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5 Barriers to a Contractor’s Success

While there are many potential factors that can lead to contractor failure, the following five have been identified as the most common. As you read this article, if any of these situations sound all too familiar, it may mean it’s time to implement new policies or refresh current ones.

 

  1. Lack of strategic leadership

Many business owners in the construction trade would like to see their business continue to prosper after they have passed the mantle of leadership on to their successors. Unfortunately, many owners do not realize – or underestimate – the depth of planning that must take place to guarantee that a leadership transition does not cripple their business. Developing strong and complete succession plans is extremely difficult to accomplish and requires great foresight and expertise. Moreover, developing and implementing a business succession plan may take years to maximize the successors’ comfort and knowledge with the facets of the business of which only the owner has been aware.

 

One of the most important steps you as an owner can take is to impart as much knowledge as possible about the company to your successors. As the old adage goes, knowledge is power; and leaving a company without a good knowledge basis can spell its demise. Transferring knowledge can be one of the most difficult parts of the succession process, but it is also one of the most vital.

 

  1. Lack of Humility

Leaders with too much confidence tend to make bad business decisions that can inevitably lead to the company’s demise. Successful contractors should exhibit a high tolerance for risk and the right balance of self-confidence. Possessing a high degree of optimism is also important considering the highs and lows associated with securing work and winning bids. Feelings of invincibility is another example of an undesirable characteristic. Leaders who exhibit extreme self-confidence will ultimately lead the company into a financial rut.

 

  1. Failure to manage the rate of changes

The constant changes happening in construction can be overwhelming and throw a company off course. Contractors know all too well, they are susceptible to changes such as new customers, projects, superintendents, project managers, systems and geographical targets. Unable to adapt, these changes can put contractors at a serious disadvantage. Being prepared and managing the rate at which these changes happen is the key keeping your head above water. For instance, making a list of anticipated changes can help visualize if the organization is undergoing too many transformations at once. While change is good, too much change too quickly can set you up for failure.

 

  1. Lack of discipline

One of the secrets to running a successful construction organization is the ability to run a disciplined practice. Especially when growing, building discipline internally is important for the company culture and to keep everyone on the same page. Losing focus can lead to a bureaucratic environment.

 

  1. Lack of control over finances

For most organizations, cash flow is their lifeblood. In the construction industry—with its unique aspects, complex nature and projects that span several years and seasonal slowdowns—cash flow is especially critical. The most successful contractors know how much money is coming into their business and how much is going out and they understand the ebbs of cash flow. It can mean the difference between operating in the black instead of in the red.

 

Our professionals can help break down these barriers, call us today at 239.992.6211.