Growing business (construction)

[AMFS]

I am writing to get some useful advice from anybody who knows a little about construction businesses and their growth. We have a small flooring company, started of as self-employment, but now we use a few sub contractors to be able to complete the jobs thats coming through. Business is definitely going but we are too small for bigger projects, have cash flow problems and cannot guarantee continuous work for people to be able to employ them full time. `We are stuck in this middle stage where jobs are too big for one man but too small for a whole team, any advise on these please. We would like to move onto the commercial side of fitting, not sure how to bag big contracts with the big guys or how to grow our business safely. Perhaps if anybody can advise on going from fitting floor to becoming a contractor, that would be really helpful. Many thanks

 

[Mark T Jones]

TBH, you post itself as a bit confused and 'all over the place', which might well reflect your current situation.

If you can break it down and ask some more focused questions you will get far better answers.

2 things I have picked out:

1. Cashflow. It's a biggie in your sector, and offering credit is in itself a big and potentially risky jump. Factoring might help this situation - speak to @Ian J, but better still, seek a good portion of payment in advance.

2. People. It's far from unusual to rely on sub-contract labour, but it is important to build a good team of trusted workers around you. I'm no expert in IR35, but I suspect it will apply.

 

[Darren_Ssc]

I used to work in commercial construction and you definitely don't want to get into this unless you have the cash-flow to support it. There is also a very steep and potentially expensive learning curve involved in procurement and contract admin with many ways in which you can be 'had over' by an unscrupulous main contractor, of which there are many.

Ideally, to move forward, you need someone with commercial experience behind you rather than just more pairs of hands.

One way of getting around employing people full-time is to look for people who are just starting out but don't yet have enough work to be fully independent. The other obvious solution is to hire unskilled labour and train them up.

It is over 12 years since I was in the business but even then good floor layers were like gold dust. I expect not much has changed on that score?

 

[AMFS]

Thank you for your response everyone, it is really helpful, even though my head is all over the place. Fell like I am useless in this field as well

 

[Mattymoomoo]

Ive seen this before and as you can see, full of risks. My thoughts and by no way the only way.

Companies fail to get paid all the time and ive worked on sites where 100's of staff stopped turning up. Choose your sales based on payment reliability.

How do your prices compare to the big boys working on the bigger projects? If you can undercut them, whilst still making a good margin, I suggest you split the difference for getting the materials paid up front and labour paid each week until you grow in size. My method is to be open and honest. It makes a change in the industry, but you will lose some sales as a result as well. If you don't think you will get the job, or you don't want it charge high. You will be surprised how many of those jobs you will get and the extra margin will pay for the financing.

If you are doing this for the long haul, training people up is the best way as mentioned by Darren. They get paid peanuts, but turnover is large and you will find some great people (which you should pay well).

 

[AMFS]

You guys are amazing, thank you so much. I studied business and management but have no experience in this field and I guess construction is a little different, also I don't feel like I am naturally a business person, find it hard to see the opportunities and go for it. Do you recommend any courses or training programs to look at or just throw ourselves in the deep water and see what happens? Somebody recommended a business coach but not sure if they provide with relevant advise and they cost a lot of money. Wish I knew what I am doing. I have all faith in my partners ability ( he is the best fitter by far and everybody just wants him), but he cannot do this by himself in the long run, he isnt getting any younger. He is in the same boat like me, very hearty guy and not good in business, just good in customer care and in perfect fitting. Thank you again and if you have anything else to say I am pleased to read your posts.

 

[Mattymoomoo]

You guys are amazing, thank you so much. I studied business and management but have no experience in this field and I guess construction is a little different, also I don't feel like I am naturally a business person, find it hard to see the opportunities and go for it. Do you recommend any courses or training programs to look at or just throw ourselves in the deep water and see what happens? Somebody recommended a business coach but not sure if they provide with relevant advise and they cost a lot of money. Wish I knew what I am doing. I have all faith in my partners ability ( he is the best fitter by far and everybody just wants him), but he cannot do this by himself in the long run, he isnt getting any younger. He is in the same boat like me, very hearty guy and not good in business, just good in customer care and in perfect fitting. Thank you again and if you have anything else to say I am pleased to read your posts.

Everyone will have a different idea on the best way forward. My general feeling is if you are not naturally a business person, then tread carefully. Maybe bring in someone who is? This is why coaches get paid.
Short courses can help, but I think it is always best to learn on the job (hopefully at someone else's expense). Personally I think you take the info you have, assess it and the risks and if it is worth the return, go for it....Just limit your downside. I.E don't put your house on it or have one deal that can put the whole business under (unless it is guaranteed).

 

[Darren_Ssc]

If you are lacking in experience on the commercial side I would recommend doing an academic construction course such as an HNC because you'll learn many aspects of the construction process which may have been a mystery to you before as well as getting a basic grounding in estimating. tendering, surveying, measurement, contracts, etc. You'll be surprised what advantage this will give you.

Aside from the educational aspect, and very importantly, you will make contacts who work in different fields who may stay with you as their careers progress.

 

[Ian J]

2 things I have picked out:

1. Cashflow. It's a biggie in your sector, and offering credit is in itself a big and potentially risky jump. Factoring might help this situation - speak to @Ian J,

Factoring could help your cash flow as long as your customers are businesses and not private individuals but I have a feeling that cash flow is the least of your problems

https://factoringconstruction.co.uk/