Running a construction business comes with an array of challenges that encompass everything from providing clients with bids to visiting job sites to managing construction business operations. It’s essential to prioritize operations because when your day-to-day tasks aren’t going smoothly, it can impact every other aspect of your business.
At Select Funding, we help our construction clients by providing them with the working capital and guidance they need to achieve their most important business objectives. That includes offering advice about how to improve the day-to-day operation of their businesses. With that in mind, here are eight ways to improve operations at your small construction business.
How Do You Run a Successful Construction Business?
There are some key factors to running a successful construction business, many of which play into your operations. Here are some of the elements to keep in mind:
- Stay organized. A construction business has a lot of moving parts, including customer service and relations, maintaining equipment, managing employees, ordering supplies, and keeping jobs on schedule. Organization can help you keep track of everything.
- Invest in technology. The right technology can help you streamline your operations and automate repetitive tasks to save time. It can also help you be as accurate as possible with your bids and do a better job of providing your clients with excellent service. Project management technology can also help you track employees’ time and bill clients accurately.
- Protect yourself. Having the required business licenses and insurance to shield you and your employees is a must. You’ll need insurance to protect your company as a whole as well as insurance for specific jobs.
- Don’t skimp on materials. While cost management will help you maximize your profits, it’s never a good idea to cut corners by purchasing subpar materials. While keeping clients’ budgets in mind, you should buy the best materials you can to minimize potential issues or complaints.
- Focus on communication. Good communication can prevent problems because when everybody feels they’re in the loop, they’re less likely to be confused or become dissatisfied with your company.
There’s a need to focus on both the client experience and the bottom line, doing what you can to make sure that both elements work to help your business thrive.
What Are Construction Operations?
Construction operations encompasses administrative and managerial tasks as well as on-site construction tasks that help keep a job within budget and on schedule. Here are some of the things that go into construction operations:
- Budgeting. Budgeting is an essential part of construction business operations because creating an accurate budget is the key to managing every other part of your business. Budgeting should include an overall business budget as well as creating accurate budgets (and bids) for jobs.
- Human resources. Every construction company has employees whose performance and pay needs to be managed. Your company may have a combination of full-time and part-time employees as well as contractors who work for you on a per-project or hourly basis.
- Finances. Budgeting is only one aspect of finances. Construction operations also require attention to things like taxes, accounts payable, and accounts receivable.
- Office management. Office management involves things like maintaining office equipment and technology, managing employees’ time, and more.
- Field management. Field management involves overseeing construction projects and budgets, ordering materials and supplies, and addressing clients’ needs as they arise.
For a construction business to be successful, its operations must be well-organized, efficient, and cost effective.
What Does an Operations Manager Do in Construction?
An operations manager has several important functions in a construction business and these may include tasks that keep the office running smoothly as well as project-specific tasks. A larger construction company may have an in-house operations manager as well as a field operations manager.
An in-house operations manager may be in charge of creating and managing a business budget, onboarding and managing employees, ordering supplies and materials, creating bids for clients, marketing, and more.
A field operations manager may oversee several projects and is responsible for budgeting, estimates, deadlines, deliverables, and overseeing the on-site work of employees, contract workers, and subcontractors.
8 Ways to Improve Your Construction Business Operations
Here are eight ways that you can improve your construction business operations to achieve your financial and business growth goals.
#1: Use Construction Management Software
Using software to streamline your operations makes sense and is a worthwhile investment. Construction management software can help you do the following things:
- Create and manage bids
- Create invoices
- Bill clients
- Manage contractors and subcontractors
- Create and store documents
- Report incidents
- Track employee and contractor timesheets
- Schedule jobs
You can choose software that’s installed on your office computers or use mobile apps to manage these tasks. Either way, equipment financing can help you get the money you need to invest in technology.
#2: Make Planning a Priority
One of the most common and costly mistakes that a construction company can make is inadequate or inaccurate planning. At the planning stage, you have the opportunity to learn about a project, including which materials you’ll need to complete it and how much time it will take.
You can improve your small construction business operations by dedicating the time needed to visualize a project and plan it as completely as possible. Proper planning will help you calculate which materials you need, so you don’t run out and put your delivery dates at jeopardy. Keep in mind, too, that proper planning will eliminate many potential problems ahead of time, resulting in better online reviews and higher customer satisfaction.
#3: Use Building Information Modeling
Building Information Modeling, or BIM, is a process that construction companies can use to visualize a project in its entirety before construction begins. You can use BIM to create a 3D model of each project.
Once you’ve created a model, your operations team and construction team can use it to ask important questions about how the building will be used and how to most efficiently and effectively build it. For example, BIM can help you choose the right water heater size or pump size for your project.
#4: Improve Communication
Communication is at the core of any business and is particularly important in the construction industry. Your communication policy should address both internal and external communication.
With internal communication, you’ll need to be sure that your employees and contract workers know what’s expected of them and that they feel comfortable coming to you with concerns and problems.
External communication should focus on providing clear, honest, and timely communication with clients to minimize the risk of misunderstandings or confusion. It’s best to have a system in place to be sure that clients receive regular progress updates and have a mechanism to reach you if there’s a problem or question.
#5: Understand (and Bid for) Your Profit Margins
Building enough profit into your bids is a necessity for any construction business to be successful. If you don’t have a handle on your material or labor costs, it’s easy to charge too little and end up in a position where no amount of speed will make a project profitable.
The key is to understand your material and labor costs, making sure to build in sufficient profit for you to meet your growth goals. Your bids should never be the result of guesswork, but should be created using accurate data and information gleaned from your experience and calculations.
#6: Invest in the Right Equipment
Construction equipment plays an essential role in the success of construction businesses. With the right equipment, you can beat out your competitors, complete work to the highest possible standard, and stay within your budget while hitting all deliverable dates on time.
Of course, you’ll need working capital to buy the equipment you need, and that’s where the right financing can help. You don’t need to come up with the money to purchase equipment outright if you can qualify for equipment financing, which is something we do at Select Funding.
#7: Establish and Monitor Performance Measurements
One of the most important things you can do to improve your operations is to choose key performance indicators (KPIs) and track them to improve every aspect of your small construction business.
Ideally, you should track financial KPIs as well as KPIs related to employee performance and other issues that relate specifically to the work you do. We suggest selecting KPIs, putting employees in the loop about what’s expected, and incentivizing employees to help you meet your goals with rewards.
#8: Make Financing a Priority
Every small business needs working capital to succeed. Whether you need money to finance the purchase of necessary construction or office equipment, expand to a new location, or bid on large jobs, it’s essential to find the right financing partner to help you achieve your goals.
Select Funding provides affordable small business financing that you can use to hire and train employees, invest in new equipment, purchase supplies, improve your efficiency, or simply pay your overhead expenses without worrying about cash flow.
Get the Financing You Need to Improve Your Operations
The bottom line is that improving your construction business operations can make your business more efficient and more profitable. The eight things we’ve suggested here can help you optimize your business operations to achieve your business growth objectives.
Do you need small business or equipment financing to help your construction business grow? Select Funding can help! Click here to read about our construction business financing and begin the application process today.
