Construction is a multifaceted industry and a risky business. It requires huge financial investments, which get returned as profits much later. Thus, it is an expensive business which offers delayed benefits. The construction project cannot proceed without adequate finances. Hence, the owner of construction facilities must obtain reliable capital resources to finance costs of construction. The owner does not just work on one project but numerous projects which are all financed together. In addition, there are other problems such as budget overruns, unreliable contractors and delays. If the owner is unable to cover costs, the capital investors face financial problems.
However with a pragmatic approach, owner of construction industry can build finances (achieve profits) in less time. Some of the guidelines for the same are as follows:
- The owner should be aware of the amount of work to be undertaken. Further obtain knowledge of the technical skills required which will enable to calculate the correct cost of construction project. Thus he should define goals and set expectations. Emphasis have to be on long term planning. Setting expectations enhances confidence of both clients and employee’s in the owner.
- Generally it costs less during planning and designing of the project but involves substantial expenses during construction. Instead of giving importance to sales, and getting deals, owner should develop understanding of the financial aspects and costs involved in the construction project. They can also hire appropriate project managers and financial consultants to understand the actual costs incurred by a project.
- Estimate the true profit by considering overhead costs, risks and job costs.
- Managing the job production to achieve profits: the job should be done in the cost-effective manner to make profits. Changing daily orders of operation and determining the productivity of labour force. When the work to be completed in 2 days, takes 6 days, it incurs additional costs. Thus jobs should get delayed.
- Accounting for profit by employing a project manager who keeps track of the budget and purchase orders. He has accurate knowledge of the expenses since he is present on the site. He applies construction specific accounting knowledge.
- Since education always helps, hence training to be given to labourers, employees and management professionals.
- Emphasis on written procedures (SOP) is important. Procedures should change improve. They should be evaluated periodically.
- Effective Good communication with employees is valuable and necessary. They result in strong relationships with all parties and frequently result in future referral business.
Overall building finance in construction industry takes time. Following the above guidelines will enable the owner to develop business skills to reap profits in less time and have sustainable career in construction industry.
We generally believe that construction business is a highly profitable one and people who are associated with it know the secret of making quick money. Well as a matter of fact, first and foremost there is nothing like easy money. It may be quick money but one can’t guarantee how long does the quick money last but there is definitely no easy money. People belonging to whatever industry have to work hard all day to earn money and they do not want to emphasize that as neither quick nor easy money. Same goes with the men in the construction domain. Right from the person who owns a construction company to the one who work in that company, all of them have to go through rigorous hardship day in and day out to achieve success and the money that comes attached with the success.
There are basically 2 most important attributes that is required to form or to transform a small construction company to a giant organization and these attributes are something that we have been doing all our lives without knowing the importance of it. The first one is hard work and the second is dedication. As you spend more time in the construction business, you keep on learning new things that were completely unknown to you or is probably unknown to many in this domain. However, you get to know those things only if you are dedicated towards your business. One who gets knowledge is the one who seeks it. Therefore, you have to keep your dedication intact irrespective of whatever challenges comes up in your life. Difficulties are part of our daily life and they come and go often. If they start bothering you, it will be tough for you to take things ahead in life.
Dedicated towards your work will also keep you focused towards what you want to achieve in life. It has been often witnessed that people after having started their construction business plan to wrap it down in few years time. This happens because they have entered the sector thinking that life here is a bed of roses where challenges are rare to come. They can make good, easy and quick money and will still rich forever. Things are not what these men contemplate it to be. It is indeed absolutely contrary to their imagination and they fall flat on their face when they see the industry is giving them several blows without anytime to recuperate.
Dedication and hard work goes hand in hand. In fact, it is dedication that gives rise to hard work. You will not work hard on things that you are not dedicated to do. You will find the work monotonous and after some time you may lose interest from it. Stories of ace construction companies should be read to know the pain they have gone through to reach the place they are in. That will motivate you to work harder and extend your limits of persistence.
Every business has both ups and downs and so one must ensure that he takes all possible measure to try to keep his business afloat during the downs and try to save as much as he can during the ups. This is perhaps the most common phenomenon of probably every successful businessman all around the world. This phenomenon is not limited to just one particular industry but is accepted in any kind of business. We have witnessed the same instance in the construction industry many times.
People belonging to this industry often see it to be the ever blooming one and does not pay much attention to the fact that it can also have a downward trend which can appear anytime sooner. So they simply lack to take any precaution and happy making more expenses. But there also comes a time when you stop getting business. This could be due to several reasons. There has been a sudden increase in the price of raw materials or the policies of the government as such that it does not favor the construction segment. These could be few reasons why the business may take a dip and it becomes imperative for the business owner to take necessary steps in advance so that he can eventually save his business from completely winding up.
There are few tips that one should follow to keep his business floating and not think about winding it up.
Maintain a contingency fund:-
Maintaining a contingency fund is quite crucial when you are part of a business that is highly volatile. While you have set up the contingency fund, it is also imperative that you add some amount on a monthly basis and increase its corpus. At the same time, you should invest that amount is some debt funds where you averse from taking risks and are also content with the little returns that it is able to give you. What is important for you is to accumulate funds for the bad time keeping aside the intention to achieve good returns. So when you see the business is on its down, you can depend on the money that you have in the emergency kitty. Likewise you can also maintain a separate fund for business expansion which can be used for purposes related to the expansion of your business.
Cut down your operational costs:-
Cutting down your operational costs will help you big deal at times when the business is not doing to its potential. You have to give a clear instruction to the various levels of departments that they need to reduce the operational cost or they may have to face expulsion. Construction business being a volatile one does not stay put at one juncture for a long time and therefore there is every chance for it to bounce back real soon. If at all things get worse, then you might even take the decision to do away with assets that are no longer worthy to the company. These are few things that can be done to keep your business alive.
Like many other industries, construction industry is one such sector where beginners have a tough time while they give a start to the business. They got to understand the tricks of the trade and then play the game keeping its rules into consideration. Apart from this, there are always big companies that are waiting to eat up the small budding ones. They do want much competition to their set business. However, it is not always that you experience a direct threat from the old players but many have bitter experiences as well. Small contractors who are primarily fresher and do not know how to run the business can face horrendous situations due to their inability to tackle them.
We will be talking about some generic challenges that most newcomers experience and what can be done to do away with those challenges and end up becoming a successful entrepreneur.
Knowing the business:-
It is very crucial that you know your business well before you get into it. This does not imply that you should know everything about it. This may not be virtually possible for someone to know everything about his business first and then get into it. We all learn while we do something but before we start doing something as important as getting into the construction business, we should know the pros and cons of the business. You can talk to industry specialists about it and take guidance from people whom you can trust. Try to generate contacts with people who have been for a while in this industry. You can expect some good advices coming from them which might help you to steer your way in this business.
Do not overspend on anything:-
You need not have a swanky office if you intend to become a contractor. A normal office will do. Clients check your work history to give you contracts and not the sort of office you have leased. Also, do not go on a buying spree for heavy equipment. They form an integral part of the business you are getting into but your selection should be on the basis of your requirement. You can also take machines on lease. So you do not have to necessarily buy heavy equipment to work. You can take them on rent and fulfill your purpose. Many budding contractors seem to do this mistake and repent later.
Do not fall for offers that are unethical:-
If you are new to this business, you will meet people who will give you offers that may not be ethical but definitely alluring. You might be in desperate need of work and may consider it to be a wonderful offer. But this can be a trap and might end your career as a contractor. By no means should you accept any offer that goes against the norms of the law of the land how enticing it may be. You got to patient to get business. Showing any form of desperation can go against you and can lead you into serious trouble.
Customers are considered as king of the market. The makers of products produce goods on the basis of the wants and demands in the market and the wants and demands are of the customers. This means that they have to produce items that are in trend and are liked by people at that time. Though trend keeps on changing so once the trend changes the makers also have to switch to the next trend that making buzz in the market. They always have to be on their toes to meet the needs and demands of the customers. While they are meeting the needs of the customers they also need to pay good deal of attention to the fact that they provide them with exceptional quality or else customers always have a choice and they can move on to the next provider. You will only end up in losing business simply because you did not give much importance to the quality of the product.
In the construction domain, the voice of the customer plays a very crucial role in the growth of a company. They may have the best heavy equipment and may use top notch materials to build the buildings but at the end of the day they also need to check that whatever they are constructing, is it as per the wants of the customer and does it goes with the trend of the time.
Knowing the pulse of the customer is important:-
For the survival and steady growth of the construction company, it is very important that they first try to read the pulse of the customer. Check what they can do to make things better for them and accordingly build something that should not be less than exceptional. Customers should feel that they have got the worth of their money and you in turn build reputation from your good work. Getting new businesses in this domain becomes difficult when you do not have goodwill backing your company. If you are into building apartments for people to live, your reputation will speak about you and therefore people will book the apartments right from the period the building is getting constructed. You can achieve this reputation only if you can read the pulse of the customer properly.
Provide them with state of the art amenities:-
When you sell apartments that have state of the art amenities, it sells faster. You can market the apartments on the basis of the amenities that you will offer to the general public. Knowing on what you will offer, people will be interested to book their apartments in your building. This also acts as a brilliant marketing strategy that will drive many to go for apartments constructed by you. You can also charge them for the luxury but that should not be exponential. You should not be money oriented but should be more customer centric. You should quote the amount that gives you your profit. If you try to become greedy and quote higher amount, people will look for someone else.
One should always be satisfied with whatever little he gets but at the same time his hunger to get more should not die. It is perhaps this passion of his that will keep him ticking during the rough patches of his business. Laying concrete strategy is one thing but when it has to come to the ground for implementation there lies the real zeal of the business owner and this zeal to get more and more business will also take him to the many levels that many aspire to reach in the construction industry.
Many enter the construction business with an incorrect notion that they can make good money without having to shed much effort. They believe that getting business is simple but industry experts find the truth to be completely other way round. In order to get business you need to have all your stuffs in place. Right from heavy equipment to a track record that is impeccable, you have to display all of them to get some business.
Getting small may not be much of a struggle but there will be a point when you will mind doing petty work and want to get into something bigger. This is when you will start experiencing acute hardships and failures. They may even become the part and parcel of your daily routine but this is what the leaders of the construction industry had also gone through. They had their share of rough patches but what they did different that most did not do is they stuck to the ground and kept their zeal alive to continue the search of getting more business.
Your confidence will keep your zeal alive:-
Folks who are new to the business and do not have anyone who can guide them ideally lose their confidence when they see things not working for them. They do not see the light out of the tunnel and find themselves to be completely lost in their endeavor. It is absolutely critical for such men to first generate some confidence and remain hopeful that luck will favor them. When you go to market your company, the person on the other side of the table first checks your confidence and then the stuff that you are presenting. So you may be marvelous in your work but self-confidence also speaks loud and you need to pay stress on developing that. It actually keeps your enthusiasm to get more business alive.
People start knowing you:-
You drop in to the office to check if they can give you a contract. They saying NO should not disappoint you because by reaching out to them and dropping your business card at their office will let them remember you. Also check out the classified part where people are looking out for contractors to give them work. So be open to that as well and try and meet as many people as you can. A “NO” now does not mean a “NO” forever. There will be a time when they will really need your services. So meeting people often should be your priority.
Having a business of own is every man’s dream and if one gets to set his foot in the construction industry then there is no looking back for him. But the truth is that firstly it is not so simple to get into the construction industry if you do not know much about it and secondly if at all you make your way in the sector, you may find it pretty hard to sustain. People with good financial backing find it extremely difficult to survive in the construction arena. The reasons are plenty. Right from severe competition to ever changing mood of the industry, a businessman has to battle it all in order to keep his place secure. But it has been seen that many are unable to strive the tide and they get drown. Therefore, once needs to be mentally prepared for the tough life and also with the harsh realities that they may encounter after they have made their way inside the industry.
We would be speaking in depth about the essentials that a person should have before they decide to start a construction business.
Technical know-how is a must:-
For people who do not relate to the construction industry nor knows anyone who belongs to this domain should take few lessons on how to run the business and then decide if they want to make their way in. Not knowing the technical know-how can cost him dearly and he may become the part of the larger lot who has left the business. Technical know-how does not mean that you should be well versed with all the jargons or should know how to drive or repair heavy equipment; but it certainly means that should know a bit of everything. For instance, if the heavy equipment develops a problem, you should know where to get it fixed rather than being clueless what to do next. Similarly, if you experience a strange problem in your business and are unable to know the way out, you should at least know of somebody who can get this fixed.
Know your finances well:-
People ideally become very eager with the idea of starting a new business forgetting the fact that the business need investments and if they are unable to arrange the finances then things can go awry and they may fall flat on their face. Therefore when they are struck with the idea of opening a new business, they should first check their finances. See if they have any opportunity to get any loans and estimate the time by when they can repay it off. They also need to decide if they have to buy heavy equipment or take it on rent and whether they have sufficient funds in doing either of the two options.
Hunting for projects:-
Getting work is the primary goal after you have set up the business. You should work hard to form a sales and marketing team and check who is good in selling. If you have the skill to sell, you become the head of the sales department and lead the team. However, at the end of the day, you should have few projects in hand.
United States is a place that has people coming from all walks of life and they come to this place to have a decent life. It is probably the only country in the entire world which has people coming from different countries to make their dream come true. On an annual basis, US is seeing an increase in the influx of immigrants. Some skilled, some semi-skilled and some unskilled labors constitute the total population of immigrants in this country and strangely they all are able to find a job for themselves. It seems that the construction industry also has a healthy strength of immigrant workers. Since this industry does not need a lot of skilled labor, therefore it does well with semi-skilled workforce. The only criteria that the construction companies have for them is that they should be hard working and should give their 100% to the job.
Now how the construction companies benefit when they employ immigrants in their company. There is a scarcity of labor as many consider this part of the job to be perilous and hence you will find Americans holding the top position where their job is to give instruction to the laborers and also supervise their work. In case, things are not going as per the plan the supervisor will be taken to task. But it is not that the labor workforce is only occupied by the immigrants. You will also find Americans in this club. Usually construction companies are of the opinion that just hiring immigrants as workers can be a bit problematic as they want to give equal opportunity to all and therefore feel that it is healthy to have a mixture of employees constituting your workforce.
Immigrants are paid less as compared to their American counterparts:-
It has now become an open secret that the immigrants are paid less than what the companies had to pay to the Americans. This becomes highly cost effective for the company especially during times of turbulence. The construction market is not always flourishing and there are times when things take a bad shape for the overall sector. This is when the construction companies continue doing business by paying less to the immigrants. Having said so, this does not imply that they exploit them to the core. They are provided with all the other facilities that are given to the resident but are cut short on the wages part. The company in this way is able to save a lot for the hard times.
Immigrants are ready to work beyond the working hours:-
Not every person in the United States readily works beyond his working hours. Though they are paid extra for working after their shift, people are still reluctant to do so. However, the immigrants in this case are more than happy to work and earn some extra money. They are probably without their families and are here with the sole purpose of earning more money. Anything earned in addition to the wages is an incentive. Though government has now made the visa rules quite stringent and construction companies are finding it hard to employ more immigrants. It needs to be seen how things will shape up after few years.
A computer programmer has a lot to do when it comes to programming software for different companies across various sectors. They are people who are in huge demand and have to cater to people of different industries keeping into consideration their varying wants. So you have a team of software programmer who has designed new software for a retail store and now they are been approached by someone who belongs to the pharmaceutical industry and who wants them to work on his specific requirements. So the same team will now focus on a different industry and will try to build software that especially suits their needs. This shows that a software developer can work across industries and is not constraint to one particular genre of business. Similarly, their services can also be used in the construction business. As a matter of fact, there are construction companies that are ready to pay software developers good sum of money but in return they want something that is nothing less exceptional.
Not all construction company can afford to hire software developer to design unique software for their company. Some companies may even find it difficult to buy expensive software. But they all have to use one and therefore there are different levels of software developers and programmers in the market. Not all are expensive. There are some newbie who have ideas but do not have relevant experience for which they are not hired by the giants. However, they can prove to be very useful for small construction companies. The small companies can check the software they have developed and if they feel that it suits their requirements they can go for it. These new guys may not charge a bomb from the companies and are also ready to provide support if in case the program stops working.
This suggests that there is ample of opportunity for software programmers in the construction industry. You will not find the employment getting dried up. Businesses will always flow in some way or the other. Most of the time it comes in the form of upgrading the existing software. You can’t keep on working with the same version for many years. Everything has an expiration date and so does software. So it is imperative for a construction company to keep the software that they are using updated. This can be done with the help of the programmers who have designed the program in the first place or some other programmer who knows about the software and how to upgrade it.
The programmers who are associated to the construction industry should first understand the various needs that a construction company can have. This will give them an idea of the possibilities that they should work on and offer the best to the industry. Many of the time, it has been observed that after doing a in-depth study of the subject, the programmers approach the construction company and place a solution to them. If the company likes the idea they will buy the design and give the contract to service them for a couple of years. It has been therefore termed to be a rewarding business.
We generally meet all kinds of people when we are associated with an industry like construction. Generally people are tends to be good but some may not have that good intention. Hence, it is very crucial that you pick the people whom you feel that you can be compatible with. This does not mean that you will not have any relation with guys whom you feel does not fall in your compatibility zone. You will maintain your relationship with everyone but will restrict yourself to few people rather than getting open to everyone. If you make yourself available to everyone, there are chances that people might take undue advantage which will not be in anyway healthy for you. However, if you are in the company of people whom you trust, there are lesser chances that they will ever cheat on you.
Threat of losing project/client:-
If you get yourself in the company of wrong guys who may pose well to you, they might try to get info of your work and you never know when they will snatch away your project and start working on it. There have been numerous such cases where contractors have lost their project after they came into contact with someone they hardly knew and gave too much space to them. They on the other hand took as much info as they can to snatch away the project or just the client. They established their contact with the clients and ensured that the future projects are given to them. By the time the contractor came to know about this, he has already lost the client.
You will grow in the company of good people:-
Construction sector can often show you turbulent times. This being a dynamic industry, we can face any sort of threat from any corner. Therefore, it is important that you be in the company of people you know and whom you can trust. They might come for your help during your bad phase and bail you out. Alternatively, they can also give you valuable advice that you may hardly get from people in this circle. At times, this advice helps you a great deal. You might have taken a stand on the basis of certain information which may or may not be correct. However, you have a slight confusion on this and want to take a second opinion. Therefore, you decide to discuss it with your guys and you get to know more insights that you were complete unaware of. This eventually clears your thoughts and you are able to take a wise decision thus having a positive impact on your company.
Be in touch with them even if they are not your employees:-
We feel sad when we lose men who served our company for years and now want to retire. Even if they retire, they are very much a part of the company as they have served it for years. Therefore, being in touch with such people can always be beneficial for the company. They can guide you in difficult times and help you come out of a crooked situation.