597: Key Questions To Help Evaluate And Operate Your Construction Business

This Podcast Is Episode 597, And It's About Key Questions To Help Evaluate And Operate Your Construction Business External factors, such as economic changes or technological advances, can significantly impact whether a business will thrive or fail. The rise of sharing and gig economy apps is an excellent example. These apps gave consumers more affordable options for daily tasks and errands and provided individuals with a new way to earn money on their schedules.   Running a business is a fascinating journey. But it's essential to thoroughly evaluate your company before moving further to ensure you're creating a sustainable and successful venture.   Costs may be high, requiring careful planning. You may need to educate your customers and convince them to adapt to your business before they're ready to use it or hire you. And let's remember the competition that already exists in the market.  

Competitor research is critical to evaluating your company when it's just starting out. Knowing your competitors, their operations, and their strengths and weaknesses will help you create a successful strategy.

To start with, through phone conversations or in-person chat, I usually tell our clients to consider these top five questions:

1. What are my short-term and long-term business goals?

2. How well do I understand my target market and customer needs?

3. What sets my construction company apart from competitors?

4. Am I effectively managing my financial resources and cash flow?

5. Do I have a clear marketing and branding strategy in place?

If you know the answers, the questions will not bother you.

- Randalism

In school, when you sat for an exam or a test, and you knew the material forwards and backward, it was fast and easy. The exams and tests for the classes you struggled with were the opposite. Having a Business Process Management Plan answers the questions about how to run your business because it is something you developed. Not something someone else did and handed to you.

As you build and grow your construction business, you must constantly evaluate and reflect on your progress. By investing a little effort now, you can save money, time, and heartache. Asking yourself the right questions can help you navigate challenges, make informed decisions, and set strategic goals for the future.

Here are some key questions to consider as you learn more about your construction business:

1. Financial Performance:

How is the overall financial health of the business? Are there any significant fluctuations in revenue or expenses? What is the profitability of different projects or contracts?

It's important to know what resources, including financial capital, you need to start and maintain your company. It's also important to know what barriers exist. These barriers include high startup costs, tough competitors, or regulatory hurdles that may need to be overcome.

2. Operational Efficiency:

Are projects being completed on time and within budget? What is the status of current projects in terms of milestones and deadlines? Are there any recurring operational challenges or bottlenecks?

Consider what systems and tools you can implement to streamline operations and improve efficiency.

3. Customer Satisfaction:

How satisfied are your clients with the quality of work and customer service? Are there any common feedback or complaints from clients? What steps are being taken to address customer concerns and improve satisfaction?

Evaluate how you can foster strong relationships with clients, suppliers, and subcontractors by understanding the current market and trends and being an active listener.

4. Employee Engagement and Development:

 How engaged are my employees in their work?   What opportunities are available for professional development and growth?   Are there any notable retention or recruitment challenges?

Not everyone is an expert at everything. You have to ask yourself whether you have the right skills to launch and run the business or who you can gather around you to support you.

5. Compliance and Risk Management:

 Am I up to date with relevant industry regulations and standards?  What measures are in place to mitigate potential risks in projects?  Are there any outstanding legal or compliance issues that need attention?  How do I prioritize safety and compliance in my construction projects?

Not every project is guaranteed success. There are always inherent risks involved in starting a new venture. Evaluating these risks and creating contingency plans to address them is an integral part of the evaluation process, especially ensuring that your company complies with regulations and industry standards.

Of course, measure and track the results of your journey and improvements. I do not intend to deter you with this post; my goal is to encourage you to think about what you must do to turn your company into a successful business and fill in the spots you may have missed.

Balancing various responsibilities within a limited timeframe can be challenging, and time equals money. You might be better off focusing on your skills, but hiring help under your payroll is unnecessary. You can, however, outsource tasks like:

1. Administrative

Responsibilities such as bookkeeping, invoicing, and paperwork can be overwhelming for solo business owners also focused on project management and client communication.

2. Financial Management

Many solo construction business owners require assistance with financial tasks such as budgeting, accounting, and tax preparation to ensure compliance and economic stability.

3. Time Management

Assistance with time management strategies and tools can significantly benefit solo business owners like you.

4. Legal and Compliance Matters

Understanding and adhering to complex legal and compliance requirements, including permits, licenses, and safety regulations, often requires external support to avoid potential pitfalls.

5. Marketing and Business Development

Generating leads, marketing services, and expanding the business can be daunting for construction business owners who may need guidance on effective marketing strategies and business growth opportunities.

6. Professional Development

Staying updated with industry trends, new technologies, and best practices often requires external resources and support, especially for solo contractors juggling multiple roles.

Final thoughts

Building a successful business is not a sprint; it's a marathon. By regularly reflecting on these questions and seeking answers, you can gain valuable insights into your industry, identify areas for improvement, and make well-informed decisions to drive sustainable growth. Continuous learning and self-assessment are not just tools but the cornerstones of building a successful construction business. Stay committed, stay motivated, and keep learning.

About The Author:

Sharie DeHart, QPA, is the co-founder of Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com