Politics and Business
Things Not to Ignore When Expanding Your Contracting Business
When you have been working as a contractor for a while and are looking to expand and build yourself within the industry, there are several things which you need to consider. Whether you are a contractor who acts as a self-employed tradesman, lead a team of contractors who build homes, or contract out services to get jobs done, we are here to help you determine what you should keep in mind when you are scaling up.
Amongst contractors, there are many business failures. Whilst it’s not easy to figure out exactly why a business has failed – and several do – the general consensus is that a large portion fail because they try to grow too big too fast, and this means that a number of them end up running out of money and don’t survive their first five years.
This doesn’t mirror other business models which tend to fare better, even if they try and go for growth early on. With contracting, scaling up is more of a financial investment and there’s a bigger inherent risk as a result. After all, raw materials cost money and the nature of contracting work is harder and more volatile.
#1: Your Finances Matter
When you are scaling up, it is vital that you don’t ignore your finances, either as a company or as an individual. The improper management of finances, improper budgeting, bad cash flow, a lack of cost controls and bad project management can all cause a precarious financial situation for businesses new and old.
When you are a contractor, it is not just your creativity and technical skills which matter – it is vital that you have financial sense and are able to keep on top of the one commodity which matters most to your business; money. As a side-note, if you don’t have any contractor insurance, then get this sorted before you even think about growth. You’ll be happy you have it when something goes wrong. Even the best contractor will have a bad experience and contractor insurance can save your business.
#2: Growth You Are Currently Experiencing
Even if you are pushing for growth and are expanding your bottom-line, it’s important that you don’t ignore current growth and fail to increase your resources. A business which is expanding rapidly is often unable to keep up with demand, and quality of work will suffer as a result.
Shortages of equipment are one of the most likely things you will face as a contracting business that is undergoing organic growth. This is made worse if you are currently planning and pushing for growth as it’s easy to ignore this smaller organic growth and fail to account for it.
#3: Factors Beyond Your Control
There are several things beyond your control which shouldn’t be ignored. Materials shortages, economic downturns and periods of high inflation can all have a knock-on impact when you want to grow your business and there are certain times when, despite how much you want to, you shouldn’t be pursuing growth. During a bad economic climate, it’s always going to be better and more prosperous for you to wait it out.
In addition to this, pay attention to any clients you have had bad experiences with and try to rectify any underlying or existing problems. Even if the problem was not your own doing, biting your tongue and trying to amicably solve any unsolved problems could help your growth. How? Because there’s nothing worse than a previous negative client seeing that you are trying to expand your business and then crawling out of obscurity to speak badly about your business and try to stunt your growth.
#4: The Traits of Successful Contractors
There are a lot of contractors and contracting business out there, and this is good news because it has given us a lot to learn from. Successful contractors and their businesses share several traits and characteristics, for example:
- Robust training for new employees
- Good relationships with other contractors and companies
- Competitive rates of pay for your staff
- Great benefits for your staff
- Excellent communications skills
- Good financial management
- An ability to get hands-on with projects and manage them efficiently
- Good management of creditors and debt
- An ability to stay on top of industry trends
There are several more, but these are some of the most important traits and characteristics. Note how many of them include the word “manage” or “management” – that’s what running a business is all about, sound management.
If you are running a contracting business and are seeing clear success, then you may be considering scaling up. This is a great idea and can work wonders further down the line, but it’s important you plan for any growth properly; don’t go rushing into it and don’t ignore any of the obvious things.