Tag Archives: Construction Business

What does construction industry have for new entrants?

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New entrants are always posed to higher risk in any form of industry. Newbie who lack experience to handle volatile business are prone to risk that can lead to winding up of the business once and for all. This is the reason why when you think of trying your luck in an industry, try to gather as much knowledge as you can to help you analyze the scope you have to stay afloat and the risks attached that has the potential to sway your business forever. Take advices from people who have been in the industry for long. Their tips will definitely help you for good. When we talk about volatile industry, we can never skip talking about the construction sector. It is considered to be one of the most volatile sectors. It is also known for rewarding people for their good work and ability to strive in high tides.

New entrants in the construction industry have to witty, sharp and sensitive towards their business. Any form of casual approach can cost the company dearly and end their hopes to make it big in the sector. Market experts believe that the construction sector in a nutshell is doing better that most other industries and the reason behind it is the boom in the economy.

The world economy is improving and so are the industries that are closely associated with a growing economy. It is therefore the right time to get into the construction business and try to achieve success with hard work and dedication. However, you got to decide the genre that you want to take. For instance, you need to decide if you want to get into forestry or road building or construction of residential property or commercial houses. This decision is quite imperative for you to get hold of the business and later consolidate it.

Housing sector is at its peak:-

New entrants in the construction industry can try out in the housing sector which is at its peak for the time being. You will not find much competition there as long as the size of the project is small. Companies that are into this business for long do not want to end up in small projects. They basically eye for work that will last for a couple of years. It undoubtedly has more money for the builder which is why many companies compete to bag the work. Quite contrary to this, small housing projects are not a highly profitable zone that one would like to enter and therefore it gives new entrants the opportunity to take the work and strengthen their position. They can continue to pick smaller projects as long as they are not confident to go for a bigger deal.

Construction of amusements parks and resorts:-

Constructing a holiday home is the next big thing that the construction industry has for new entrants. However, a company with no experience of building such projects can have a hard time to complete it and therefore it is recommended that they get into a partnership with a more experienced company which is smaller in size and is ready to partner with a company that is a newbie.

 

Be careful while dealing with contractors that you have not worked with

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Trust is an important factor in any form of business. You got to trust the person before you start working with him and if you are not able to generate the trust and comfort then it makes no point in working along with them. At some point or the other you will get stressed up and you will have to do away with the other guy. When you are entering into a partnership with a person you do not know much about, you got to be very cautious. Ideally, it is recommended that you do not get into any partnership with an unknown person but in case if you have to then you are needed to remain ultra-careful and monitor his business activities. You should not trust the person by not knowing him in complete or else it might lead you to serious issues.

There is a popular saying in the construction world. “Do not trust an unknown person. He carries with him the potential to back-bite you”. This is very much a possibility in an industry where there is cut throat competition all over the place and people are ready to negotiate with their ethics without giving a second thought. Since the construction business has been considered such a rewarding business many people are turning into it to make it their career. They will often consider toppling anybody that they see as a potential competitor and therefore if you think of getting into partnership with one such person you will regret it for the rest of your life.

Contractors in specific can cause you more harm than others. They are the ones who do most of the work in a project for you and are paid as per the contract. Now if you get engaged with a contractor that you do not know much about and he does not intend to do his work properly and is associated with you to make some easy money by doing shabby work, it can lead you to serious problems. It is therefore important to know the credentials of a contractor before you give him the contract.

You need to know if he has worked previously in any such project and try to get his conduct from that company. Such information can be availed with ease. Construction companies do mind giving out conduct report about a specific contractor as they understand that the contractor is not bound to work with just one construction company. They can work with multiple companies at the same time. So if the contractor is worth getting some work, you will be informed about it or else they will give you a negative report.

If you have been working with a contractor for a long time and you know his quality of work is splendid that generates a certain degree of trust in you and you can focus on other stuffs by submitting the entire assignment to him but this can’t be done in case of an unknown contractor with whom you have been working for the first or perhaps the second time.

A lien on the construction can lead to serious problems

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You take up a big project, complete the work on time but forget to pay your contractors their dues. This can lead you to some serious problems in the future. If you do not pay your contractor for their work, they have every right to place a lien on the construction project and you will then find it difficult to get a completion certificate. More to this, banks will not entertain you when it comes to refinancing or for that matter any sort of financial assistance. Banks do not get into projects that have issues. They want projects whose title are clear and have no issues whatsoever. It can cause several other issues to the constructor when it comes to selling the apartments in a condominium which he has constructed for residential purpose. If the title on the property is not clear, he will find it absolutely difficult to sell it to the public.

The construction company has to ensure that he clears the dues of the contractors should also ensure that the contractors are also paying to the sub-contractors because if they are not paid then they can also adopt the same methodology and create issues for the company. The sub-contractor can also place a lien on the project and can put a halt to the sale proceeds. It has been seen that liens are ideally placed as a last resort when contractors do not see any other option to get their money they go for placing liens. Once a lien is placed on any construction project, it gets recorded in the credit rating of the company. This means that credit rating of the company gets hampered which eventually affects the overall goodwill of the company. Construction companies do not want to play with their goodwill and therefore they do not want to take any potential risk by not paying their creditors or contractors.

Further to this, a dip in their credit rating can also cause problems to them when it comes to getting loans from banks. Construction companies with poor credit rating do not easily get loans and if at all they manage to get it from any financial institution then the interest rates will be really high. This in turn will have a negative impact on their business. They will never want such things to happen and therefore should try everything to avoid getting a lien on their project.

There have been several instances where construction companies have paid the contractors but they in turn have failed to pay other concerned parties to the project. This can be a big pain for the project owner because here he may not know all the parties who are associated with the contract and then all of a sudden you get to know that someone has placed a lien as they are not being paid. However, you check your records and see that you have paid all the parties involved in the transaction on time. You can file a complaint and state that you are clear in paying everybody and can disclose the records in front of the concerned authority. But this is unquestionably a big pain and in order to avoid this, you should pick contractors of good reputation.

How to effectively market your construction business

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For a business to grow, it is important that people know about it and only when they know about the brand they will buy the product or use the services of the brand. In a nutshell any company who wants to grow its business needs to first create a brand for itself so that people are aware of its product and services and then sell it to them. Reaching to the end user and keeping them in loop of your existence is also knows as marketing and every company has to form a strategy to market their brand. Now some company takes an aggressive approach and some go soft while marketing their product. It is believed that companies that market their products aggressively are the one who have hunger in their belly. They want to grow quickly and the ones who are slow on marketing their products are perhaps happy with how things are moving. They might take an aggressive approach later as they may feel the opportunity is not right for that time and will wait till they see things moving their way.

A business where day in and day out there are new competitors joining in and each of them are struggling hard to make their name in the market it makes the overall environment to be more challenging. The construction industry in one such industry where you will come across many companies who have just started their business and are marketing their company quite aggressively. People with experience in this form of a business know how the industry works and what they got to do to make their business a success.

Be in the news:-

For people to know about you and your company, you got to be in the news for the right reason. You have to come up with excellent ideas and should also be able to present that to whosoever is interested to know about it. People in the construction business circle should know about you. For this, you need a website where you can put up your business plans and talk more often on how you can accomplish your targets. Your website should reflect the personality you possess. People going through your website should know that you dream big and also have the courage to fulfill it. This is one way to market your company. You may show your aggressiveness here which will go to a lot of people. You can also release circulars every week where you’ll talk about the industry as a whole and how your business is reacting to the current situation.

Be active on social media:-

We have a craze of social media these days. For every small things that we do, we try to put that out on social media. We do this to get some attention and as far as the construction business is concerned, it makes sense to be ultra active on social media. It is perhaps one of the many platforms that will take your identity to a lot of people by paying a nominal fee.

The ups and downs of the construction industry

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If you are in some form of business you will always come across suggestions from veterans of the industry that you should save more during the ups and be conservative during the downs. It simply implies that when you are having a good time in your business you should try to preserve capital for the bad times and this rule is applicable for all the industry and every kind of business. This makes more sense in a volatile sector like construction. In the construction industry, you can’t ever guess when the downtime will begin.

As long as you have projects in hand and you are getting paid for it, it is all good for you but when things turn ugly, it does a huge impact on the overall industry and particularly to businesses. At times the industry as a whole is at its peak but due to some unforeseen situations, you do not get paid for your work. Now you can come across this situation no matter how well the industry is performing. It is absolutely not relevant to the performance of the industry. This can turn into a crunch situation where you need money desperately to carry out business activities on a different location.

Preserve capital by not overspending:-

We in our daily lives tend to spend to stuffs that we do not need much. In other words, we can still carry ourselves quite elegantly without the presence of a particular commodity. But since we have enough money to buy the stuff, we go for it. Something similar to this also happens in the construction business. If we have made good profits from the last few projects, we start to contemplate to expand our business for which we think of buying heavy equipment, hire more labor, increase the marketing team etc. This in turn will increase the operating cost exponentially which in no way is healthy for a growing business. On the other hand, one must try to preserve the capital that he has earned and invest it when he feels necessary. You can buy your business related products when you have enough need for it or else it will be just waste of money.

Take calculative risk:-

Business is all about taking risk at the right juncture. Industry experts say that the more risk you take the more is the chances for you to get better returns. Well, it should be put in this way. The more calculated risk you take, the better is the chance to earn good returns. Just because we all want to earn money in no time, does not mean that we should begin taking risk without giving a second thought to it. This can lead us to a bigger mess and is certainly not advisable. Before you take a big leap, understand what you are doing and what could be the repercussions. Understand both the pros and cons of your decision and please before you act and not after your act. It makes no sense to cry over spilled milk.

 

Team work is an important component in the construction business

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When you are running a huge business that has many genres and departments you can make it a success only when you have people who work as a team. Running a big business is not a joke and it takes lot of wit and cautiousness when it comes to taking important decisions. You do not know if the decision that you have taken will be beneficial for you or will it harm the prospect of the business but you still have to take a call. This is when you depend on your team and believes that if you take a call to go ahead on a project you have your entire team to back you up and will face all hardships together. There are several instances where it has been proven that a single man can’t make all the difference. He may become a good leader if he believes in bringing the change but he definitely needs his team to follow him and show excellent team work.

Construction industry like all other industries firmly believes in team work. You have plenty of departments if you are attached to a big project and the success of the project lies on how cordially the entire team can perform. The team has to display great team work and they all have to follow what their leader says and got to complete the task on time. This also shows how important of the role of a team leader is while handling a big project. Right from the heavy equipment operators to its mechanics and the construction workers, they all have to work in tandem with each other. When we talk about team work it does not mean that there is no place for any dispute within the team.

Disputes do arise but it is the responsibility of the group leader or his seniors to address the issue then and there and try to get it sorted. It is quite natural for the employees to expect quick remedy of their problems rather than having to deal with the issue for months. This is why the management in a construction company needs to ensure that they address the issue without any delays. The morale of the workers should not be brought down by any means and if their well-being is taken care then that will play a mighty role in increasing support from the team members.

Rewards and recognitions should be quite usual. It should not take time for the superiors or people from the management to acknowledge the efforts and hard work of the employees. Employees from all departments should be awarded for their good work and a tradition should be made where employees from various departments come under one roof to collect their awards. In this way they will also know people from other departments. This will explore their options of learning new things by engaging with people from different teams. These little things play a big role in ensuring that there is a cordial environment and people continue to work as a team.

Plan your budget for a new project

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When you are a part of an industry and are doing well, you are tend to get more work. It is probably you have created a reputation over the years that now people believe in you and therefore give more business to you. So whenever you are given a new task, you need to plan few things in advance. Do you have the required human resource to get the work done in time? Is your financial reserve sound enough to take care of any additional requirements that will come out from a new business and many more of such questions should be answered first. These are tough questions for any business and the answers can’t come out of one’s head swiftly. There will be a lot of pondering that needs to be done when there is a chance of getting some new projects.

Moving our focus towards the construction segment, a business owner has to go through the same set of questions but for him the answers are far more difficult as compared to any other person belonging to some different industry.

Basically he needs to plan his budget bit differently than people from other sectors do. He even has to estimate the estimates. Now this is really difficult and can be confusing to many. When we talk about estimating the estimate, it means that the owner of a construction company have to estimate some rough estimates of the cost to the company. For instance, he estimates the cost of raw materials may increase and if it increases then what could be the price. So what is the highest point can he take his estimation is estimating the estimate. So in the above example, he is already estimating that the price of the raw material will increase and then he is further estimating the highest point that it may reach. Similarly, he can have estimation on anything that concerns his business. These estimations are crucial as it takes you closer to the actual.

Once you have made a rough estimation, the next step is to align it well with your budget. You may know your financial position much better than anybody else and therefore preparing a budget based on the estimations will be highly fruitful. It will take you closer to your goal and slowly and steadily you will start seeing things getting more realistic. It is only because of your in-depth planning that you can come so close to the realistic figures. They may not be accurate but certainly will be well-defined.

After you match up your financial position to the market estimate, you get to understand if entering into a new venture is anyway going to be profitable to you. Getting it discussed with your team is a healthy way to move forward and you might come across some really valuable suggestions from your team members. Taking advices from the seniors of your company will help you take precise decisions. So by planning your budget for a new project, you understand if you should put your hands into it or postpone it for some time.

Team work matters most in the construction business

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Dreaming big is a good thing but when you want to make your dreams come true you have to follow some very basic principles that will help you reach the place you want to go. The most important principle that you can’t afford to miss is to learn to work in a team. You may be the owner of your business but you should give equal importance to all the members of your company. You should know the importance of your team and how they function and you can know this only when you become a part of them. Working in a team and working as a team are both important factors that one should learn well if you want to take his business to the next level and especially when you are part of a much volatile industry like construction. Construction industry will give you no scope to survive or grow if you do not want to work as a team. Individual players have absolutely no role in this segment of business. They might stay for some time but will not be able to carry it along for long and will see problems erupting which he will find it difficult to manage it alone.

Though this sector is an alluring one and promises to give good returns if you are ready to work hard but just working hard will not take you to the top. You have to also take into account factors like working in a team.

You know where the business is going:-

When you are working alone and try to manage everything on your own, there are high chances that you may miss out on many things. It is never simple to manage a business alone and you need people to whom you will distribute your work so that they can take care of their part and you can take a report from them and understand where the business is heading. This is how it is supposed to work. You doing the work alone will take you nowhere as you will not have the slightest idea what exactly is going on. You will have no one to prepare reports for you and in case you have a department who does this thing, it is crucial that you maintain good rapport with them. In other words, have good team bonding with them which will also help them to work comfortably.

Team work makes things simple:-

In a big construction company, they have many different levels of departments and if there is sync between each department then things become simpler. The progress of work can be understood more clearly. This will also help you to move forward in your business and clear your paths for any possible expansion in the near future. You can have a bird view on the performance of your business if there is proper team work. The level of co-ordination amongst all the teams will define how successful you can become with your business.

Know the intricacies of the construction business

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The construction business is one of the most popular and profitable businesses in the current scenario. People choose the real estate business for investments and also everyone desires to have a property of his or her own. Hence, if you too are looking for a business that will fetch you great profits within a very short span, the construction business is the right one for you.

But, before you start the construction business, it is a must that you know about the intricacies of the construction business. With proper details, you will be able to establish your business fast and will also be able to enjoy the profits soon.

  • Get the finances:

 

The first thing that you need to start or establish a business is finance. Without finances, you will never be able to start any business. However, the construction business is one of those businesses that require huge amount of start-up capital.

For that you need to chalk out a business plan that will help you to fetch bank loans. The plan must clearly state how many employees you are going to have, your target market and how you plan to achieve the target. The initial cost and the potential profit that you will earn from it must be clearly mentioned in the plan. If you do not know how to right a good business plan, hire a skilled professional, who knows how to write business plans for a construction business.

  • Tools and heavy construction equipment:

 

One of the very important intricate factors associated with construction business is the expense of tools, heavy construction equipment and machineries. If you can afford, you can buy them. You will certainly get the brand new equipment as well as the old equipment. There are many dealers, who deal in the new and old construction equipment and will easily find one for you. You can also rent the equipment, tools and machineries for your projects initially, if you do not want to engage a lump sum amount of money in buying them.

  • Setup the business office:

 

The construction business demands a physical office, where all the employees, the clients and the customers can come in to deal. You must also keep in mind that along with the office building, you need a parking space for the construction equipment, machineries and tools.

  • Licensed and insured:

 

If you want to be fair and gain acknowledgement within a short span of time, having your business licensed and insured is a must. This will give the customers the assurance and guarantee that your company is there to stay. Certainly this will have an impact on the prices of your projects, increasing the profit margin.

  • Safety plans for the employees:

 

Since the construction business works onsite and there are numerous workers, who will be working on the many construction projects, their safety plans and occupational health plans is your responsibility. You must offer them to the employees, so that they are happy working with you and do not bring your business to a standstill under any circumstances.

 

Owning a construction business – Promote it on Social Media

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It is somewhat difficult to promote a construction business if you do not have a goodwill that supports to name of the company. This form of the business is so big and widely spread that it may take ages for you to set up an identity of your own. You not only got to work really hard but also equally smart in order to make a mark in this industry. So when we talk about smart work, the smartest will be to find an easier way to communicate to the mass about your business and in this process get some work and recognition from people. You can make use of a very powerful tool that will help you connect to many people at a given point in time. The people with whom you are getting connected to may or may not know you but irrespective of that you can put your word across to the mass. You can make use of Social Media.

It has been witnessed that almost every company across any industry has their website where they can post about their information. Similarly, they are fast approaching the concept of having an account in a Social Media forum so that people can go there and check the reviews left by others. Many from the construction business have also taken the same approach. In order to promote their business, they open an account in a Social Media website and from there they post messages about their business, their achievements and the activities they conduct so that people who might require their service are aware of them and can contact them when required.

Almost every internet savvy person today has an account in some or the other Social Media website. They do this so that they can stay in close contact with their friends and loved ones. Off late, it has been seen that people who have their businesses have started promoting them on these websites. However, they prefer to keep it official and do not post pictures that are casual. Likewise, when you are creating an account for your construction business, do not post any casual pictures of you hanging around with your pals. Try to keep it as much professional as you can. Post pictures that are linked with your jobsite. Pictures like heavy equipment working on the site, engineers talking with the laborers explaining what needs to be done and stuff.

Mentioning a bit about your achievements on the Social Media website also helps a lot. There are job seekers and job givers both available on the Social Media website and if any of the job giver finds the quality of your work in compatible to his requirements, he may give you an assignment to work on. You can also customize your account to make it look attractive. There are loads of options available that you can opt to make it work. Many have found this to be a great tool to promote their business and when it comes to construction, it can’t get better than this.

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