Bobby had worked for the same concrete contractor for more than ten years but was beginning to think that the owner was not paying enough attention to quality and to his customers as he should. In short, Bobby really believed that he could provide better quality and do a better job of meeting customer's needs than his present employer.
Pat had owned his contracting business for almost twelve years now. Over the past two years he began to have some of his current clients ask him about doing some work in a few new market areas, one of them almost fifty miles away. While there were contractors in the new areas he was also fairly confident that he could compete against them due to his proven history of doing quality work.
The title of this article is just as critical an issue for the veteran contractor looking to expand his or her company's business as it is for the contractor "wanna be" who is about to act on their dream of starting their own construction company. Determining the right market to enter is paramount to the future success of any contractor. The only more important determining factor is knowing when to enter the market.
Bobby and Pat from our earlier examples represent real contractors. I've worked with both of these individuals and many others just like them. While there are no secrets to determine the best market for you to enter and there is certainly no perfect time table about when to enter a market, there are several guidelines that have assisted many a contractor in dealing with our focus in this article. Let me share a few of the critical considerations.
Guideline No. 1 Consider Your Resource Potential
Whether starting a brand new company or expanding into a new market you must recognize your resource potential. This is two fold. First, what are your current resources including manpower, experience/expertise, equipment, tools, etc. Second, what potential exist for you to borrow the necessary monies to purchase or lease needed equipment, tools, etc. While borrowing comes with a price attached you should not eliminate the possibility of increasing a line of credit or taking an additional loan for capital investment from your bank.
Guideline No. 2 Have a Realistic Expectation for Success
Too many anxious or inexperienced contractors expect great results in the first year. In some situations there may be great rewards for taking the risk. However, in most new construction beginnings it is more realistic to expect a 3-5 year period of time to realize the full potential. Therefore, making the mental commitment to seeing the investment through is important to make. Don't be short sighted; good things often come to those who can persistently wait!
Guideline No. 3 Look to Possible "Joint Ventures" or Partnering Relationships
Many contractors have found greater growth through joining up their resources with another contractor who has what they do not. This can include having the needed expertise or already having a presence in a particular market. When you partner with another contractor in any form you will not reap the entire benefits but neither will you have to exhaust only your resources. You should not go into just any relationship with another company as each company has their own way of doing things. However, this can be an option that could benefit both parties involved.
Guideline No. 4 Review Available Market Info AND Do Your Own Research
A growing number of resources exist that provide market data for communities. This information is often split into categories that can provide valuable information about a growing need in a geographical market area. While this resource should be obtained and studied the contractor serious about starting their own business or expanding into another market should do some of their own reconnaissance. Visiting with local material plants and industry related vendors, asking them about growth trends and needs or what market segment is not being adequately meet should be pursued. In some cases, contractors have conducted their own survey among a specific area, asking potential customers would they support a new construction service if it were available.