**UPDATED JULY 2015**
Despite the rapidly recovering construction market, many companies are still finding it difficult to be successful. Margins are tighter than ever and a lot of companies are trading dollars, but not finding the success they are seeking. In our discussions, we have identified some challenges that our industry faces. Ken Y., Training & Development Manager, discusses 5 challenges the construction industry is facing right now.
Undercapitalization—Operating money is critical to achieve success. Do not underestimate the capital needed to pursue the most profitable projects and have the cash necessary to fund those projects until draws can be obtained. Many bad decisions are made while companies are in panic mode due to their cash being unavailable.
Bad Cash Flow—We all know that getting paid gets harder and harder all the time. Submitting for draws and having an understanding of how each particular client pays is critical to maintaining a positive cash flow into your businesses. A missed draw or poor paying clients has caused many problems in our industry. Stay on top of your cash flow and draw dates.
Inadequate Planning—Understanding your manpower and cash issues can determine the success or failure of any project. Do not overestimate your capabilities or underestimate your cash flow. Map out the details of all of the projects going on and what you are bidding that could happen in the near future. Know who you are and what you can do (more advice on this subject).
Inflexibility—Map out your plan and continually review your plan versus reality. Be willing to make changes when you see your plan is failing. Working without a plan or refusing to gauge success against that plan has doomed many companies to continue down a road to failure. Have a willingness to change the plan and learn. If you haven’t failed, you have not done much. However, learn from failures and incorporate that knowledge into the next plan.
Uncontrolled Growth—Know who you are, who works for you, and what all of your capabilities are. When growth is not controlled, we lose sight of who we are and what we are capable of. Set realistic goals and allow your company to grow at the same rate as your capabilities (more about that idea).
We hope some of these suggestions will help every one of our clients realize the success hard work should deliver. Unfortunately, sometimes working harder is not the answer. We need to work smarter.