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The construction industry is volatile, with only 47 percent of companies lasting four years. While countless construction companies close their doors, others get bigger and stronger by the year. This has nothing to do with luck. The most successful companies share some traits that allow them to make money, even during economic downturns. Find out what traits these companies share and incorporate them into your own business.
Top construction companies understand that adapting is part of the business. The contractors at these companies plan for each project while still understanding that unknowns can creep up at any time. Common variables include weather conditions and unmarked underground utilities, but anything can happen on a jobsite. The scope of the project can even change. The ability to adapt to change can turn a good construction company into a great one.
2. Commitment to Safety
The top construction companies do more than put up safety signs and use personal protective equipment. While that’s important, the best companies make safety a part of the culture. When safety is part of the culture, employees understand that following safety protocols is more important than efficiency. To make safety part of the culture, companies must embrace constant training, collaboration, and transparency, while also providing the best gear possible.
3. Embrace Technnology
Technology has changed the way companies in various industries conduct business. That includes the construction industry. Industry leaders have adopted technology to help them complete jobs. GPS technology allows companies to track employees, technicians, or equipment on jobsites. This cuts down on the time they spend looking for pieces of equipment, making them more efficient.
Industry leaders have also embraced drones to help them on jobsites. They use drones to survey land, surveil jobsites, improve safety, and more. Many believe that construction companies have only begun to see what drones can do for the industry. In the future, they could play an even larger role.
Leading companies have gone beyond implementing new technology and have also created new roles. Some of the most successful construction companies now have construction technologists on the payroll. Construction technologists empower employees by training them to use the different software solutions and tools that are now available.
4. Build a Diverse Portfolio
Far too many construction companies focus on a specific niche. That’s fine when there’s lots of work available, but the construction industry tends to ebb and flow. When companies only offer one type of work, they can expect to experience dry spells. It’s hard to go weeks or months without jobs and still be successful, so the best companies expand their offerings and create a diverse portfolio of projects. Companies should not confine themselves to a specific niche or type of construction. Instead, they should embrace opportunities and bid on new projects. When they do this, they’ll discover that there’s lots of money to be made in construction. The trick is to open up to different types of projects.
5. Have Enough Capital to Seize Opportunities
Top companies understand the importance of seizing opportunities. If a key hire or an opportunity for an acquisition presents itself and the company cannot act, it won’t be competitive. To ensure that companies can take action, they must have enough capital on hand. Because so many construction companies live project to project, those with the extra capital can quickly differentiate themselves and become success stories
6. Have a low Turnover Rate
The construction industry has a 3.5 percent monthly turnover rate. The high turnover rate indicates some serious problems in the industry, including low employee morale. The best companies have managed to reduce employee turnover by providing a better experience for employees. Lower employee turnover makes companies more reliable and efficient. Also, it’s easier for these companies to attract the best talent. The best workers want to work for a company that appreciates them and provides a positive experience. Because of that, they are most likely to land at companies that have low turnover rates.
7. Use Robust Construction Financial Management Software Packages for Better Oversight
Poor organization is one of the top reasons construction companies lose money. Disorganization can lead to a variety of problems, including missed invoices and forgotten payments. Disorganized companies also tend to misallocate costs, making it impossible to track profits or losses on a per-project basis. When you combine these problems, it’s easy to see why so many companies don’t survive.
Successful construction companies avoid this problem by using robust construction financial management software packages to manage every aspect of operational and accounting tasks. The software has modules, including project management, document management, service management, accounting, and more. The software allows companies to manage the details while also understanding the big picture. This type of organization makes it easier to be successful.
8. Only Take on Profitable Work
Some construction companies get in the habit of saying yes to every project. The owners believe that they need to keep saying yes, so they can build their portfolios. However, they should turn down projects unless they are profitable. The right software can help with this, as long as your project management and accounting are under one roof. Companies should easily be able to see similar previous jobs, including variance between estimates and actuals and what the profit margins achieved were.
9. Experienced in All Phases of Construction
The most successful construction companies are turnkey operations. These companies can assist in each stage of construction, beginning with site selection and ending with the final occupancy approvals. Customers prefer a turkey solution since there is a single point of contact, allowing for smoother communication and improved efficiency.
10. Solid Risk Management Strategy
To be successful, a construction company must have a solid risk management strategy in place. The right plan protects customers and the company from potential risks. Successful companies determine all potential risks and create a plan to deal with them. Sometimes, risk can be avoided or transferred, but other times, the company might have to mitigate the risk. After determining how to deal with the risk, companies then choose a resource to handle it. While risk management doesn’t make risks magically disappear, it does make them less impactful
Embarking on the Road to Success
When you incorporate the best practices, you can begin to compete with the best in your industry. All companies have the ability to be successful. It comes down to adopting the best practices, so you can grow as a company
About the Author:
Cedric Jackson is a contributing writer. His writing draws on his rich life experiences, time spent traveling and years working with the written word. He is passionate about internet marketing, finance, travel and the construction industry. When not busy writing, he spends his time traveling, reading and keeping up with world events.