Growing your construction business is easier than you think
How to engage your customers to help you grow your building business and maintain your margins
Some of you will know that I used to own a building and construction company. It’s been a while now, I founded the company in 1983 as a tradie (I used to be a carpenter) and I sold the company to my junior partner in 2003, but I have many fond memories of my building days (and some not so fond).
Because of my background I am often asked how to grow a construction company and building trades business, while keeping margins up, and I have coached many builders and tradies over the years. In my experience, profitable business growth in the building industry comes down to implementing Five Golden Rules of customer expectations:
- Be empathic
- Be predictable
- Under-promise and over-deliver
- Say No
Probably not the Rules you were expecting, so let me explain:
Muddy building boots and cream carpets
The building industry in Australia is a strange beast. On the one hand, because of it’s widespread system of contractors and sub contractors and tradies, I believe it’s probably one of the most efficient building industries in the world, but on the other hand I also believe it is one of the unruliest building industries in the world. Most of us know one or more horror stories of builders going bankrupt, subbies walking off site, costs spiralling out of control, tradies walking muddy boots through cream carpets, leaking bathrooms, disputes before tribunals and indecipherable quotes on the back of envelopes.
I’ve certainly have my fair share of war stories from my 20 years in the building industry in Sydney. And to be honest, I’ll even admit that I and my company might even have been at the root-cause of a couple of those stories.
It’s not easy running a building or building-trades company in Australia. But there’s two sides to that coin. There’s also great opportunity in the building industry to grow your business and make good money and margins, because there are so many drongos out there and customers are desperate to find professional reliable building businesses to deal with.
Looking after the tradies
It was that way in my days as a builder. The good, professional, reliable, tilers, bricklayers, carpenters, painters, plumbers, electricians, concreters, renderers and roofers were always busy. I would have to book them in 6 weeks in advance, I’d have to pay them well and lay out the red carpet for them, or they’d go somewhere else. And I learnt that I’d better do all of that, and then some, because getting the cheaper, available tradies always led to disasters of one kind or another and most importantly, unhappy customers.
The Golden Rules of Growing your Building Company and Making Profit:
Hence my Five Golden Rules for Growing your Building Company and making Profit above, because this is what I learned about developing a growing Beautiful Building Business (and Life):
- Be empathic: Building contracts are big things, in dollar terms as well as scope. Customers enter into building contracts with great trepidation, because it’s usually the biggest contract of any type they’ve ever signed and they can’t even see what they’re buying yet. You need to be sensitive to that anxiety, that all customers experience at some stage in the journey. You deal with big contracts and big turnover every day. For your customers it’s a great source of stress. Stress makes people behave irrationally… Make allowances for that.
- Be predictable: Customers are happy to pay your price if they feel confident they’ll get what they are expecting. If they don’t have that confidence, they’ll shop on price because that’s the only thing they can control.
- Under-promise and over-deliver: If you tell your customers you’ll be ready with something by Friday, surprise them and finish by lunchtime on Friday and then take some time to really clean up, dot the I’s and cross the T’s. Don’t ever tell the customer you’ll be all finished by Friday and then when they come home from work on Friday it’s still unfinished and a mess… That’s just asking for trouble.
- Say No: Don’t take on work you don’t feel confident you can deliver, fully, properly, on time, profitably and with a smile. Say yes, only when you are 100% confident you can do it how it’s meant to be done.
- Communicate: The three C’s: Communicate, Communicate, Communicate. If you come to the conclusion on Wednesday that you can’t complete the job on Friday as you promised… Tell your customer… on Wednesday… By email, by letter, by carrier pidgeon, by SMS, or by Whatsapp or Twitter… But for Pete’s sake, tell them. They won’t know, they expect to have a Barbeque on the new deck on Friday evening and they’ve invited their friends to celebrate. Similarly… If you strike something unexpected, you hit rock where you didn’t expect it, asbestos in the roof, an aboriginal artifact in the footings, a conflict on the drawings, you find out you’ve made a mistake in your calculations, ordered the kitchen benchtop 100 mm too short, or forgotten to order it at all… TELL THEM. Seriously. They’ll understand. They’ve made mistakes in their life as well.
And if you do all of that… If you live and breathe those rules, every day, and you hammer those rules into the heads of your employees and subbies, your construction business will grow and grow and grow, because your customers will be your Raving Fans and they’ll do your marketing for you. They’ll tell their friends all about how you finished the deck early on Friday, cleaned and tidied up and left a bottle of wine to have with the barbie on the deck when you came home from work. They’ll talk about you to their work-mates and convince their neighbours to have their own decks built by you as well, even though they’ve had cheaper quotes, allowing you to make good margins and profit. Read the story of one of my favorite building clients.
The alternative means you’ll have to endlessly compete on price and competing on price is a dog’s game… I promise you.
More about growing a building business:
- How to grow and develop a small construction company, CEO today
- Four ways to make your construction company a success, QBE blog
Your next steps:
If you’re interested to find out more about how I support my clients to do things I’ve written about here and make business fun again. Have a look at my 5 Step Discovery program. The 5 Step Discovery program is designed to answer the question: Is it a good idea for the two of us to work together? The first steps in the Discovery process are entirely free, and the remaining steps are nearly free or low cost. Find out more about the 5 Step Discovery process here.
Read more on this website
- All the most important business growth strategies here
- How to build a beautiful architectural business
- How to build a beautiful family business
- How to build a beautiful service business
- Growing your business is the easy part
- Managing your quality
- Enough and the business growth myth