How to Manage a Construction Business Without Losing Your Mind

Are inefficient staff, demanding customers, and out-of-control projects making you question why you even started your construction company in the first place? It doesn’t have to be this way.

Owning a construction business is not for the faint of heart. Whether your company focuses on small residential projects or large-scale commercial developments (or has no focus at all!), it can feel like you’re constantly firefighting, searching for reliable staff, and scrambling to plug the holes in your cash flow. As you collapse into bed at the end of another 16-hour day, you have the fleeting thought that this is no way to live. And you’re absolutely right.

That’s why we’ve put together this overview on how to run an effective and successful construction company - while still maintaining a sense of calm. These key tactics lead to happy customers, productive teams, and an energized owner (that’s you, for the record).

Create a clear construction business plan

A business plan is like a blueprint for your construction company’s future. It defines the:

• Purpose behind your work
• Values that will guide your decisions
• Long-term and near-term goals
• Executable steps to achieve those goals
• Celebration you’ll have when you reach the other side

The business plan isn’t the place to break down the minutiae of how each goal will be accomplished, it’s more of a framework that keeps your financial and operational strategies on track throughout the year.

It hangs off your overarching vision for the business, where you see the company five or ten years from now, and how you intend for it to positively serve the world.

Many construction contractors try to take their business in too many directions at once, but to get where you want to go, you need to pick a lane and figure out where your business fits within the marketplace. Everyone has only 24 hours in a day. Use yours effectively, and you’ll soon be watching your competition fade in your rearview mirror.

Business plans can be as lengthy or comprehensive as you’d like, but we recommend staying on the succinct side. We have a one-page Strategic Plan template to get you going quickly and easily.

Want to learn more? We dig deeper in this article on How to Write a Construction Business Plan.

Use a budget and track your financials

Budgets for construction companies are typically set up in a way that satisfies tax accountants before business owners. But a properly formatted budget should have a customized chart of accounts that reflects how you actually run your operations, and an accountant familiar with the construction industry will be able to translate your budget into tax-ese without any issues.

Once you have a tailored budget in place, you’ll then be able to implement a system to:

• Track your actuals against your budget, annually, quarterly and weekly
• Understand your revenue, variable expenses, and overhead
• Increase your gross and net profit margins to meet (or even beat!) the benchmarks
• Make accurate business forecasts with the use of an at-a-glance dashboard
• Set up a stress-free system for job costing and tracking billable hours

Do you have an annual budget? Do you know your exact revenue figures? Does job costing feel like playing the lottery? If any of these scenarios sound familiar, it’s probably a good idea to get concrete about your finances. This Budget Quick Tool can help you end the financial freewheeling.

Stick to a construction project plan

A construction project plan outlines a set of manageable, actionable and executable steps to reach your goals. Beyond just articulating what needs to be done, it should also include an accountability component, such as a process for keeping tabs on the progress of each item.

A thoughtfully laid-out plan will help keep your construction projects on schedule and within budget, ensuring your team functions cohesively. By infusing accountability into your culture, mistakes will become less rampant and finger-pointing will be a thing of the past. Best of all, you’ll be able to breathe again.

When you’re overwhelmed by demands, you become reactive, not proactive, with projects running you instead of the other way around, which isn’t just exhausting… it also causes delays.

The most effective way to guide your team’s priorities is with Goal Setting & Review sessions. View this free webinar to learn more about how they can help obliterate the “blame game” in your company through an easy-to-implement accountability system.

Learn more about the ins and outs of accountability and goal setting in this article on Creating Construction Project Plans Your Team Actually Follow.

Attract top-notch construction staff

Finding talent has never been tougher, particularly for construction companies. As a wave of tradespeople reach retirement, the industry is facing an “experience exodus.” With the growing demands on your business (ultimately a good thing), an effective hiring system is more important than ever.

It is entirely possible to build a hiring funnel that brings A-players right to your door, with:

• Job postings that speak directly to prospects
• Budget plans that allow you to offer competitive salaries

To begin with, though, you must have a clear idea of who you’re looking for. This extends beyond technical competencies to the prospect’s attitudes and perspectives. Ideally, you want someone who’s aligned with your company’s values and will blend well with the rest of your team.

We’ve got a template for creating Ideal Candidate Profiles, which will assist you with defining the skills and values you require in each role.

Once you’ve got applications coming in, it’s time to narrow the field. This Interview Guide will help you pick up on red flags and recognize the prospects who are the best fit for your business.

Finally, this quick tool on Compensation and Incentives will help ensure you’re able to offer competitive packages to shore up an A-team.

Define your organizational structure

An organizational structure basically lays out:

• Who reports to who
• What “good looks like” for each role in your company
• How all that gets communicated

It should clearly define each role within the company, so everyone is aware of where their job ends and the next begins. It keeps your team from tripping over each other and allows them to function as a well-integrated unit. With a clear structure, there’s less chance of things falling between the cracks or time being wasted with duplicated work. It will also help diminish burnout and turnover within your staff.

As the owner of a construction company, it can often feel like every job is your job, so putting an organizational structure in place will benefit you as much as your team. By delegating responsibilities, you can alleviate pressure and remove some of the many hats you’ve likely been wearing for much too long.

We’ve got templates for producing Employment Agreements that will clearly explain the expected deliverables for each role in your organization.

Provide standard operating procedures

Standard Operating Procedures (SOPs) give your staff a framework for success. They normally take the form of instructional documentation and often include images or videos that offer additional clarity and context on the described process. They also help you:

• Infuse consistency into your products or services
• Turn training and onboarding into plug-and-play
• Scale your profitability
• Inject future value into your business (this one gets overlooked, but it’s a biggie!)

Standardization may sound dull as bricks, but it is the key to saving your sanity, especially for construction companies, where issues like tumultuous pre-production phases, clunky hand-offs between sales and operations, or constant change orders can easily derail projects.

Creating SOPs can seem daunting – not to mention time consuming – but it really isn’t. If you’d like to learn more about how to bring more standardization into your business, Breakthrough Academy can help.

We’ve also got a Training Checklist to help you set your new hires off on the right foot.

Nail your sales and marketing strategy

Sales and marketing for construction companies basically comes down to lead flow management. You can think of it like a conveyor belt: marketing brings in leads, those leads ultimately turn into jobs. Of course, there’s a lot more to it than that, which is why having a finely-tuned sales process is so imperative. It can help you:

• Plan and Forecast – exactly how many leads are needed, how many estimates should be delivered, and what your sales ratio ought to be
• Measure results – from lead acquired, to job landed, to deposit received (while taking seasonal fluctuations into account)
• Highlight your average job size and necessary conversion levels
• Demystify job estimates

It’s not unusual for even successful construction companies to experience struggles around their sales and marketing. Maybe you have a ton of leads, but they’re the wrong ones, or there’s a lack of follow-up. Maybe you’re so busy with actual jobs, there’s no time to focus on sales. Maybe your primary salesperson is… you. In which case, it’s vital you work towards handing over that role because there’s only so much one person can sell, and you have a bigger job to do: run your business.

If you’re interested in optimizing your sales and marketing strategy, we’ve got a Sales Forecasting Tool that can help, available as part of our coaching program.

Embrace construction management software

Just like it’s difficult to build anything without tools, it’s nearly impossible to effectively run a construction company without tech.

There are apps for budget tracking, team communications, customer support, marketing, and project management (just to name a few). Some platforms are designed specifically for managing multiple small-budget residential projects, whereas others are better for singular but complex high-budget commercial projects.

Choosing which software is best for your business, however, can be a headache-inducing undertaking. Fortunately, we’ve put together an article on How to Choose Your Construction Management Software.

We also have a Tech Stack Quick Tool to help you get a sense of where to start.

Tying it all together

Alright, so… we get it. There’s a lot to wrap your head around and implementing everything mentioned here is probably not gonna happen overnight.

Breakthrough Academy has distilled the above elements down to a 6 system framework we call The Contractor Growth Method.

It’s the only business system purpose-built for construction companies – complete with the support of expert coaches, a motivated community and thoughtfully crafted content – all designed to help you free yourself from the frenzy of day-to-day operations.

No more crying in your truck.

You are a leader. But you’re not alone. Learn more about Breakthrough Academy’s community of elite construction contractors today.