By Cass Jacoby, RCS Reporter.
Running a construction business isn’t easy. It isn’t a stretch to say that almost all contractors who own their own roofing companies worry about their business. They’re concerned if they are doing the right things, hiring the right people or simply doing enough to keep their business growing.
There are many reasons why these kinds of businesses fail, but usually it is a host of factors rather than one specific reason. Knowing the pitfalls to watch out for and how to avoid them is important for your success.
Cash flow is a challenge in any industry, but it hits the construction industry particularly hard. This is because construction businesses typically see a large outflow of cash upfront before anyone even gets on the roof — purchasing materials, paying back-office employees and leasing equipment. According to Level Set, because of the nature of the way money moves on a project, contractors and suppliers carry significant financial risk. Profit is necessary for a company to grow, but it won’t keep it alive.
You could run the most profitable construction business in the world, but if you don’t have enough cash to cover your bills your company will still be in trouble.
It is important to make sure that there is a proper cash flow in your company. This means that you are billing and getting paid in a timely manner, keeping your accounts payable and properly managing project budgets. Maintaining a consistently positive cash flow allows you to pay your expenses, reinvest in your business and save up for your rainy-day reserve in case of emergencies.
Moral of the story: Make sure you understand your cash flow and maintain a positive cash flow. Read your contracts carefully to ensure the payment terms and conditions are acceptable and consider what will happen should a customer delay payment or if large unresolved change order claims occur.
It might sound crazy to think that growing your business could lead to going out of business, however, there is always the issue of too much of a good thing. When a company tries to grow too fast without the resources, know-how or manpower to execute that growth it will soon run into problems.
Taking in more business and building more projects is not indicative of success. According to Evan McLaughlin on LinkedIn, to successfully grow you will need to expand in all areas of your business and increase profit margins to justify the new growth.
Moral of the story: Be strategic and methodical in your plans for expansion. If you want to take on larger projects, do it incrementally.
You know the saying that a chain is only as good as its weakest link? That rings true in construction too. A construction company is only as successful as its people, which means you need to have engaged and valued employees on board who will deliver their best effort.
Learn how to properly invest and develop your employees through training and certification, but also by building a culture that values professional and private employee growth.
Training an employee not only empowers them to do their job well and learn more, it is the key to retaining good people. So train people to do their jobs well and on how to advance and thrive in your company.
Moral of the story: Turnover is high in the construction industry, so it is important that you learn to properly recruit, retain and maintain your workforce. Construct Connect suggests that you attract and maintain your employees by offering competitive salaries and benefits, providing on-the-job training for all employees, promoting your best workers from within your organization, and building a company culture that is focused on keeping employees happy and engaged.
The roofing industry has seen quite a few technological advancements in the past few years alone, and like any other industry, your company will need to adapt to these changes to survive. The digital transformation currently occurring in the industry covers everything from drones to CRM software, and these advancements are changing how construction works.
As the complexity of construction projects increases, companies that incorporate these new technologies and digital tools are setting themselves up for continued success. The industry is embracing new technologies that are changing the world, allowing significant advances to be made in the way roofers communicate, work and interact so that they can provide better services for their clients while enhancing their bottom line and staying safe. Failure to innovate means letting the wonderful opportunity of this tech pass your company by.
Moral of the story: Technology will save you time and effort, which is necessary for gaining a competitive edge. Keep up with the industry as a whole by innovating and embracing technology.
There are many risks lurking in the construction grounds that can hurt your company. Knowing what to avoid is the best way to not fall into common mistakes that will hurt your company, and learning how to be strategic while still embracing changes is a great way to circumnavigate these pitfalls.
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