Taking Your Construction Company to the Next Level

This article is part of a series sponsored by Old Republic Surety.

There are many ways to grow a business, but the first step is to understand how you got to where you are, and then decide what you need to do next to take your company to the next level.

Start by assessing your operations, key personnel, subcontractor and supplier relationships, finances and business plan. What works, and what doesn’t? What do you need to change to grow your company?

It is this self-assessment that is often difficult for contractors to perform. Many contractors get into construction because they love to build things. They didn’t sign up for the management part, whether that’s planning projects, tracking costs or supervising people.

But knowing the business side well can make the difference in getting big projects – and qualifying for big bonds. A successful business leads to increased profits, greater efficiency, better performing employees and an improved reputation.

So go ahead, ask yourself the hard questions about where you’re headed. Be sure to include the following five questions in your list. You will find that answering “yes” to them will open doors to new business, better results and growing relationships.

1. Do I have the accounting programs I need to grow? Basic income or accrual accounting can only take you so far. To grow your business, you will need to prepare funds according to the percentage of completion. A CPA specializing in design can help you set up appropriate accounting systems and provide the year-end financial statements that trust companies and banks expect. Putting accounting controls in place will help you optimize your cash flow, reduce the need to borrow, improve your receivables collection time, and increase your retained earnings. As you grow, you will also need to hire dedicated accounting staff and use accounting software designed for your business.
2. Do I have a job tracking, measurement and pricing system? Without timely and accurate data, your company cannot adequately predict and track costs, stay on schedule or price work appropriately. As you grow, reporting becomes more important for controlling costs, avoiding underpayments, identifying scheduling constraints and completing your work-in-progress reports. You need to buy software designed for construction companies, and make sure your project managers use your reporting system. Proper reporting will not only help you run your business better and be more profitable, it’s important to increase your collaboration potential. Guarantees depend on this information to record the sound.
3. Do I have the right people on my team? It is not by chance that successful construction companies have experienced project managers, skilled professionals and reliable workers. These companies have invested in their people. They do what it takes to attract and retain talent: offer competitive pay and benefits, provide opportunities for professional growth, and create a great company culture and work environment. They also have onboarding and training programs, written HR policies and an employee handbook. Have you made your company a place where people want to stay, even if they are offered a job elsewhere? If not, what needs to be changed? Don’t let low morale, bad management or high profits hurt your chances of getting new and bigger projects.
4. Do I have a business continuity plan? What happens if a key person in your organization is unable to work or leaves? Who will manage the company? Have a plan for when the unexpected happens, whether it’s the death of an owner or a natural disaster. Contingency planning is important for all businesses, but it is especially important in construction where firms often rely on one-person leadership or at the mercy of weather-related events. Work with an attorney, insurance professional and your bank to put together a plan that will keep your business running if the worst happens. Identify key employees and successors, and create a roadmap for leadership transition and succession.
5. Do I use a construction lawyer to review contracts and get legal advice? Contracts guide everything you do at work, the relationship you have with the owner, the amount you will be paid, the work you must do, and the penalties you will receive if you do not complete the work on time. Knowing contract language and how to negotiate contracts is key to protecting your business. Get the legal support you need from experts familiar with the construction business. Reviewing contracts, mitigating credit risk and complying with regulatory requirements are important safeguards you need to have in place to grow your business.

To get to the next level, don’t be afraid to identify areas where you can improve your company. Your certification can provide insight into construction best practices and refer you to CPAs, attorneys and bankers who specialize in construction. Invest in your business, and you’ll be on your way to great success.

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