Scaling Your Construction Business: Four Proven Tips to Multiply Your Revenue

How to Scale Your Construction Company: Four Strategic Tips

Unlocking New Levels of Success

In the construction industry, the path to expansion can often seem cluttered with challenges and uncertainties. Many contractors find themselves stuck, unable to process how to leap from handling $500,000 projects to managing Multi-Million dollar projects and scaling their company to over $50 MM plus! However, scaling your construction company isn't as daunting as it appears, provided you employ the right strategies AND ALWAYS KEEP YOUR EYE ON PROFITS! Chasing top revenue is NEVER as important as being productive and efficient resulting in great profits! In this comprehensive guide, we'll dive into four strategic tips to scale your construction company that can catapult your business to new heights. 

1. Bid on Larger Work

The most obvious yet frequently overlooked strategy is to start bidding on larger projects. Many contractors stay confined to $500,000 or $1 million jobs due to fear or uncertainty. If you're proficient in managing smaller projects and achieving your desired profit margins, it's time to cast your net wider. Here are a few steps to begin:

- Understand Your Overhead and Resources: Make sure your company infrastructure, including manpower, is capable of sustaining bigger projects. Make sure, YOU the owner, understand the risks and can help when needed as well.

- Fix Profitability Issues: If you're struggling with achieving profits on smaller projects, resolve those issues first to build a stable foundation.

- Network with Larger GCs: Join associations and network with general contractors (GCs) who are already handling more significant projects. 

Making the leap to larger work can be intimidating, but with thorough preparation, the benefits can be astronomical.

2. Expand Your Services Through Subcontracting

If you're a subcontractor with a specialized niche, understand the broader scope of services required for larger projects. This includes both predecessor trades, which come before your involvement, and successor trades, which follow. Consider hiring your own subs to handle these additional areas:

- Form a DBA (Doing Business As) Company: Many subcontractors create a DBA company to handle these expanded services while continuing their specialized work under the original company name.

- Submit Dual Bids: You can even submit two bids— one for your niche and another for the larger package— to maximize your opportunities.

General contractors often prefer dealing with one sub who manages multiple trades, which can give you a competitive edge and allow you to scale efficiently.

3. Obtain Minority Business Certifications

If you're a minority, a woman, or a veteran, obtaining the relevant certifications (DBE, WBE, MBE, or SDVOB) can open doors to numerous federal projects that require a certain percentage of minority-owned business participation. Here are the benefits:

- Increased Invitations to Bid: Certified businesses often receive more invitations to bid on projects, especially those federally funded.

- Less Aggressive Pricing: The competitive edge provided by your certification means you may not have to dive as deep as others to win the contract.

Good craftsmanship and strategic marketing of your certifications can turn these opportunities into significant growth drivers for your company. You'll still need to put in the hard work to estimate and close deals however you'll certainly have more opportunities come your way, especially on federally funded projects including Public Works.

4. Enter the Public Works Sector

Public works projects are where the multi-hundred million dollar and the multi-billion dollar contracts are often found. With most of my projects being public works, I can vouch for the lucrative nature of this sector. Here's why this area is worth pursuing:

- High-Value Contracts: Public works projects range in value from a few million to several billion dollars.

- Diversity of Opportunities: These projects offer a variety of scopes and trades, providing ample opportunities for different types of contractors.

- Economic Stability: Even during economic downturns, federal funding keeps public works stable, making it a reliable source of revenue.

However, public works require more administrative work, and you may need dedicated staff for project management, superintendence, and paperwork. The investment in resources is justified by the high returns and growth potential.

Essential Components for Expansion

To implement these strategies successfully, you must focus on two main components:

1. Capable Resources: Skilled management and trades are the backbone of any successful construction business. Invest in training and acquiring the best talent. Your company is worthless without great employees so take care of them and build a great company culture.

2. Strategic Planning: A clear roadmap, complete with actionable steps and milestones, is crucial. Without a strategy, even the most ambitious goals will remain unattainable. Remember, a vision without a roadmap and plan is wishful thinking!

Scaling your construction company is not about wishful thinking; it requires concrete plans, the right resources, and a strategic approach. By bidding on larger projects, expanding your services, obtaining minority certifications, and entering the public works sector, you can unlock substantial growth for your business. 

Embrace these strategies, and witness your construction company scale new heights, achieving success you once only dreamed of.

For more info on how Pro-Accel can help you scale your company to new heights click here.