5 Key Areas To Building A Profitable Construction Or Trades Company That Puts You In Control Of Running Your Business
According to Bloomberg 8 out of 10 small companies don’t succeed long-term and that’s across all industries, not just construction and trades.
So the question is, ‘Why do companies fail? Are there specific areas that are crucial to get right for building a profitable company?’
The answer is yes, there are. There are 5 key areas that every business must have functioning properly like a well-oiled machine if they are to see long-term success and profitability.
Those 5 key areas are:
- Office and operational efficiency
- Employees and productivity
- Marketing and sales
- Business planning including succession
If all or just one of these key areas are not functioning properly then it affects your business’ long-term growth. And the sad reality is that many business owners are not even aware of the 5 key areas we just stated, yet alone know how to make sure they’re running efficiently.
In this blog post, we’re going to briefly elaborate on each of these areas and how each of them affects your ability to grow your construction or trades business.
Profitability refers to your business’ ability to earn and keep a profit from each project it undertakes. Every project you undertake has costs associated with it such as payroll for your employees’ labor, materials, estimations, recovery costs, and much more.
Your overall profit is how much you have left after all of these necessary project expenses have been accounted for. Most construction and trades companies aren’t left with much profit after expenses. This is largely due to the mistakes they’re making that include but aren’t limited to:
- Poor estimation processes
- Working beyond original project completion date
- Invoices being paid late
- Not charging high enough fees
- Teams that aren’t working productively
If you’re unable to make a sizeable profit after expenses with each project you’ll often find that you’re stuck working long and tiring hours each day, have little time for family and friends, and you’re working in rather than on your business.
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Office And Operational Efficiency
Office and operational efficiency refers to your company’s ability to practice competent day to day management of the business’ operations, paperwork, financial record keeping and reporting. The reason why good office and operational efficiency is so important is because it allows you to stay on top of things and prevent something becoming an obstacle.
One common example of this could be tax reporting. If you’re not properly tracking tax and how much money needs to allocated to tax from each project then you could find that you’re hit with a big tax bill from the government for unpaid taxes. With a reliable system in place that ensures office and operational efficiency, you could avoid this problem before it ever becomes one.
Employees And Productivity
Your company is only as strong as the people it employs. If you’re not employing staff who also perform and interact with each other well then projects will take longer to be completed and mistakes will be made on the work site.
Project leaders are also crucial to this element and each company needs managers who have a system for managing their teams and ensuring that morale remains high amongst staff. It’s no coincidence that profits are affected by employees with low morale and who are turning out poor quality work each day.
Communication is also crucial in this area. There needs to be a reliable chain of communication established that managers can easily follow, implement, and instruct to their team members, and you to them.
Find Out How Your Employees Perform
Take our quiz and find out where employee performance can be improved.
Marketing And Sales
Marketing and sales are important because it’s what brings in new customers and keeps your business afloat.
Without effective marketing and sales processes in your business, getting new customers will be a constant slog every month and you’ll get to the point where you end up taking on projects that aren’t really a good fit just because you’re desperate for the cash flow injection.
It’s vital for your business’ long-term profit and growth that you develop marketing and sales activities that reliably bring in new customers every month so you can grow your business with some financial stability. Not only that, it will also just make running your business and life more enjoyable in general.
Business planning encompasses areas like growth, improvement, and succession (retirement or sale of the business). It’s important you focus on business planning because it gives you a roadmap and plan to work towards in your business each day. You’ll be guided by the long-term vision you have for your business’ success and have weekly KPI’s and goals that help you make that vision a reality.
Companies that focus on this area experience a stable work environment for employees that increases loyalty and attracts top talent. It creates an environment of continuous improvement that expands across all areas of the business. And perhaps most importantly, it gives the business owner/s that much needed Work/Life balance we all crave.
As we say here at Avitan, “If you aren’t planning to succeed, you’re planning to fail.”
Do You Have A Plan For Your Business?
Find out where you can improve planning in your business immediately.
Are You Aware That You’re Struggling In All Or Some Of These Areas?
We hope that this short blog post has helped bring some awareness and clarity as to why you may be struggling to run and grow your business right now.
As we’ve already mentioned, if you don’t have all of these five key areas functioning like a well-oiled machine then business growth will be a constant grind each month and you’ll be banging your head against the wall wondering where you’re going wrong.
Would you like to find out in more detail how these five key areas specifically relate to your construction or trades company?
Then we have a short 10-minute quiz you can take right now that will tell you which one of these five key areas you’re most struggling in and offer possible solutions for fixing those problems.
You can begin the quiz by clicking here.
Alternatively, you may wish to discuss these five key areas and how they relate to your business with one of our Consultants. If that’s you then give us a call today on +1 604-542-4713.