Benefits of Doing Construction Work

There's a new sport that's becoming popular across the country: triathlons. This is where a bunch of rather crazy athletes do three back-to-back events a swim, a bike ride and a run. The distances vary, and it can be very tiring; but the sport is taking off anyway, perhaps because it requires a high level of both dedication and fitness, and the participants get a great feeling of accomplishment when (and if!) they finish.

Offering more services in your own business can be a similar challenge that gives you the same rush, and the same great sense of accomplishment.'

If you're building and installing, say, kitchen cabinets, did you ever think about providing more services? Demolition, new framing, coordination of plumbing and electrical subcontractors, drywall or painting? This kind of work can offer healthy profits if you stay organized and perform well.
Since today's consumers increasingly look for "one-stop shopping" a resource where they can get their whole project taken care of you can see why this idea might have merit.'

Now I'm not saying that your company has to do all the physical construction work, but it may be worth considering taking on more than just shop fabrication, if you can make money with it.

Is it worth it?
Do you really need the extra headaches? There's enough going on as it is the end-trim motor on the edge-bander is acting up again, your detailer is late on the cut-list for phase III of the Oliver project, and that library bid is due the day after tomorrow. And you're thinking about adding construction services into the mix? Are you nuts?

Then, of course, there's the question of leads. Can the company get enough? Is the business really out there? Well, yes, it's definitely out there, and it's growing. Some estimates put the remodeling market at around $130 billion annually. That's a lot of business, and there's no reason why you shouldn't have some of it.

First, though, you need the right people. It can be difficult to find a builder-type person who can run this end of your business for you, and most shop-trained staff won't know how to do construction work. You may want to move a good installer into a position of organizing people, controlling jobsites and coordinating subs.

Are you an organized organization? The key to successful and profitable construction work is being on top of it all. If you already have company systems in place good accounting, record keeping, communication, employee manuals, etc. you're in a better position to expand into other similar work.

Can you find good subcontractors? Here's one major key to doing good work and having your projects run smoothly. Right now, you're probably already working alongside some of these companies. If you can hook up with good subs, they'll take care of the actual physical work your challenge is to coordinate things. You have to charge for that coordination usually in the form of some kind of mark-up of what the sub charges to do the work and I would recommend a minimum of 25%, more if their work is small dollar value.

Do you have the right license to do this kind of work? Many states do require a general contracting license to do building work, and if don't have that, you may run the risk of not being paid or having your project stopped.

You should also check with'your insurance company as to whether you're covered in your expanded capacity without a doubt, you're exposing yourself'to higher liabilities.

Speaking of liability, do you want a longer period of being responsible for your work? With shop work, you may be used to warranties that run for a year or so; in the construction world, expectations of guarantees and fixes can run longer, even if you try to limit them.

Will doing construction projects pose a threat to your existing builder clientele? It may be that the remodelers who work with you now will not like the idea of you getting into their line of work. You may want to make sure that you never bid against companies you work for, and don't ever try to take clients away from them. Negotiated work, where you don't get into a competitive bid situation, may be where you want to end up anyway.

How can we do it?
You have to start with a person whose position in your organization is dedicated to doing the construction work. He or she needs physical experience in the field, along with good management and people skills. Your construction manager will be dealing with clients, staff and subcontractors, and will have to have good juggling techniques! It's a different set of problems than the ones you encounter daily on the shop floor.

This person may not be on your staff now, and may not have to be. You could form an association with a good builder, and together you can build projects. This kind of alliance can work very well for both parties the shop and the builder and you can work on each other's leads.

You may want to consider forming some kind of joint venture with a builder, or even merging your businesses together. This way, you'll be closely tied in with a'motivated party who's already experienced at doing the kind of work we're talking about.

By adding construction to your repertoire, you may be able to do more volume of work without significantly increasing your overhead. In fact, the added dollar volume may even decrease your overhead costs as a percentage of sales. It may be that your shop can become more price competitive; even better, you can make more profit.

It's possible you won't even have to increase plant size or capacity, or add machinery. You may have to add smart people, but if you can pass those costs along to your client, you're still ahead.

The construction world is certainly a bigger universe than the one you may be working in right now as a shop. But it could very well be one worth considering as our society moves toward more comfortable interiors with more cabinets, built-ins, furniture, fixtures etc. all of which is work we do already.'

If you're willing to take on a bigger package, a wider scope, you may be surprised at what that can do to enhance your profitability. Don't forget, though, just as with those triathlon events, you need to stay in good shape to participate, and you have to have a lot of stamina to finish!

Loading