Five Helpful Tips for Small Construction Businesses

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Five Helpful Tips for Small Construction Businesses by Patrick Hogan, CEO, Handle.com

Managing a small construction business could seem daunting, especially when you consider the huge amount of work it requires. When you are running a construction business, you work through all the important stages of a project, from bidding through planning all the way to closing.

Along the way, small business managers may encounter common issues such as payment disputes and schedule delays, among other problems. Construction management is no easy task, and small business contractors must learn to be resilient to succeed.

In this article, we lay out 5 management tips for small businesses in the field of construction.

1.Study your contracts thoroughly

Having good, iron-clad contracts is very important in construction management. Right from the get-go, you should establish rapport with your client by ensuring that you are on the same page with respect to the terms and conditions stipulated in your contract.

Take your time to go over your contracts before signing them. Clarify the payment terms, and look for potential provisions that could put you at a disadvantage. For example, be wary of any item that could be interpreted as a possible waiver for your lien rights. If payment disputes come up, you want to be able to record a mechanics lien to improve your leverage during negotiations.

You should also look into provisions that could be potentially ambiguous. If there are items that you are not quite comfortable with, raise your concerns to your client and clarify them as early as possible. Remember that failing to study your contracts carefully can be one of the gravest mistakes you as a small business owner can make.

2.Take the planning stage seriously

This one goes without saying, but it needs to be reiterated. Many issues in construction may be mitigated through proper planning and thorough risk analysis. Prevention is better than cure, and coming up with a solid plan is the best way to prevent problems that can potentially raze your business to the ground.

During the planning stage, always remember to be realistic. This means that your budget must be reasonable, and it should consider the necessary costs for all materials, labor, and other equipment needed to complete a project successfully. You should also be realistic as regards your schedule, and be sure to come up with a reasonable timeline.

Furthermore, the planning stage should include proper delegation of tasks. Assign specific people on your team that will be responsible for the completion of certain deliverables, and also remember to set your intended project milestones.

3.Train your employees well

Small businesses bank on skilled, reliable, and talented employees. Contractors and subcontractors must invest in their employees and make sure that they are properly trained.

There is an ongoing labor shortage in the construction industry, so being a company that cares for your people can potentially attract talented workers. Furthermore, ensuring that your employees are welltrained and properly compensated can also help your company retain your best workers.

Training and investing in your employees is one of the best ways to keep your business running. It can improve the quality of your services and make task delegation easier, especially if you trust that you are working with the best workers in the industry.

4.Track your data and finances

Construction management requires solid organization skills. Not only should you be able to track your inventory, for example, but you should also know where your finances stand. You can do this effectively if all your documents and data are organized, and if they are consistently updated. Tracking your data means knowing what goes on in your business day in and day out. You need to know what services were performed in a day, check the deliverables you completed versus the goal, and track the invoices that you sent out and which among them have been paid.

Most importantly, you also need to be constantly studying your cash flow. It is imperative that you know how much money you have and how much is going out. Having this information allows you to prepare and mitigate potential losses. Running a small construction business involves a lot of paperwork and accounting, so make sure that you have the best people to help you with those.

5.Ensure proper communication among all parties

Disputes in a construction project can stem from miscommunication. This is why it is very important to ensure that proper communication channels are established right at the beginning of a project.

Communication lines must be opened among all stakeholders in a project. One way to do this with a property owner is to serve a preliminary notice when you begin working on a project. You should also understand which parties you must report to for which tasks, and be sure to have their contact details.

Set clear designations so the members of your team will know whom to communicate with when there are issues or questions regarding their respective tasks.

About the Author:

Patrick Hogan is the CEO of Handle.com, where they build software that helps contractors, subcontractors, and material suppliers with late payments. Handle. com also provides funding for construction businesses in the form of invoice factoring, material supply trade credit, and mechanics lien purchasing.