Construction business owners need to be where the action is, but scatter-shot effort rarely pays off. Still, it’s dangerous to be a sitting duck as business in some sectors slows down and even dries up. Steer forward strategically with a slow and steady approach to selective diversification based on areas of strength.
Always Be On The Lookout
Business owners can’t afford to be so far down in the trenches on a current project that they don’t have the pulse on where money is flowing in their regions. Has the school district just made a big multi-year commitment to upgrades? Is another new manufacturing build headed to the outskirts of town? What ripples of action are following on the heels of the 60,000 federally funded infrastructure projects happening around the country? As Construction Business Owner, Michael Monahan reminds us, constantly networking and actively building relationships are keys to ensuring a business remains vibrant: “Relying on marketing only when you need new business is not an efficient or effective strategy. When you market your company well, everything becomes easier, including learning about bid opportunities, winning business, attracting and retaining talent, and connecting with investors.”
As critical as awareness of potential new markets and projects is, it’s of course not a smart strategy to randomly go after every opportunity. It’s better to think like a turtle, slow and steady when diversifying a construction business:
With backlogs dwindling and certain sectors drying up more quickly than others, expanding your scope of services or geographic reach may be a worthwhile investment of your energy. Start seeking new opportunities by putting your experience in context. You may not want to jump from residential construction to large-scale infrastructure. However, with the industry more amenable to collaborative structures like joint ventures and the tight labor market incentivizing partnerships, there are opportunities to earn experience in new areas. Make sure you know any industry regulations if you’re entering new geographies or industries, and be diligent about doing your homework….Be careful about biting off more than you can chew. Aggressive growth strategies are tempting, but conflicts, reputational damage and other hidden costs can be the price of taking on projects you don’t have the skilled resources or infrastructure to properly support … .Consider pursuing a more modest but potentially safer growth plan.
When exploring diversification opportunities, it can be especially helpful to consider projects which are complementary to your primary area of expertise. As you grow, don’t neglect sight supervision, which is essential to maintaining and furthering your reputation: “There’s no better way to get a sense of business performance than supervising the work as it’s underway. Projects can’t be completed from the office. Showing up on-site to observe progress enables you to interact and develop better relationships with field personnel and review actual costs versus estimates firsthand.”
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