Building a Successful Construction Company

By Patricia W. Atallah

If you’re seriously thinking about starting a contracting business in the construction industry, or are already deep into it and wake up in a cold sweat nightly wondering how you’ll get through the week, this book is for you. I’ve written it with you in mind because I have “been there” and know firsthand how it feels to grope one’s way through the process of starting and growing a business and then stay afloat and even thrive in a tough and quirky industry like construction. I’ve also worked with an assortment of contractors over the years and have gained insights on what factors separate success from failure. I’d like to share those with you here.

This book is designed specifically for aspiring and start-up contractors who want to get it right from the start, and for established contractors who are frustrated and overwhelmed with their businesses and tired of operating in a crisis management mode. If either of these describes you, this book will help you take a breather from your daily routine and walk you through the steps you must take to start thinking “big picture” about your business. Only then can you properly assess your current situation and the challenges and opportunities ahead of you. Only then can you decide where you want to go and how you are going to get there.

I started a construction business more than 12 years ago with business and banking experience and scant knowledge of the construction industry. What on earth possessed me, you ask? I’ve always had an entrepreneurial bent, and in my early 30s, I became anxious to drop out of the corporate fold and start my own business. I was looking for flexibility, a better balance in my life, and freedom from the limitations of a job description. I researched various possibilities for about a year and, based on my research, finally decided to start a business in the construction industry. With the perspective of an outsider looking in, I recognized some of the critical issues facing the industry and saw an opportunity to eventually make a contribution.

I joined forces with two partners who were trained engineers working for a prominent construction company. We looked at industry trends and the outlook for the mid-1990s and beyond, and envisioned that we could achieve great things with our combined talents. I was excited by the prospect of launching a business in a new industry and was attracted and comforted by the notion that I wouldn’t be venturing out alone. Our target markets were commercial and institutional general contracting and construction consulting.

And so we plunged in with boundless enthusiasm and incredible focus. With virtually no capital and few resources, we managed to “move mountains” by winning projects and building name recognition in a mature and crowded market like New York. Beginner’s luck? High energy fueled by unbeatable optimism? Yes to both.

In the middle to late 1990s, we experienced several ups and downs, at least one major crisis, several close calls, and almost daily thrills and disappointments. Despite our impressive credentials and our belief that we knew what we were doing, we made painful mistakes early on and almost went under in 1997, during our third year.

Looking back, we refer to those hard lessons as the “most expensive degree we ever earned” and a turning point in our business. We decided to get smart and establish realistic and well-defined goals and plans for our business instead of “playing it by ear.” Since the late 1990s, we’ve narrowed our focus to construction consulting and have steadily built a professional organization with carefully targeted services, a team of top professionals, a solid client base, and a market presence that should serve us well in the foreseeable future. The past fall, we celebrated our 12th year and are looking forward to many more.

One area of consulting that I’ve devoted my attention to is providing management advisory services to construction companies. Armed with a real appreciation for the challenges building contractors face every day, I’ve developed practical tools and advisory services aimed at helping contractors avoid the difficulties that we encountered. During the past eight years, I’ve helped many small and midsize construction firms take time out to look inward, assess their goals and capabilities, position themselves properly in the market, and resolve internal issues that get in the way of success.

What I’ve learned from working with these companies is that the construction industry is relatively easy to get into but a tough environment in which to do business, as evidenced by one of the highest business failure rates among major industries. Construction is a complex and risky activity with unknown variables and hazards at every turn. It’s also an industry with constantly shifting market conditions and demands. The risks are enormous and business stability and financial rewards remain elusive for most contractors.

Faced with a variety of challenges that can affect their businesses, owners of construction companies often have trouble juggling all the issues that arise because they must manage the business and manage the project work simultaneously, a tall order for most people.

The majority of contractors know their trade and/or are proficient technically but are often weak on business management and leadership skills. Thus, they don’t have the proper internal company setup and framework to allow them to juggle their business risks successfully. They struggle to survive year in and year out and remain frustrated because they’re not earning an acceptable return for their efforts.

If you’re an owner of a start-up or a growing construction company, you’re likely enthusiastic about your business and ready to do whatever it takes to succeed. You know from experience and research what some of the pitfalls are but refuse to imagine that you could end up becoming a member of the struggling majority. You’re determined to do it right.

If you’re an owner of an established company that is perpetually living in crisis management and survival modes, you may be fed up enough to want to make the necessary changes to put your company back on the right track.

I wrote this book to help you move ahead with your plans to succeed. To take the driver’s seat, you’ll need to face the realities of the business you’re in and create the strategy, organizational structure, controls, and support required to propel your company toward long-term success and financial stability.

In the next ten chapters, we’re going to concentrate on the key ingredients to business success: big picture thinking, strong leadership, and prudent business planning and management. I provide hard facts, true stories, practical advice, and valuable resources to help you develop and implement the strategic business thinking and management skills that are absolutely essential to your business.

We’ll take a close look at the realities, risks, and rewards of the construction industry and whether they truly suit your capabilities, resources, and disposition. Next, we’ll delve into the important elements of a successful business: careful planning, targeted marketing, effective company organization, strong in-house talent and resources, standard company practices and procedures, effective project management, proper financial management, prudent protection against risk, and adaptability to a changing environment.

By reading about these topics and taking advantage of the tools and resources I’ve made available throughout the book, you’ll learn how to gain the competitive edge that is so critical to your success, insulate your company from the ebbs and flows of the market, and manage your risk. You’ll also develop a real appreciation for what it takes and start laying out a workable plan to achieve your goals.

This book is designed to be user-friendly, with links to essential industry resources and checklists, templates, and workbooks that have been specifically created for your convenience. You can retrieve digital copies of many of the materials in the book by visiting the book Web site at www.ConstructBiz.com .

While writing this book, I had the pleasure of interviewing many contractors at various stages of their companies’ development. I also met with project owners and top industry experts in the fields of management consulting, banking, accounting, financial management, bonding, law, and information systems. Throughout the book, I’ll be sharing their comments, feedback, anecdotes, and wisdom.

The chapters are organized like building blocks. Each chapter builds on the preceding chapters and is the foundation for the next one. To get the most out of the book, I recommend that you read the chapters in sequence, as if you were reading a novel. You’ll meander through the twists and turns of the plot (creating a successful contracting business) and hopefully find a treasure of ideas, insights, strategies, and tools that will prove invaluable as you map out your path to success.