The ultimate goal for all of us is to build a business that is lucrative, sustainable and relatively stress free.
Creating such a business requires foresight and planning, it doesn’t happen overnight, and it doesn’t happen by accident.
The first thing to understand when growing a trade business is that you need to hang up the KingGees and get comfortable in a business suit. Your trade skills will get you out of the gate, but your business skills will get you across the finish line.
Educate yourself – Chances are you’ve got fantastic trade skills but lack the business knowledge you need to run a successful business. That’s not your fault, tradies are not traditionally taught these skills, so you need to go out and get educated.
There are many ways to gain the knowledge you need; blogs, podcasts, books, good old TAFE, but my personal favourite is a business coach. Yes, a business coach will set you back a few bob, but they are a quick and effective way to get you up to speed and your business on the growth track.
Plan – Writing a business plan will help you clarify some fundamental questions around your business:
- How you want to grow.
- Your business values.
- Your unique selling point – how you will differentiate yourself from your competition.
- Identify your target market.
- Your strengths and weaknesses.
- Insurance requirements.
Get across your costs – Before you can grow sustainably you need to understand what the costs of running your business are:
- Overheads – Understand what your annual overheads are, and what they are as a percentage of your turnover.
- Director salary – When you come off the tools you automatically become an overhead. You need to pay yourself a wage that is sustainable for yourself and the business. Of course, the company profits are yours, but you must pay yourself a wage that allows you to live day-to-day.
- Labour costs – Staff cost more than their wages, on average it’s 20 per cent more. Understanding the true cost of labour is the first step to charging a suitable labour rate and running a sustainable business.
- Systemise the Business – You’ll never be able to put down the tools until you learn to delegate and trust your staff. To do this effectively you need to systemise your business. The right construction management software will help you achieve this, as will implementing policies and procedures (see the January-February issue of BCM for my article on systemising your business) and a structure for communication. Systemising takes time, but the more you invest in it the more it will reward you down the track.
- Hire Good Staff – Good staff make a great company. Don’t expect to find staff with the same work ethic or dedication as you; it’s not their business so they’re not driven by the same goals.
- Hire staff with the future in mind. Hire labourers who show potential to become foremen and hire foremen who have the potential to become managers.
- Fill the skills and knowledge gaps you are missing.
- Outsource where possible and necessary.
- Find out what motivates your staff and reward them accordingly.
- Spend time and money training them.
- Spend time onboarding them, their transition into your business will be a more pleasant and productive one.
- Build your funnel – Now you’re off the tools you’ve got to find enough work to keep your staff going. Marketing is a great way to burn cash, but it is the only way to get more work. You need to educate yourself on the best ways to market your business, test those and then refine your marketing accordingly. Remember, there are many ways to market your business. I recommend you look at building strong connections with people who can send you repeat business, like designers, architects and builders. These leads are always warm, so they have a much higher chance of converting. Traditional channels, like social media and email marketing are well worth investing in IF you are making content the Target Market wants to consume. If you have a clearly defined USP (unique selling point) and you understand your clients, then you will find a formula that works.
- Invest in your reports – Reports are what business owners use to check the health of their business. Reports show you where you are thriving and where you are not. Spend time every month looking at what is working and what is not and adjust your business practices accordingly.
Building a successful construction business is not for the faint hearted. It takes a lot of self-reflection and self-education.
For a copy of my e-book The step-by-step guide to building a successful construction business, where I dive deep into each of these points, please reach out at [email protected]