Hand held compass

Navigating a Construction Business Through Economic Uncertainty: Lessons from Sailing

Financial Management, Owner

Running a construction business during these uncertain economic times can feel like sailing a yacht through stormy weather. Just as a skilled captain must adapt to strong headwinds and turbulent seas, you as a business owner must navigate choppy economic waters with foresight and agility. If you have a team under you, they will be looking for direction and confidence. In this post I share some strategies for steering your business through stormy economic seas.

TOFU-MOFU-BOFU Sales funnel

Using content to improve sales conversion

cash flow, Marketing, Sales

Up to half the people who first contact your business aren’t ready to buy yet. And by contact it could mean just a visit to your website without your knowledge. This is especially true if it is a discretionary spend project they have in mind or a large ticket item. Understanding the buyer’s journey is essential and creating an effective content strategy can keep the potential buyer closer to you and more likely to buy.

The buyer’s journey is often segmented into three stages: Top of the Funnel (TOFU), Middle of the Funnel (MOFU), and Bottom of the Funnel (BOFU). For trades businesses—such as plumbing, electrical, HVAC, or building services—tailoring content to these stages can significantly enhance the conversion rates for any leads. This guide outlines some content category ideas for each stage of the funnel to help you attract, engage, and convert prospects. For examples of what specific content material might suit your company at each of the customer journey stages, email me at andy@tradescoach.co.nz and I will help.

cash flow cycle

Improve cash flow in your trades business

cash flow, Owner

In order to have a successful working capital (cash flow) situation you need to have the cash cycle going as fast as possible, or increase the volume of cash invested in the business. You also need to become good at the cash flow game: making the cash come into your business as fast as possible and in as much quantity as sustainably possible and pay it out as slowly as you can get away with.  There are multiple levers you can tweak to achieve this and the balance of this guide is about five of the key strategies you should look at implementing into your business.  Working with an advisor like The Trades Coach will be the fastest way to have these strategies, and other relevant ones, implemented effectively into your business and watch the working capital steadily increase. Until then, read on to find out what my top 5 suggestions are.

Mike Tyson on plans

Effective Business Planning

Owner

Over the past 4 years or so the business world has been turned on its head. No one could have predicted the Covid pandemic and the implications that flowed from it. More recently supply lines have been majorly affected and migration flows have gone from famine to feast. In this type of environment putting a business plan together seems in many ways like a waste of time. When I look at some of the traditional business planning models used, I would tend to agree.

In my opinion it comes down to the type of business plan that is produced and the length of time taken to produce it.  Many business plans are a waste of time because they are too long, too “corporate”, don’t motivate staff and are not connected to the day-to-day operations of the business. Learn how to put a simple and effective business plan together here.

stressed business owner

Circle of Influence

Owner

The fact that these are some of the most challenging times for builders in the past 10 years comes as no surprise. We have come through labour shortages, supply line disruptions and Covid lockdowns just to be faced with huge increases in interest rates and a drop in demand. Furthermore, the banks have factored in many of these events into their risk equation and made lending tighter for home buyers, further adding to the uncertainty.
The effect can be for people to worry about things they have no influence over and miss opportunities to improve those things they DO have influence over.

lion doing a lead generation exercise

Lead generation in construction – Step 1

Marketing

There is a growing problem in the building trade.  Consumer confidence has declined, the cost of living “crisis” is making some people close their wallets and interest rates are more than double what they were 2 years ago. Suddenly lead generation is top of mind for owners of construction related businesses. It can cause a bit of a downward spiral if you don’t take action. A typical story goes like this…

man watching phone

Lead generation for construction businesses

Marketing

A comment I hear from a lot of people in the construction industry at the moment is that the market is significantly quieter than last year and they need to increase the flow of sales leads. Those business owners who have invested time and money into their marketing over the years are a lot better off, but many people rely too heavily on word-of-mouth marketing for their opportunities. 

While a solid, long-term marketing plan is best, for those who need more leads quickly, I have outlined a few options in this article to broaden your marketing reach and support word-of-mouth referrals.

Sell with stories

Using stories to sell your services

Marketing, Sales

If you operate in the residential construction space you need to be aware that emotions play an important role in how your customers connect with you. You need to connect first at the emotional level and using stories is a great way to do this.

Best of all your past customers become your extra sales team and will have much better credibility in the eyes of prospective customers than you will.

Click on the picture below to start the video

risk reward balance

Risk management – Getting the balance right

Owner

The construction game is a risky one. Probably don’t have to tell you that but it needs saying and it also needs to be proactively managed. On the other hand it can be a very rewarding industry and you can have a great life if done well…..and a bit of luck. No business however is risk-free. 

Part of your role as a business owner is to think about the risks in your particular part of the market, prioritise what risks to reduce first and put processes in place to manage those risks. Also decide on what level of risk you are comfortable with and not try to reduce all risks to zero. Here are the seven most important areas of risk for a construction company and some strategies for managing them effectively

Late nights quoting

An end to free quotes

Marketing, Sales

If you are in the residential market and still providing free quotes, you should stop. It’s called free consulting, and you won’t be successful giving away your time. Doctors don’t. If you have had the unfortunate need to visit a specialist medical consultant to discuss a problem and consider a potential course of treatment, they will probably charge you between $500 and $1,000 an hour for the privilege of their advice. It is unlikely your hourly rate is that high, but you are still providing a similar advisory service to your potential customer.

In providing a quote to a potential customer, you may be doing everything from putting together some initial numbers to providing some preliminary design work and saving the customer significant money through your experience. Learn how to start charging for your quotes and increase your sense of worth.