How to Make Your Construction Business Succeed for the Long Term

Today, it takes innovative strategy, decisiveness and a new vision to be successful. It takes guts to make tough decisions that will keep you in business, allow you to emerge as an industry leader, grow and profit.

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Have you ever played on a sports team with a losing record? As the season comes closer to the end, a losing coach must make one of two choices: panic in desperation and call some bad plays or sacrifice short-term gains to build for the future. The desperate coach who fears for their future often calls ‘Hail-Mary’ plays, hopes for a miracle, or make some bad decisions. A solid and confident coach will stick to basic principles and do what they know will build a better team over the long haul.

Desperate people make desperate decisions

As your construction business struggles, have you called any risky plays in hopes that a miracle will salvage your future and keep you afloat? Often desperate business owners call the wrong plays to bandage the short term and keep them surviving and barely able to play the game. To keep their companies alive and remain in the game, I have witnessed many poor decisions made including:

  • Bidding contracts at cost to keep crews and equipment working
  • Eliminating employee training to cut costs
  • Not upgrading technology to save money
  • Selling equipment at a huge discount to generate cash
  • Letting go of key managers to reduce overhead expenses
  • Trying to generate more sales without a marketing budget or salesperson
  • Offering large discounts to get paid faster
  • Trying to generate revenue without thinking about long-term plans

A winning coach must always put long-term success ahead of short term victories in order to build a winning team that will remain victorious and gain momentum over the long haul. These successful coaches build on a solid foundation of values, principles, character, and planning. Just like winning coaches, successful business owners also have goals, targets, and plans built on sound principles for success. These sound principles include:

  • A strong management team
  • Written targets & goals
  • Systematic operations
  • Financial management
  • Ongoing sales & marketing
  • Employee training
  • Administrative excellence
  • Cutting-edge technology
  • Profitability
  • Innovation & creativity

Read next: Call Winning Plays to Build a Profitable Construction Company

It’s back to business basics

As business changes and demands gets tougher, your business must still work and run on all four cylinders! Work well, work fast, work lean and produce results. You still need 11 players out on your football field, backed by coaches, management, sales, marketing, accounting, trainers, administration, and leadership. You can’t get it to work without all the parts necessary to run your team. Without all the required parts operating efficiently, you’ll eventually lose your business to your banker, suppliers, competitors, bonding company, or the creditors

Attempting desperate moves and eliminating people, managers and systems required to manage a successful business won't deliver the results you need to sustain your viable business. In today’s fast paced competitive environment, your old customer pipelines won't feed the profit machine and your old-school management techniques won’t work.

To make matters worse, most business leaders are stuck in the past, outdated and continually playing catch up with the new competitors, new products, new delivery systems, and high-tech ideas that appear quickly, intense, and difficult to maintain or implement. It is obvious you will either have to make significant changes and investments in how you do business today, or your business will not succeed over the next ten years.

Established businesses typically sit and wait for some other company to try new ideas or be first with new types of leadership, systems, technology, delivery methods, employee incentives, or company operations. Many resist making tough decisions about their future and don't change until it’s too late. Some owners hope everything will work out, as it always has before during a growing economy.

This type of leadership will only do one thing in today's exponentially pressured business climate: FAIL. Today, it takes innovative strategy, decisiveness and a new vision to be successful. It takes guts to make tough decisions that will keep you in business, allow you to emerge as an industry leader, grow and profit. It takes real strength and confidence to coach a winning team and keep it on the leader board over the long haul.

Think new and different plays

To build a winning long-time business, start with a new playbook with blank pages. Ask the question: "If we could start over, how can we design this company to be a cutting-edge and profitable industry leader?"

Forget about your current people, positions, procedures, equipment, strategies, or customers. Think new. Think new markets. Think real customer needs. Think creative approaches. Think beyond the same old box. Think different and NEW delivery systems, pricing structures, chain of commands, rewards and incentives, management reporting, productivity programs, customer relationships, sales and marketing approaches, and profit goals. Think YOUNGER with less control. Think about rewarding and compensating results in new ways.

Think FASTER. Think BETTER than ever before. Think BEYOND. Customers today want it all. Design your service for today's demanding customer who expects perfect quality and perfect service at a great price even faster than you can imagine. Design your company to deliver bottom-line results twice the industry average because of your super-fast productivity and efficiency.

Define what you want and need to do

A successful business over the next several years operates by knowing what it does best, why it does what it does its' purpose, and what it needs to do to stay focused and gain market share. It has a clear vision of why the business exists and what measurable results are expected to keep it winning for a long time. The purpose of a business is to give the owner what he or she wants.

In publicly traded companies, stockholders want three things:

  • quarterly earnings or profit
  • increasing stock value
  • revenue growth

In private companies, the owner can want a variety of things including the three listed above. Construction business owners also want their businesses to create wealth, build equity, and give them freedom from handling the day-to-day operations. Some also want their companies to create investment opportunities which reap fantastic returns. Others put a heavy focus on loyal customers. While others seek to maintain great place to work that attracts and retains the best people in their industry.

Read next: How to Achieve Your Business Targets and Goals

To reach your objectives, start by deciding what you want and what you need to do to be successful over the long term. The purpose for your company can be whatever the owner wants it to be: freedom, finances, fun, family, faith, image, prestige, community involvement, to help others, provide service, or anything else you can think of. 

In many cases, business owners work too many hours for the return they receive. This is common in small- and medium-size entrepreneurial companies where the owner and business are one in the same. In those cases, the owner doesn't own a business, he owns a job that doesn't pay very much.

The purpose of a business is NOT to keep busy, create stress, work hard, survive or break-even.  With a clear purpose, one would have specific reasons why one owns a business and what results can be expected.

Expect the results you want

For a business to work, expected measurable results must be clear, precise and written. A sample of clear results a commercial construction company might seek should the following targets:

  • Return On Equity  - Minimum 15% to 20% pre-tax
  • Return On Overhead  - Minimum 20% to 50% pre-tax
  • Net Profit On Sales  - Minimum 1.5% to 3% pre-tax
  • Total Revenue  - $12,000,000
  • Maximum Overhead - $800,000
  • Loyal Customers - Minimum 25%
  • Repeat Customers - Minimum 50%
  • New Customers - 1 per month
  • # Customer Referrals - 12 per year
  • Number of Contracts - 24 per year
  • Minimum Contract - $500,000
  • Employee Retention - 90%
  • Employee Training - 40 hours per year each

The key to making it happen is to know what you strive for. Set clear measurable targets, and then make people accountable and responsible to make them a reality.

Developing a winning focus

A winning business finds and keeps customers at a great profit. This must be the central theme and priority of all business operations at every level in your organization. Most construction companies typically experience a constant struggle between what they sell and what their customers buy. Customers demand first class quality and top service but often make their buying decisions based on price.

The challenge was how to deliver on all three (schedule, quality and price) and still make a profit. It is difficult to be the low bid provider while delivering the best quality and superior service.

Read next: 5 Focus Areas to Increase Your Construction Company’s Efficiency

In order to improve your bottom line success, get your winning strategy and focus clear and on-target as follows:

  • Your #1 priority: Repeat loyal customers; Make 20% minimum return on equity
  • What we do best: Provide personal service; Integrity & trust
  • What project types we do: Commercial buildings
  • What size projects we do: Over 20,000 square feet; Over $1,000,000.
  • Where we do business: Within 60 miles from our office
  • Who we do business with: Manufacturing companies
  • How we do business: Full service & full value
  • Total project management: Design-build contracts

Jack of all trades = losing team

What kind of offense will you run? Winning teams use the same type of offense for the whole season. This way you can get really good at what you do. In your business, you can’t be all things to all customers. It doesn't work. A real benefit of getting focused is the ability to know when to say "no." When you decide who and what you are, the opportunity to excel increases dramatically.  You become laser beam focused and don't get off track, both of which improve customer loyalty and bottom line profit.

Hedley Small AdIf you want to focus your top priority like creating loyal profitable customers, you’ll have to re-write everyone's job description to include focusing on customer satisfaction. You might also need to change your incentive plans with targeted results based on finding and keeping customers. This should result in productive focused people, lifetime customers, and above normal profits. With continuous repeat customers, finding new opportunities can become an easy task for your business development department.

Call winning plays

The ultimate goal in business is to be systemized and organized. This will produce the same results every time and deliver the results you want. This requires a set standard way of doing the work. Good systems determine the ultimate success of any business. Good systems equal good results. Poor, unused and unmonitored systems equal sporadic results that are too dependent on people and the owner making too many of the day-to-day decisions.

To build a consistent machine, it is management's job to work-on the business and develop, refine and perfect its’ systems. Priority must be focused on dedicating a portion of every week to improving, documenting, and refining your operational systems. As you work-on rather than ‘in’ your business, your role changes from doing the work to managing the systems.

An organized and systemized business allows your people to respond to customers in a consistent and predictable manner. Building a business that works or rebuilding an existing one is not easy. It takes a lot of dedication, hard work, and forceful leadership, but the end results are well worth it a business that works!

Your leadership coaching decisions determine your everyday results. Weak and inconsistent actions will not get the winning results you want. Where are you now? Where do you wish you were? How can you make it happen? Be bold. Be brave. Be radical. Try something new. Set clear measurable goals and targets. Write out exactly what you will do and don't do. To build your business takes hard work, positive decisions, and visionary determination. Don't and you won't. Do and you will.

George Hedley CPBC is a certified professional construction BIZCOACH and popular speaker.  He helps contractors build better businesses, grow, increase profits, develop management teams, improve field production, and get their companies to work.  He is the best-selling author of “Get Your Construction Business To Always Make A Profit!” available on  To get his free e-newsletter, start a personalized BIZCOACH program, attend a BIZ-BUILDER Wealthy Contractor Boot Camp, or get a discount at online university for contractors, Visit or E-mail [email protected].