Growing and Scaling a Construction Business: A Practical Guide for Contractors

Although you may have experience hiring help and taking on bigger jobs, there’s likely a whole world of opportunities that feel just out of reach at your business’s current size.

For example, you may need more scale to bid on major commercial building projects or put in a proposal for a big contract with your state’s department of transportation.

This guide will help you make the jump. We’ll cover everything you need to know about growing a construction business and break the process down into steps any contractor and business owner can follow. Along the way, we’ll offer practical tips from large construction business owners who have been in your position before.

Keep reading to scale up your business today.

How To Grow Your Construction Business: A Step-by-Step Guide

We’ll break the process of scaling your construction business down into easy-to-follow steps and explain exactly what you need to do to achieve growth.

Step 1: Lay out your vision

Growth starts with a vision for the future. Think carefully about where you want your company to be 10 years from now. What kind of jobs do you want to be working on? How much revenue do you want to generate? Is your business operating in 1 city or several?

A good place to start is to think about big projects happening now that you’d like your business to bid on—but don’t feel like you have the scale to compete for just yet. For example, maybe you want to bid on a $1 million highway repaving project or a $15 million contract for building a new wastewater treatment plant. These are big, specific goals that your business can work towards.

Create a list of companies currently bidding on those projects. Then study what they have in common and what makes them strong candidates for large contracts. For example, how many employees do they have? What specialized equipment do they have that your business lacks? How did these companies build their reputations, and what other kinds of jobs do they work on?

As you research competitors, you’ll start to see common threads—be sure to write these down. These are the strengths you’ll seek to build for your business as you begin the growth process.

Step 2: Create a short-term plan

Once you’ve got a long-term vision for your business, it’s time to take a step back and figure out how you’ll get there. Think about what’s achievable in 1 year and list out specific goals, such as:

• Bidding for new types of jobs.
• Hiring 1 or more new laborers.
• Growing your revenue by 10%.
• Establishing new processes for your business operations.
• Making investments in new equipment or technology.

Follow the SMART approach to goal-setting—that is, goals should be specific, measurable, achievable, relevant, and time-bound. It’s okay if a few of your goals are ambitious, but the majority should be within reach from where your business is today. These goals will help you prioritize where you put your time and attention during your first year of growth.

Next, you need to create action plans to help you achieve these short-term goals. Break each goal into several milestones, then list out the actions you need to take to reach each milestone. Assign an owner to each action, designate required resources, and set a timeline to make it happen.

As an example, say you want to take on a new type of job, like painting a commercial building. Relevant milestones include submitting a bid and hiring an additional laborer. You can assign 1 employee to craft a bid and set a deadline for the first draft. You can assign another employee to take charge of the hiring process and set a timeline for onboarding.

Be sure to measure your progress toward each milestone and goal. If you’re not making progress—for example, your business isn’t landing that new job you want—be sure to stop and reassess your plan. Identify the sticking point and consider breaking the goal or milestone into smaller, more manageable parts to make it more attainable.

Step 3: Refine your operation

Now it’s time to get into specific changes you can make to your operations. Chances are, there are some inefficient processes that have been in place since you started your construction business. Addressing these is one of the best places to start scaling.

This operations-focused approach was recommended by Hunter Kosar, owner of Twisted Nail Broker Services. “When we experience an issue,” he said. “We pursue it aggressively until we find a solution for it so that the issue isn’t replicated. Over time, this builds a very refined and tuned operation.”

Think about what bottlenecks your business has faced on recent jobs and what process gaps need to be filled. For example, maybe your business recently had to turn down a job because your heavy machinery was parked at another site. This could potentially be solved with equipment management software.

If you’re not sure where your business’s bottlenecks lie, there are a few solutions. One is to simply spend a day in the field with your employees—you might be surprised at how many inefficiencies you spot on your company’s job sites. You can also survey your employees, since they might be keenly aware of operational shortcomings that haven’t previously been brought to your attention.

Another approach is to break your processes into discrete steps and measure the time each step takes. For example, if you’re installing windows, measure the time it takes to load windows onto your truck, unload them at the job site, and install each window. If one step takes significantly longer than the others, it could be a bottleneck that’s holding up your operations.

Refining your current operations enables you to do more with the people, equipment, and resources you already have. Address any bottlenecks now; otherwise, they will only get worse when you have more employees, more projects, and more money on the line.

Step 4: Assemble a team you trust

Scaling a construction business requires bringing on high-caliber employees. “It takes people who you trust and are willing to treat the business as if it were their own to scale,” said Justin Olewack, owner of BOLT Builders.

So how do you get the right team in place? We’ll cover a few proven strategies.

• Visit trade schools: Trade and vocational schools are packed with skilled workers looking for construction jobs. You can find both entry-level workers (the students) and experienced tradesmen (the instructors).
• Offer apprenticeships: Apprenticeships are in high demand, so you’ll typically have your pick of motivated workers for these programs. When you find an especially skilled apprentice, you can offer them a full-time job at the end of their program.
• Network on job sites: When you meet a skilled worker you like at a job site, invite them out for coffee or lunch to start a relationship. This is a great chance to pitch a job opening. Even if they’re not ready to switch jobs right now, they’ll know to call you first when they’re ready for a change.
• Launch an employee referral program: Offer cash bonuses for employees who refer candidates for open positions at your company. This encourages employees to be on the lookout for qualified workers and to act as grassroots recruiters for your business.

Step 5: Create a scalable business structure

Take a hard look at your organizational structure. Many small construction businesses operate using a simple hierarchy, with the owner at the top and several employees below them. But as you add employees and take on bigger projects, this basic setup may prove insufficient.

Put simply, running a larger operation requires a more complex business structure. For construction, the 2 most effective ways to organize your business are by department or by project.

• Department-based organization: Involves dividing employees into functions like sales, finance, HR, and operations. This typically works best for very large construction companies that require multiple employees for roles such as sales, HR, and accounting.
• Project-based organization: Involves assigning employees to specific projects on a flexible basis. This typically works best for mid-sized companies where 1 employee may be assigned to multiple projects simultaneously.

Regardless of the structure you choose, it’s essential to define each employee’s responsibilities clearly. Set up a transparent chain of command so that employees know who to report to and who is responsible for decision-making. While it may take time to get to grips with a new business structure, organizing in this way will lead to much better communication and enhanced productivity as your business grows.

Step 6: Invest in software tools

General business software and construction-specific management software help boost productivity, ensure critical work isn’t missed, and keep your employees and customers happy.

Some of the most important types of software tools to consider include:

• Employee scheduling software to assign employees to jobs, ensure no work is missed, and minimize overtime costs.
• Construction time tracking software to track labor costs across your jobs and pay employees accurately.
• Fleet management software to track your construction equipment and vehicles. This software also assists with maintenance, extending the lifespan of your equipment.
• Employee training software to ensure employees’ certifications are up-to-date and your business has a strong safety culture.
• Accounting software to track the profitability of each job and monitor your business’s expenses.

You can purchase these tools individually or use all-in-one software like Connecteam, which includes tools for scheduling, dispatching field employees, time tracking, employee training, and HR.

Step 7: Build a strong sales pipeline

This final step ensures you always have new business coming in the door. We’ll focus on 2 approaches to boosting your sales: accelerating your marketing efforts and building a dedicated sales team.

Marketing your business

The most important thing you can do to scale your sales is to market your business aggressively. Marketing puts your company in front of more potential customers and ensures your business is top of mind when they need construction services.

The types of marketing approaches that are most effective for your business will depend on the types of construction services you offer. Here are a few strategies to consider:

• Social media: Use social media to market to homeowners and target individuals who recently searched for construction services your business offers.
• Marketing emails: Use email to reach out directly to leads who have expressed interest in your construction services. You can also send cold emails to builders in your area to ask if they need subcontractors.
• Billboards: Consider billboards as a way to build your business’s reputation. They’re relatively expensive, but they can help make your business a household name.
• Search engine advertising: Target keywords for your city and your construction services—for instance, “best roofers Savannah.” Make sure your website has all the information prospective customers are looking for.
• Local networking: Show up at trade shows and conferences with your business card and a short pitch about what your company does. Set up meetings with managers of large construction companies who may need your services.

Hire a dedicated sales team

Another highly effective approach to growing your sales is to hire a dedicated sales rep or an entire sales team. These employees can reach out to potential customers, assemble bids, close deals, and provide service for existing customers. Having a sales team adds a ton of capacity for bigger jobs and ensures your business has a steady stream of work.

Scaling Smart on a Budget: 3 Low-Cost Wins

Scaling your construction business can seem like a gargantuan task, but it starts with a few small steps. We’ll highlight 3 budget-friendly moves you can make to kickstart your growth today.

If you don’t already have a playbook for your employees to follow, creating one is a great way to boost productivity and prevent costly mistakes. List out common operations and processes your business needs to perform when you take on a new job. Then describe in detail how they should be done. Next time you take on a new project, your employees will know exactly what to do.

There are many free software tools available to help you streamline your operations and better handle multiple projects. For example, Connecteam is completely free for construction businesses with up to 10 employees. It allows you to schedule workers and track the time they spend on each job, enabling you to manage more jobs and invoice customers accurately.

As mentioned, marketing can go a long way towards generating new business—and making a few impactful tweaks doesn’t require you to spend much money. For example, you can update your business’s website and social media profiles or send a few marketing emails to prospective customers. You can also reach out to construction-adjacent businesses in your area, like realtors and architects, to introduce your company and ask for referrals.

FAQs

Should I take on more work or hire more employees first?

Whether you should wait until you win new construction jobs to hire or hire before you bid for new work is a common chicken-and-egg problem. The best approach for many companies is to line up potential subcontractors, then bid for new work. Once you have a steady stream of new jobs, you can replace your subcontractors with permanent employees.

How do I pay for growth?

Growing your business costs money since you need to hire new employees and purchase new equipment. You can pay for this growth by taking out a business loan or reducing your own salary to reinvest in your business. You may also be able to apply for grants or write the cost of new employees or equipment into a bid.

How do I expand my business into another state?

If you want to expand your construction business across state lines, there are some legal and compliance obligations to consider. You may need to get a contractor’s license in the new state before you can take on jobs. You also need to update your business insurance policies and ensure you comply with state-level labor and tax requirements.

Disclaimer

This article is for general informational and educational purposes only. It is not intended as and does not constitute business, financial, or professional advice, and should not be relied upon as such. Market conditions and business outcomes can vary widely. Before pursuing new services or business strategies, consult with a qualified business advisor for tailored advice based on your business’s circumstances. Connecteam accepts no responsibility for consequences arising from actions taken or not taken based on the information present in this article.