Construction company growth requires embracing change
Jerry Aliberti • March 11, 2024
Explore the critical steps you need to take to adapt and thrive as your construction business grows.
The construction industry is undoubtedly tough, and growing a business within it is no walk in the park. You started with $0 then grew to a $5 million company, and through your hard work and determination, you've managed to scale it up to $10 million, even $25 million. However as a business owner of a construction company, you need to fully understand that growth requires embracing change.
However, there's a common challenge that many construction business owners face - they continue to think and act like they're running a $5 million company. This can be damaging to your employees, financial situation, and you and your family well being.
Embrace Change and Growth
Change is inevitable, and in the dynamic world of construction, it's essential to evolve with the times. As your business expands, you must avoid clinging to old habits and approaches. It's a mistake to assume that what worked for your $5 million company will work for your $25 million one. Embrace change as an opportunity for growth and improvement.
Regularly assess your business processes, technology, and strategies. Identify areas that need improvement and be open to change. Encourage your team to provide feedback and ideas for optimization. Construction company growth requires embracing change.
Develop a Strategic Plan
One of the key reasons construction businesses struggle during growth is the lack of a comprehensive strategic plan. Without a clear roadmap, you and your team might find yourselves scrambling, unsure of what to do next. A well-thought-out plan is crucial to guide your company through various growth stages.
Create a strategic plan that outlines your short-term and long-term goals, including financial targets, project expansion, and workforce development. I usually recommend not going beyond 5 years. Involve key team members in the planning process to ensure everyone is on the same page. If your key employees aren’t involved in this process and don’t fully understand your vision then you’ll be fighting an uphill battle that will wear you out.
Invest in New Technology
As your construction company grows, it's crucial to update your technology to keep up with the increasing demands. Technology can significantly improve both operations and accounting by automating tasks, streamlining processes, and providing valuable insights.
An actionable step to ensure you have the right technology is to conduct a comprehensive technology audit. Identify areas where manual tasks can be automated, and assess whether your current software and systems are scalable. Look for construction-specific software solutions that can integrate operations and accounting, ensuring seamless communication between project management and financial tracking. By investing in the right technology and keeping it up-to-date, you can create maximum flow in your company, improving efficiency, accuracy, and overall success.
Invest in Equipment and Maintenance
As your construction business grows, so does your fleet of equipment. Neglecting the proper care and maintenance of your machinery can lead to costly breakdowns and project delays. Assigning responsibility for equipment management is essential to ensure your assets remain in top condition.
I can’t tell you how many project managers and superintendents I’ve talked to leave companies because nobody knows where equipment is and theirs no system in place to track when equipment needs basic maintenance like filter replacement, oil changes, etc. It’s impossible to meet your project budgets if the very tools necessary to complete the work aren’t working. This becomes extremely stressful for your employees.
Appoint an equipment manager or team responsible for regular maintenance and inspections. Implement a preventive maintenance schedule to avoid unexpected downtime and repair expenses.
Promote a Healthy Work Environment
The stress and chaos that often accompany rapid growth can take a toll on your team's well-being. It's crucial to maintain a healthy work environment to keep your employees motivated and productive. Unhappy and stressed workers can lead to lower job satisfaction and increased turnover.
Too often company owners add more work to their existing management team without adding more staff and this becomes unsustainable for any human being to manage long term. Promote and delegate your current staff and add more as you grow to take on the less important tasks. Then groom them and keep promoting.
Prioritize employee well-being by offering support, training, and opportunities for growth. Implement stress-reduction programs, and encourage open communication to address concerns promptly. Plan events to bring your team together and let them know each other on a personal level.
Streamline Bidding and Estimating Processes
As your construction business expands, you may find yourself bidding on more projects. However, bidding on too many projects without a streamlined process can lead to inefficiency and missed opportunities. It's essential to evaluate each project carefully and bid only on those that align with your company's strengths and capacity.
Develop a systematic approach to bidding and estimating. Assign dedicated staff or teams to handle these processes efficiently. Use data analysis and historical project performance to make informed decisions about which projects to pursue.
Conclusion
Growing a construction business from $5 million to $10 million, $25 million, and beyond is a significant accomplishment. However, it's equally important to adapt your mindset and strategies to match your company's new scale. Construction company growth requires embracing change.
Remember that no "secret sauce" as many contractors claim to have can replace the hard work and dedication required to sustain and thrive in the dynamic construction industry. By implementing these actionable tips and staying open to continuous improvement, you can position your construction business for long-term success, even as it continues to grow.
Pro-Accel can help you assess where your company is today and help you put together a strategy so your company can grow with less chaos and as smoothly as possible. With our boots-on-the-ground experience running projects, years of experience running estimates, and currently building our own businesses, we’re fluent in all operations and can help you develop a solid foundation so you can step away from the business and live the life all of us entrepreneurs set out to live.
Understanding what change is required starts with an Operations Assessment
The Challenge One of the most overlooked problems in construction is confusion over who is actually in charge of the project. In smaller companies and on smaller projects, it often falls on the superintendent. They have the field experience, are respected by the crews, and drive the work forward, while the project manager plays a more supporting role. That structure works when the projects are small, but as the company grows and the projects become larger, the cracks start to show. Clients expect the project manager to lead. They want answers on budgets, schedules, and commitments. The word “manager” in the title makes them assume that the person has the authority, and in my years of experience, they should. Meanwhile, the superintendent’s value is in driving the day-to-day in the field and keeping production moving. When the lines between the two are not redefined as a company grows, tension builds. Superintendents who have always “run the job” struggle to let go. Project managers who have always supported now need to step into leadership. The lack of clarity creates a tug of war inside the company.
Welcome to the first edition of The Growth Accelerator. This newsletter is designed for construction owners who are serious about scaling their operations without compromising profit or control. After 22-plus years in the industry, managing hundreds of millions of dollars in projects in the field and leading estimating teams responsible for more than $12 billion in projects, I have seen the patterns that make or break contractors. Each week, I will share insights from the field and boardroom to help you run a stronger, more profitable business. So let’s dive into the first issue topic! I figured I would start with the topic of one of my most viewed LinkedIn posts, which received over 225,000 impressions!
Struggling with large-scale construction budgeting? I can help contractors and developers plan, manage, and optimize budgets for complex projects. Read on...
