Top Ten Factors in Running a Successful Construction Contractor Business
Construction business is not easy. There are many traps and ways to lose money, but doing basic steps can not only make a living but also make you rich. Many successful construction contractors must acquire all the necessary skills and skills to be successful in a highly competitive industry. In this article, I will summarize the essential steps in order to become a successful contractor.
The most important factor: hands on experience
Construction contractors do not even think about starting a business. Years of extensive (generalized, unspecialized) construction experience. The only exception is when you want to specialize only one area and one area. We call this a niche. Niche markets are very profitable, but they can disappear, change, or be replaced by changes in technology, new products, industry, or social change. General contractors The best opportunity to succeed in business is to build on the experience of doing everything. This general experience has many benefits. It gives you the ability to identify and recruit competent individuals, dismiss incompetent people, evaluate good labor output, and identify inferior labor output. Perhaps the most important thing for you is to be a manager from being an engineer. The best experience comes from a small and medium-sized construction company that requires you to be the jack of all trades. Big companies tend to drive you into niche markets. It's okay if your business model is a niche market. However, if you start a general contractor construction business with skills only in some niche areas, you will fail if you do not draw weaknesses.
The second most important element: an excellent accounting system
Without a sound accounting system, construction will eventually fail. This CPA witnessed too much time for me to recount. With a sound accounting system, you can assess whether or not you are generating profits by job. It is dangerous and dangerous for intuition to go to instinct. With a sound accounting system, you can correct mistakes with each job. The numbers do not lie. Unfortunately, in my experience most construction contractors pay little attention to the accounting system. There is a fear that the employer will be taxed because of proper accounting. Therefore, cash received for jobs and cash will not be reported to avoid taxes. What a mistake. I do not care how great a sense is in each job. If you do not have a penny of accounts for each job, you can be relieved to fly blind and lose money on each job. You will be out of business and your family life will suffer. If you decide to start your own business, you have to act like a professional employer, which means creating a sound accounting system. The failed accounting system causes litigation, bankruptcy, and bankruptcy.
The third most important element: Effective Management
When you have experience in the industry for years (at least 5 years), it is better to switch from a technician to a manager in the construction industry. Effective management requires sound procedures in many aspects of the business. Task Definitions Well-Defined Tasks with Checklists Product processes enable you to drill workers for all aspects of a task within a task. You must have a work product process that contains a checklist of all the main tasks in the job. This eliminates human error and allows the job to be modified before it is officially completed. It is a construction company owner # 1 management tool. You need to develop a process for each task and each task. This process must be written out and stored in a binder for each job with a job checklist. Task checklists should be displayed as calendars. Your work binder should include the following:
Tab # 1 – signed contract and a copy of the change order.
Tab # 2 – Job Budget. Budget for each change order.
Tab # 3 – Income and Expense Accounting. Income includes the contract bid price, the deposit, or the amount of money received for the change order after the project phase is completed.
Tab # 4 – Summary of task lists.
Tab # 5 – Task # 1 Process Summary and Checklist.
Tab # 6 – Task # 2 Process Summary and Checklist.
Last Tab – Signs a completed task with the customer's signed statement of the standard customer, and uses the customer's name and contact information as a reference for marketing invitations and prospects. Send a copy of each sample letter to an individual binder to bring to each audience. This certificate binder may be the only thing that separates you from your competitors. It convinces potential customers that you can be very serious about customer satisfaction and can be a difference. Provides an opportunity for prospects to contact previous customers and get references. It also shows that the company is well organized and will operate well. Finally, I have a before and after picture for each job in this binder.
The Fourth Most Important Element: Strong Business Partnership
Competent subcontractors who have accumulated years of collaborative experience are professionals. Each job has a strong network of competent individuals / companies that you can use for each job in a team effort, and understanding your business processes will make each job much more efficient. EFFICIENCY AND COMPETENCE = PROFIT BY EACH PERFORMANCE
The fifth most important factor: the project bidding process
A talented subcontractor can be one of the most skilled and best managed construction companies with stability. There is not a robust process in the bidding for each job. You can lose your shirt if you make it work expensive. What will happen? The most common cause of underbidding is not to rely on your instincts or unconfirmed estimates, rather than the unsafe process of doing homework and identifying and double-checking each cost within each task. The devil of all construction work is in the details. The bidding process is very similar to the business plan for each job. It must identify all jobs and all costs and each cost must be checked and re-confirmed before bidding for the job. The place where many construction contractors go wrong is to miscalculate the cost of operations. These misstatements are caused by incorrect assumptions about the costs associated with the operation and the consequences of not accurately verifying and revalidating all operations. It's a tough process, but you need to get your bids correctly. Your assumptions about each task should be reviewed at least twice, not once. You know the rules: measure twice. This assertion is especially true during the bidding process.
Sixth Important Factors: Marketing
Everyone in the construction industry understands the importance of referrals. Most of your prospects came through referrals. But the recommendation is not enough. Should marketing tools be part of the belt?
1. You must have an active website that includes customer premises and a center assessment.
2. You need to join a networking group.
3. I need to join a civic group.
4. Provide valuable support to community nonprofits (1-2 people are enough).
5. You must have a regular process to bid for jobs that are not based on recommendations.
6. You should have a procedure for direct mailing a few weeks ago.
7. You must have a business card, a fixed billboard.
8. You must advertise in a yellow page or local newspaper.
9. Customer recommended binder (see above).
10. You must have a brochure.
The seventh most important element: Keeping up to date with technology and replacing old equipment / tools
You must upgrade your equipment and tools to keep your technology changes up-to-date. This not only improves efficiency, but also improves the quality of each job. In addition, old equipment and tools must be replaced to ensure that each task is efficient and timely. If old equipment and tools start to fail due to repeated delays, you will know when you need new equipment and tools. Failure of the equipment / tool can result in cost overruns and delays in completion. No matter how good the quality of your work is, if you forget the completion, you can do harm to your reputation.
The eight most important factors: hire weaknesses
Whatever your experience and proficiency, there are certain things that we do each and every good thing we do. Often, what we do well is what we enjoy, and what we do is disliked. Skilled business owners will hire people with strengths in areas where business owners have weaknesses. For example, one of my clients could hardly do business because they do not need to pick up the receivables. Will I give him advice? Hire someone who is a collection expert. He took me on my advice and eventually his colleague became his partner. His business is now flourishing. Hire your weaknesses and watch your business boom.
The ninth most important element: document mistakes and failures
This should be incorporated into the Business Process / Task List binder. You must learn by mistake. Mistakes should not be considered to be anything other than a learned experience. Document these bad experiences and reintegrate them into work process and task list binders to avoid repetition again.
The tenth most important element: Change order
Most agreements contain language for change orders. A change order is due to a number of factors outside the scope of this article, but it should be as clear as any change order should be spent. You must then process the change order (you must list each job and assign a completion date for each job). You must attach a job checklist for each new job that results from the change order. Finally, let the customer understand and sign the change order. Otherwise, it will not collect the full price of the job. Many construction contractors, unfortunately, perform poorly in processing change orders. They are stressed to emphasize and emphasize with customers to avoid face-to-face. Reason? The reality of change orders is not mentioned ahead when you bid for a job. The customer will only see the prices specified in the contract. You must mention the reality of the change orders that occur before the bidding process begins and before you sign the contract. From the very beginning, customers will not be ashamed of their customers when they know that change orders are frequent and change orders raise the price of the work.