Starting and running a small construction business can be an enriching experience, but it’s essential to plan for the growth of your business to ensure its long-term success. Many construction companies start as small businesses, but not all of them can scale up and become larger enterprises.
According to a recent study, the number of small businesses that scale up is remarkably low. Globally, only about 13% of small businesses achieve significant scale. So if you want your construction business to grow, you need to plan how to make that happen. Below are some tips on how to prepare for the growth of your small construction business.
1. Define your goals
The first step in planning for the growth of your construction business is to define your goals. Without a clear destination, it won’t be easy to map a path to success. You want to clearly state what you hope to achieve with your business in the short-term, medium-term, and long-term. This will give you a roadmap to follow as you implement your growth strategy.
A construction business may have different goals at different stages of its development. For example, a startup construction company may be focused on getting its first project off the ground and establishing a reputation in the industry. A more established construction company may be looking to expand its operations into new markets. It would be best if you tailored your goals to the stage of your business’s development.
2. Assess your resources
Because construction is a capital-intensive industry, you need to understand your financial resources before starting to plan for growth. This includes both your current financial situation and your long-term funding prospects. You need to know how much you have to invest in development and how you will finance additional capital requirements.
You also need to assess your human resources. Do you have the necessary workforce to execute your growth plans? If not, how will you acquire the additional personnel? In the construction industry, it’s often difficult to find qualified workers, so this is an important consideration.
A property tax accountant can help you assess your resources and develop a financial plan for your business. They can also advise on how to minimize your tax liability, which can free up additional resources for growth.
3. Identify growth opportunities
Not every construction business will have the same growth opportunities. You need to identify the areas where your company has the potential to grow. This requires a comprehensive understanding of your business and the construction industry.
One way to identify growth opportunities is to benchmark your company against others in the industry. This will give you an idea of where you stand concerning your competitors and where you have room to improve. You can also look for new markets or segments that you can enter.
For example, you may decide to focus on commercial construction if you currently only work on residential projects. This could involve expanding your geographic reach or targeting a specific type of customer. Ensure you have the necessary resources and expertise to enter these new markets.
4. Develop a growth strategy
A vital element of any business plan is the growth strategy. This outlines how you will achieve your goals and take advantage of growth opportunities. The strategy should be based on a comprehensive analysis of your business and the construction industry.
Your growth strategy will likely involve a mix of organic and external growth. Organic growth is achieved by expanding your existing business, adding new services, or entering new markets. External growth is achieved through acquisitions or mergers.
You need to consider which growth strategy is best for your company carefully. Each option has its own risks and rewards that you need to weigh.
5. Implement your growth strategy
Putting your growth strategy into action is the most important step in planning. This will require a significant investment of time and resources. It would help if you were prepared for the challenges of implementing a growth strategy.
Make sure you have a clear roadmap for implementation and that all team members are on board with the plan. Assign specific roles and responsibilities to ensure everyone knows their part in achieving the company’s goals. Monitor your progress and make adjustments to the plan as needed.
These tips will help you develop a growth plan for your small construction business. By understanding your resources, identifying opportunities, and creating a comprehensive strategy, you can ensure your company is on the right track for growth. You can achieve your goals and take your business to the next level with careful planning and execution.