Every contractor wants to be successful. Despite current setbacks in the industry like labor and material shortages, there are still several ways for contractors to create a growing and thriving business.
According to Dennis Engelbrecht, a senior consultant at The Family Business Institute, there are 10 characteristics that mark successful contractors. If you’re looking for ways to improve your success as a GC, here are the crucial characteristics that the top rung of his clients, marked by growth and profitability, had in common.
1. Good leadership
There are many ways to define good leadership, like continually seeking growth and knowledge, prioritizing your employees, and fostering healthy company culture.
Recognizing that there is always more to learn from others can help cultivate humble and effective leaders.
Looking to be of service to your employees means creating a company that’s welcoming to individuals who are new to the industry and leading by example. Good leaders inspire employees to perform better and earn their loyalty.
Healthy company culture is one where workers are comfortable relaying information up and down the leadership chain without fear of consequences.
2. Positive work environment
Good leaders should foster a company culture that attracts and retains people. Being aware of workers’ priorities, such as vision, transparency, teamwork, access to leadership, etc. is essential. Work to remove as many obstacles to worker success as possible.
It’s also key to know when to remove problematic individuals that can act as cancer in an organization. “Your culture is determined by the lowest level of behavior your leaders will allow,” Engelbrecht suggested, but good people will elevate the culture when working beside other good people.
3. Attracting and keeping good people
Once you have a positive company culture, it’s imperative that you keep it by hiring only the best and keeping talented workers. Think of the hiring process as a long-term strategy, not just a Band-Aid to fix a problem. Recruit workers when they’re young and energized to succeed, and find the work to suit them and grow their skills.
This also means determining who you may have to let go of because not everyone will be suited to or willing to grow with your company vision. This should be done as soon and you’re certain the employee isn’t the right fit. Waiting until the end of the job or some other milestone just delays the inevitable and makes it worse for those who work around the employee.
4. Strategic planning
“If there is a silver bullet for your company, it probably is strategic planning,” said Engelbrecht, who noted that the institute’s customers who did so saw 150% volume growth and 220% profit growth roughly three years later.
Setting the target seems to be the catalyst for business success. Set goals for the business and map out what needs to be done to get there. Review your planning periodically to assess your progress. Treat your strategic plan like a construction project, with objectives, milestones, timelines, responsibilities, etc.
5. Effective business development
Contractors that strive for negotiated contracts are more successful. Develop relationships with your customers and be their “go-to” contractor. Be likable and get involved as soon as possible in the construction planning process.
Lifetime customers are key to your company’s longevity. Work diligently to maintain these relationships that continually add work to your pipeline. Don’t take them for granted because your competitors will always look for any opportunity to capitalize on your losses.
6. Cultivate a diversified mix of work
While it can be beneficial to develop a niche market and concentrate your marketing efforts within that area, no level of success in a niche can be sustained forever. Markets rise and fall. Companies that specialize in certain types of projects can earn more, especially if the work is difficult or unglamorous.
Much like investing, a more diversified mix of work will ensure that you always have projects in your pipeline. Don’t be afraid to take on new niches as the market dictates.
7. Operational strength
In operations, top construction companies concentrate on three key areas according to Engelbrecht: launching a project internally, reviewing jobs, and finishing strong. They can plan a job better than companies in other industries and involve the right people from the start. They do monthly and quarterly reviews of submittals, change orders, critical path items, etc. to help elevate the organization’s performance. And they also finish strong, leaving a strong impression on the client so they are invited back.
8. Capital planning
Successful contractors keep a reserve of capital available so they can jump on opportunities, such as an acquisition or a key hire. Companies often have to slightly increase their overhead to take a chance on the future, says Engelbrecht.
Companies should always set aside enough capital to weather a potential downturn or softening of the construction market, even if one isn’t expected.
9. Leveraging data
The more data contractors have, the more successful they will be. Interactive dashboards are a powerful tool for tracking overhead expenses and determining how much is appropriate. You don’t want to take on more work than you can handle, so the better approach is to grow people first, then add work. Dashboards are helpful in tracking this type of strategy.
10. Risk management
Deciding when to bid or not bid on projects can be difficult. Most job failures can be traced to making a bad decision to take on the job when there were plenty of red flags present.
Instead, companies should have a formal “go, no go” evaluation process that includes those who are quick to identify risks and tend to be the naysayers. Good leaders listen to the skeptic’s voice before making project decisions.
When aiming to grow your business and find success as GC, try to instill your organization with these attributes, and your business will discover new ways to flourish and develop successfully, in every aspect.