Some diversification options for the entrepreneurial contractor.



Our rising gas prices and economic downturn have created a crippling lack of work for our industry. Depending on the market area you work in, many contractors are struggling to find enough jobs to maintain their manpower and overhead burdens.

Most of our readers cannot afford to sit and wait for times to get better. You need to carefully consider all of your options for survival. Keep in mind, these feasible options also lead to success and profit-producing prosperity when the economy gets back to normal.

Your first big question should be, “Why would a potential customer pick me instead of one of my competitors?” Your answers are:

1. Your professional image.
  • Your service techs are sharply dressed in clean company uniforms.

  • Your trucks are clean, neatly lettered (with logos), and your drivers are considerate and courteous on the highways.

  • Incoming service calls are answered by a human being rather than a recording.

  • Your office and shop are neat, clean and well-organized for efficiency.
2. Your reputation. You probably already know that only three out of 10 customers will tell others about your good performance. However, 10 out of 10 displeased customers will quickly spread the word throughout your market area!
  • Quality workmanship that you warranty.

  • On time, every time - beating critical schedules on major projects.

  • Your employees work safely and respect your customers’ premises. They leave each jobsite cleaner than they found it.

  • Your service techs survey your customers’ facilities and offer value-engineering energy savings and preventative maintenance options.
3. Your pricing. Your service-call rates, job estimates and change order billings are fair and competitive.
  • Charges for extra work are negotiated before it happens, documented as it happens and paid for when complete.

  • Questionable charges are negotiated amicably without legal action. Small sacrifices at the bargaining table will spread “good will” to their friends and your potential customers. When you fight for “every last penny,” it will probably be your last penny from that customer.


So You Want To Diversify?

When your professional image, reputation and prices are in order and you still need more work, or simply want to grow, you have many options to diversify.

You can become a contractor in any of these trades. You should consider how much of that work is available in your market area and investigate profit potential.

1. With the mechanical, electrical and plumbing trades, you have all of these options:
  • Residential - New installation, service work, remodeling, maintenance contracts, duct cleaning, telephone installation and security systems.

  • Commercial - New installation, service work, fire sprinklers, telephone and security systems.

  • Industrial - New installation and service work.

  • Water- and sewage-treatment plants - New installation and service work.

  • Underground utilities - Site work and highway mains.

  • Pre-fab sales - Piping and duct work.



2. With the general bulletin trades, you can become a subcontractor and perform the work, or become a general contractor or construction manager and sub this work to a trade contractor. Most of these trades are available in residential, commercial, industrial, water- and sewage-treatment plants and underground utilities:
  • Excavation, grading and paving.
  • Concrete, masonry and stucco.
  • Carpentry: rough, framing, finish and millwork.
  • Structural and miscellaneous steel.
  • Roofing and sheet metal.
  • Drywall and metal studs.
  • Glass and glazing.
  • Painting and wall covering.
  • Finish floors and ceilings.
  • Landscape and irrigation.
You might be thinking negatively about the potential stumbling blocks for you to venture into any of these opportunities:

1. We don’t have a license. You could buddy up, joint venture, or partner with a licensed contractor or hire an employee with a license to start a new division or company. There are many licensed craftsmen in all of our trades who would love to become a part owner in their own business.

2. We don’t have the know-how or skilled craftsmen to perform that trade. Here again, you can partner with another contractor or recruit craftsmen. You could also utilize skilled employees from a union local in your area.

3. We don’t have enough money or bonding power to bid those larger projects. A partnership, joint venture or even a silent partner, looking for a good investment, would make a feasible working relationship for both parties.

Isn’t it great that you have unlimited opportunities for growth and survival in this competitive construction industry throughout the country, as well as the rest of the world? You could bid a single project in a distant area to set up a remote division or new company. Possibly the most common demand for construction services follow disasters of weather or violence.

But, we have economic upturns and major expansion of public or industrial facilities and also our fluctuating housing markets. Naturally, you should always investigate the profit potential before you decide.

You also must determine how many of your key management employees would be capable and willing to travel or relocate to that area.

Your options are not limited to our construction industry. You could own a restaurant; any type of retail outlet; a wholesale distributorship; an auto, truck or equipment dealership; etc. These opportunities are available in your market area as well as remote locations.

Keep in mind that you are not just a contractor. You are a successful entrepreneur! Webster’s defines entrepreneur as “One who organizes, manages and assumes the risks of a business or enterprise.”

I simply call it “commonsense and guts!”

During the years I have worked with contractors in the United States and Canada, I have personally experienced many of those having great success with these opportunities. It is a case of no risk, no reward.

Rub elbows with your peers at construction-related conventions and seminars. Your involvement in your local trade associations will give you insight into do’s and don’ts that will definitely affect your bottom-line profits.

This would be an opportune time to start a new business for one of your family members or an ESOP (employee stock ownership plan) to provide security, loyalty and longevity for your key employees.

America is still the land of opportunity. Go get your share!

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