The goal of every construction company is to grow their business, secure as many jobs as possible and avoid organizational errors. Sometimes however, this over-eagerness to expand leads to bigger problems that you may not have expected. Although competition among construction companies remains extremely high, not all jobs are suited to your business. This article goes over some of the common mistakes that construction companies often come across, many of which can make a truly negative impact on your business. A good construction company should have the right people in place to ensure that all decisions benefit the overall business, and contribute to its growth and development. Keeping these errors in mind will help your company keep its eye on the prize, and avoid common pitfalls that hinder even some of the most successful construction companies.
Taking on Too Much
Like all good business owners, saying no to an offer maybe a difficult thing, but is sometimes the right decision. Knowing what your company’s capabilities are is essential in ensuring that you don’t take on a job that is too big. Many contractors and project managers are inclined to take on jobs that are too big, and try to make adjustments to make the project fit with their business. The reality is however, that some jobs don’t align with your business’ resources and workforce. Sometimes taking on larger construction projects forces a company to use all their resources towards one particular goal. Perhaps the best decision is to spread out your resources, which ensures your staff isn’t overworked, but maximizes their talents. If you find that a job may require a substantial amount of attention, workers, time and resources compared to jobs you normally take, consider passing it up.
Because of the unpredictable and fluid nature of construction, businesses are more likely to have trouble hiring the right amount of people, and guaranteeing them a position. Try to keep turnover to a minimum by providing a competitive pay and other forms of compensation. Communicating with employees is key and allows you to fully explain what your expectations of them will be. By maintaining a consistent workforce, it is easier to build strong relationships that can help develop a loyal and hardworking staff.
Not Relying on Professionals
Even the most knowledgeable project managers and business owners will need help in various areas, to make the most profitable business decisions. Having a reliable team, ranging from a CFO, controllers, advisors and accountants, can all contribute to the consultation processes. Although the instinct may be to take on new jobs or hire new staff, having a team of experts in every department or division within your business can make your decision-making process easier and better informed.
Going Outside Your Capabilities
Similar to taking on too much work, this organizational error is concerned with taking on jobs that are beyond your business’ expertise or skillset. Again, it may be tempting to take on new jobs especially if they are profitable and attractive, yet many businesses must take more consideration. If your company does a specific construction trade very well, you may be best served to stick with your expertise. This does not mean you should only do one thing, but taking a step back and asking if your company can execute a job efficiently and professionally should part of the criteria used when deciding on what type of work you will accept. Having trouble with a particular project may result in even bigger problems, forcing your company to spend more money and resources on a project that wasn’t suited to your expertise. If you are taking on a job that you feel your business can handle but have some apprehensions, do it cautiously and take advantage of your team of experts who will help make that decision.
Expanding Too Quickly
Many construction business owners and entrepreneurs would not hesitate to take on new jobs, hire new staff and invest in more equipment if there are jobs available. The risk this runs however, is growing too fast, and not recognizing how an influx of business can have a negative impact on certain parts of the business. Rapid organizational growth is often met with cash flow issues, lack or overabundance of talent and can limit communication due to how busy everyone has become. The focus should be to grow profits slowly recognize the pitfalls, and plan for ways to avoid these dangers before it’s too late.
No matter how much planning your business may do, coming across organizational issues or making unprofitable decisions is inevitable. The goal should be to know what pitfalls and common mistakes are out there, and doing your best to avoid them from happening. This list only addresses a few of the many risks that construction companies may be exposed to. Think of it as a quick reminder to help you slow down, eliminate impulsive decisions, and keep your company on the road to success. To read more on similar topics, see how construction companies can mitigate operational risk and how to increase efficiency on jobsites.