so far, and additional funds are needed to help the company reach the next business milestone. If operational efficiencies are optimized, it can be time to obtain a working capital loan. Construction firms that partner with an alternative lender to tap into a working capital loan can immediately and easily gain access to a crucial influx of money. These funds can then be reinvested into the company for marketing, technology purchases or whatever immediate or long-term expenses are necessary for growing your construction business.