What’s the goal of any business? To make money—and we all know the phrase “Money doesn’t grow on trees.” This concept is very familiar, but to be a profitable business you will need a sound strategic approach.
While this is true for all businesses, the construction industry has a slightly different view. In building/construction, the workers and leaders are on nearly equal playing grounds, regarding how they impact the business.
Construction workers are self-driven. They are known to have independent motives, goals, and views. These aspects are great. They’re what make your staff stick out from the competition. Yet at the same time, it can be challenging to keep everyone on the same page.
Fortunately, a simple strategic plan can be formulated to ensure that everyone is working in the same direction, helping to increase profits by addressing underlying concerns, and opportunities.
A strategic plan is designed to document the goals of your company and outline many of the steps you’ll need to take and milestones you need to achieve to get there. In this two-part series, we’re going to explore the strategic planning process. We think after reading, you’ll be able to develop a solid strategic plan for your construction firm.
Start With a Basic Mission Statement
Often, businesses start the strategic planning process by defining a mission statement. This mission statement is usually written to be “high minded.” For example:
“Acme ABC Construction will position itself as a dominant new home building company in Wisconsin. We will field a team of construction experts and contractors to build the finest homes in the area while delivering tremendous value to our clients.”
It’s perfectly fine to start with your mission statement. However, this mission statement should always be viewed as a living, breathing, asset. As you outline your strategic plan, you will likely adjust your mission statement numerous times. Just make sure your strategic plan continues to align with your goals and ambitions.
So let’s move forward by examining goals. Every strategic plan should be goal driven. What those goals should be will depend on your company, situation, and ambitions.
Goals For Construction Businesses
Goals can be viewed as the “bread and butter” of a strategic plan. There are many different types of goals to set, for example:
- Human Resource
Your strategic plan, mission statement, and everything else should be defined by your goals. The more specific you can be, the better. Don’t stop with “we’ll increase profits.” Be more exact. “We will grow profits by 10% in year one and an additional 15% in year two.” The same is true for organizational, financial, and other goals.
You don’t have to have every goal outlined when you start your strategic plan. Indeed, your goals will often shift as you go about planning your strategy.
Conduct a SWOT Analysis
Next, you need to get a good grasp of where your company stands right now. Having outlined goals, you’re already well on the way towards building up this understanding. You can expand your understanding, however, by conducting a SWOT analysis.
A SWOT analysis focuses on the environment and your company’s place in it. These aspects, in turn, can have a tremendous impact on your company and its success or failure. A SWOT analysis centers around four elements: Strength & Weakness, as well as Opportunities and Threats. Let’s look at them individually.
Construction Firm Strengths & Weaknesses
Strengths and weaknesses are internal, which means your company has a lot of control over them. Be proactive, take control.
Strengths: What are your company’s strengths? Where do you excel? Don’t overstate things, be honest. If you mischaracterize weaknesses as strengths, you’ll only hurt yourself. Pick a few areas that you are really good at. Leverage them.
Weaknesses: What are your company’s weaknesses? It’s often best to be a bit critical when examining weaknesses. If you’re doing okay in a certain area, but there’s still a lot of room to improve, it’s still a weakness. Address them.
Both strengths and weaknesses can include:
- Resources, such as money and equipment
- Human resources, including the talents of your workers
- Access to customers
- Ability to finish projects on time and under budget
Opportunities and Threats for Small Construction Firms
Opportunities and threats are external factors. They exist outside of the company’s direct control. However, proactive engagement can give companies input and an ability to respond to both.
Opportunities: An opportunity is a distinct advantage that a company can leverage to gain a leg up in the market. For example, maybe your construction firm specializes in installing solar panels as well. Can you leverage that to gain new opportunities?
Threats: External threats are factors that could damage your company. For example, is a competitor simply much better at roofing than you are?
To Be Continued in Part 2 of Strategic Planning for Construction Companies
We’ve provided a lot of food for thought. Now it’s time to digest. Take a few minutes to think about everything we talked about. Strategic planning is an art & science of nuance. In part 2, we’ll dive deeper into the strategic planning process.