7 Mistakes Rookie Contractors Make


The construction business is a booming one, and there are huge incentives to venture into this field. The industry also offers a wide range of opportunities for newbies – from public infrastructure and ground-up development to residential renovation, just to mention a few. 

However, the difference between becoming a successful contractor vs folding up your construction business after a few months lies in proper planning and attention to detail right from the start. A lot of work goes into the planning and preparation stages, which will ensure that your business takes off on the right footing. There are also some rookie mistakes you need to avoid if you want to have a smooth start. Let’s take a look at some of the avoidable mistakes.

  1. Failure to nail down your service offering

As we have already mentioned, the construction industry offers a wide range of opportunities for a newcomer. In fact, the vast number of options usually end up tempting a lot of newbies into venturing into as many of them as they want. This is a rookie mistake. Even if you intend for your operations to cover a wide range of construction services, you need to begin by focusing on one (at most two) specific areas of service. Attempting to become a Jack of all trades right from the beginning is likely to cost you a lot. Picking up any job and every kind of job offered to you may seem like a good idea, especially when you are trying to make in-roads into the business field. But this can also leave you with a lot of unprofitable projects and wasted time. Plus, the chances that you may not complete most of the projects are very high – already started on a wrong footing. Thus, to carve a niche for your business, pick one or two specific services to start with. These services should suit your strengths and should also not cost you a lot of money or time to offer. 

2. Not planning out the structure of your business

It is a bad idea to enter into the construction business – or any other business for that matter – without thinking about what your business structure is. This is very important whether you are setting up your business alone or working with a partner. There are usually three main things to consider when it comes to the structure of your business. The first structure has to do with a partnership. A partnership agreement is very important if you are entering into business with one or more other people. The agreement should spell out the rights, obligations, and rewards of each partner. The second structure is for a sole trader. This structure is usually a very simple one, as it involves only one person at the helm of operations. With this structure, there is usually no legal distinction between your business and you. The third structure is for a limited company. This structure can be an ideal alternative for different partners with stakes in the business. Getting the right advice from an experienced professional about which structure best suits you will help you avoid certain costly situations in the future.

3. Not having any source of funding

The fact that the construction industry is booming and is a very rewarding one does not mean that you will start raking in revenue as soon as your business starts operating. 

Several factors will determine how quickly the profits start trickling in or how long it will take even to start breaking even. But the certainty of this period (that is, the first couple of months after starting operations) requires that you have a source of funding to rely on. Workers need to be paid, whether you’re making profits or not. Some projects may need to finish before payment is made into your account. Some customers may fail to pay up on time and leave your hanging. Generally, it will cost you some money to run your business on a daily basis. Having a source of funding will enable you to test the waters and ride the storm until you start reaping some rewards. It will also enable you to recover from certain setbacks you may face that might cost your business money. You can also open a small business account at the beginning stages, and, if possible, acquire a loan with an overdraft facility in place. It is always a safer option to have some sort of emergency funding available to you should your business hit the red. Unfortunately, ignoring this important tip is one of the huge mistakes that most rookie contractors make.

4. Ignoring the importance of technology

One of the reasons why the construction industry continues to grow is the fact that it makes use of different kinds of technology and software. As the industry continues to grow, different kinds of soft and hard technology are introduced. In order to stay ahead of the game and remain relevant in the business, you need to take advantage of the relevant technology available that allows you to be efficient in the way you manage products, reduce the amount of time it takes you to complete those projects, yield better results, and be cost-effective. 

From accounting software to LMS software consulting solutions, it is important to take advantage of all the ‘help’ you can get with respect to online tools and software that will help make the running of your business less difficult. There are always easier and less expensive ways of doing things. And most of these technologies could help your business reach success.

5. Underestimating the power of your reputation

Even with the power of social media and the internet, one of the most effective ways of attracting new clients is through the old-school word of mouth channel. Indeed, it can even be far more effective than having a plush-looking website or creating expensive advertising campaigns. Unfortunately, a lot of rookie contractors ignore this. Thus, right from the start, it is important to focus on a number of things. First, get your business listed on a local construction review website or blog. Focus on the platforms that are most widely used to get a lot of exposure. Secondly, convince your satisfied customers to leave a review on your website, your social media pages, and the review sites and blogs you’re listed on. Doing this indicates to potential clients that your work can be trusted. Thirdly, follow best practices. This includes how you present yourself to your clients, the principles that they see you demonstrate on each project, your work ethics; you name them. All these are indirect marketing strategies that go a long way in creating a dependable reputation for you and your business. And which client wouldn’t want to hire the services of a trustworthy contractor.

6. Not having a plan

It is almost impossible to jump into the construction business without any business plan. 

Your business plan is what will guide you on your journey towards creating a successful construction company. It will outline your mission, vision, and strategies and how to achieve them. Therefore, it should be well thought out and should come with a comprehensive financial plan. Many rookie contractors make the mistake of taking jobs as they come and ‘go with the flow.’ However, it is essential to make time to get in front of the growth of your business by finding new ways to improve, attract clients, expand, etc. Also, set realistic targets for yourself and your business and map out the best strategy to achieve those targets. Have a clear vision of the kind of construction business you want to establish, your strengths and weaknesses, which areas of the industry you want to specialize in, etc. The construction business is a very competitive one. And only those who have a well-thought-through plan will be able to compete. 

7. Failing to create accountability structures

It is almost impossible to handle a construction business on your own. Even when you are running a one-man-show, you will always need extra hands on the field. And this means that you will have to deal with subcontractors, field leaders, and other subordinates throughout your operations. One of the rookie mistakes that a lot of newbie contractors make is failing to create accountability structures for their workers or subcontractors. When there is no form of accountability, you can expect a lot of on-the-job accidents, little to no customer satisfaction, horrible reviews, no referrals, and, of course, financial loss. Most rookie contractors are usually hesitant or even afraid to lay down the law and become firm with their subcontractors and subordinates. This is typically the case when they hire their buddies and family members to work with them. It is understandable if you’re trying to cut costs by hiring people closer to you. But then you need to ensure that they take your business seriously. When you allow sloppy and sub-par work to become the norm, you will lose trust with your clients and will find it difficult to mend your broken credibility.


Latest Issue

BDC 317 : Jun 2024