Following a difficult year for the sector, construction output in the UK is now growing month on month. With this in mind, we've collated our top tips and tricks for construction businesses looking to grow in 2021.
- Business planning
All too often the pressures of keeping the business going on a daily basis mean that strategic planning is not given the attention it needs. The result is often rushed judgments, over or under-capacity or missed opportunities.
Every business owner needs support from an advisor who can help them make objective decisions based on its current performance and future plans. How often do you put a little time aside to ensure that your business remains on target to achieve your business goals, or maybe your plans need revision? We recommend working with your accountant to clarify your vision for the business and discuss what you can do to monitor progress towards your growth strategy.
- Develop your brand
To achieve business growth, you should have a clearly developed brand which your customers recognise. Your brand should encapsulate everything you want your customers to think about your business. It should differentiate you from your competitors, not just by drawing attention to your particular product or service, but by promoting an image that is individual to your firm.
The right brand can help you to increase your market share and encourage customer loyalty in the long term. Some key points for consideration when it comes to developing your brand include:
- Begin by defining the qualities which best represent your product or service. Brand names inspire a feeling of confidence, and over time customers will automatically associate your company with the qualities you have chosen to highlight, when they come into contact with your brand. Does your brand name currently reflect your service? If not, it might be a good idea to evolve your current brand.
- Names, symbols and logos should be short, simple and self-explanatory. You might want to communicate an element of humour or sophistication, or of having a friendly and approachable attitude. But whichever angle you take, your brand must remain easy for the customer to recognise and remember moving forward.
- Speak to your existing customer base about your brand. Get their opinions on your plans, to see whether your choices will appeal to them.
- Ensure that all staff understand and take on board your brand identity: remember, your brand message represents your firm's image, and this image must remain consistent across all areas of your business.
- Make sure your branding and logos are consistent on all of your stationery, mailers, advertisements and website.
- Monitor projections and results
To be fully in control of growth, you need information on what is happening to your business now, not what happened weeks or months ago. As a businessperson you will recognise the vital importance of financial control in sustaining and improving profitability. Good financial control involves deciding which areas you need to monitor and how frequently, generating the numbers quickly and accurately and sharing the results with everyone who needs to know them.
It's also essential to be able to interpret the numbers correctly and take appropriate and timely action based on your interpretations. The starting point should be to set up a system that enables you to generate accurate reports as quickly as possible - certainly no later than ten days after the month closes.
- Register for VAT on a monthly basis
Construction businesses should give consideration to how often they do their VAT returns. Whilst most businesses file their VAT returns on a quarterly basis, due to the implementation earlier in 2021 of the VAT Reverse Charge, it may be appropriate for some construction businesses to switch to doing their VAT returns on a monthly basis.
Builders working for larger contractors, and who have therefore become subject to the Reverse Charge, may be able to improve their cash flow by filing monthly VAT returns rather than standard quarterly returns. Input VAT on materials and overheads can be reclaimed from HMRC every month rather than waiting a full 3 months and more. HMRC frequently query VAT repayment claims, so habitually lower reclaims are far more likely to be processed quickly and without detailed enquiries by HMRC, which can delay refunds by 6 weeks or more.
- Benchmark best practice
A profit-driven organisation must be committed to continuous improvement and always strive to be the best in its field. One way to achieve this is through best practice benchmarking.
What does benchmarking mean?
- Establishing standards that will help you achieve the best relationships with your customers and the best results on your bottom line
- Observing how others, either outside your organisation or elsewhere within it, attain these standards
- Applying the knowledge gained to achieving and maintaining those standards yourself
Clients who benchmark on a regular basis report beneficial results, including: Improved understanding of your customers' needs, more satisfied customers and improved customer retention, greater insight into competitors, greater emphasis on innovation and continuous improvement, less waste, fewer rejects, fewer quality problems and better firm reputation and increased marketing power. All of these benefits, of course, eventually trickle down to the bottom line and show up as improved profits.
- Marketing and social media
One of the best ways to grow your business and client base is to invest in marketing and social media. Experts from PR and marketing agency, KC Communications say: “Depending on the capacity of team members, this could be something you're able to manage internally or this could be outsourced to a marketing agency. When developing a marketing strategy it's important to be clear on your target market and which areas of the business you are wanting to grow.”
KC Communications highlight five key considerations for construction companies:
- What channels do your customers engage with? E.g print media, online media, TV, radio. Once you have identified this, you'll know where to focus your efforts and attract new customers. Working with a specialist in marketing will help to identify the correct channels and then create a dedicated strategy appropriate for that channel.
- Are your customers on social media and if so, what channels are they most engaged with? Review your current channels and levels of engagement to do this.
- Establish a clear tone of voice and message across social media so customers recognise your content.
- Become an authority in your industry by engaging in relevant discussions and offering useful advice and insight to your customers. If you showcase your expertise, customers will automatically think of your brand as their go to option.
- Develop the SEO of your website so customers can easily find you and navigate to your products and services. Working with digital marketing specialists on your website and ensuring it is optimised for online customers is essential in 2021.
- Finding new work
Attracting and winning new business is key to growing your business and attracting more building projects. Keeping on top of new business opportunities is essential. Whether you have a dedicated sales team or all staff work collaboratively to bring in new projects, reviewing live tenders in the industry is a great way to find new customers.
For the construction industry, there are a number of sites to review and sign up to including
The Construction Index, B2B Tenders, Gov.uk Contract Finder and Bidstats. We would recommend reviewing which sites offer the most relevant work to the services you offer. Developing an internal process for responding to these tenders is also essential and will help with the goal of increasing sales.
- Monitor risks
Charles Brook, partner at insolvency practitioners, Poppleton & Appleby says the most important thing for construction companies looking to grow is to continuously monitor risks facing their industry: “It simply isn't possible to provide an exhaustive list of risks currently facing the construction sector, but there are a few which stand out as having the potential to impact most businesses in a negative way.
“The first is being busy. Busy people may be inclined to cut corners and, whilst that may have a health and safety impact at its most basic level, it also follows that important matters such as proper costing, credit management or the supervision of sub-contractors doesn't get the attention that it deserves. There are so many business opportunities out there at the moment in this sector that it could be easy to become over-stretched or over-committed, and both of these create vulnerabilities.
“The second is managing supplies. It isn't just Brexit that has damaged the supply chain and introduced delays and increased costs associated with border controls and tariffs. Globally, the demand for building materials has produced shortages of raw materials and everything from blocks and timber to technical components at every stage in the construction process are in increasingly short supply. The consequence is increased prices, delays, lost revenue, penalties and ultimately, contract failures.”
- Billing and collecting payment on time
As the economy recovers, monitoring your billing and ensuring prompt payment by your customers is more important than ever. 'Cash is King' is an old cliché but late payment, or worse, bad debts, can bring down even the most profitable business. Ensure that you set time aside to bill regularly, and not weeks and months in arrears, and where possible bill stage payments to help cover material and subcontractor costs.
Summary:
The past 12 months have been particularly difficult for the construction sector, not only with lockdowns and restrictions but with the introduction of Brexit and new regulations across the industry.
For many, seeing growth in the next year is essential which is why we wanted to share our insight into key ways construction business owners can do just that. From working closely with your accountant on projections to investing in marketing and social media, now is the time to really take control of your business as the industry begins to open back up once again.
If you're a construction firm based in West Yorkshire, our team of construction accounts are available to support you to grow your business. Contact us today to see how we can help!