525: Building A Competitive Advantage In The Construction Industry

This Podcast Is Episode Number 525, And It's About Building A Competitive Advantage In The Construction Industry

A competitive advantage is something that you offer or have that the competitor does not. There must be compelling reasons for people to do business with you rather than with other construction companies.

The need to identify your point of difference is essential. The more similar your business is to many others, the greater your need to develop competitive advantages.

The key to benefitting from the competition is knowing how to take on competitors so your company earns a profit effectively. Look into your industry and the successful contractors around you not to lose sight of your vision for your construction company but as an inspiration to guide your systems and processes.

Identifying your advantage

A competitive advantage is what you are better at doing than anyone else. The wiser you can be about developing and promoting your competitive advantage, the better placed your business will be to succeed. Think about how you can differentiate yourself:

• Low pricing – you're able to supply the most budget-friendly service.
• Specialization – you service a specific niche market better than anyone else.
• Differentiation – you have the same service as others, but you make it different.

Specialization and differentiation are the most common small business strategies because more significant businesses can usually get bulk deals and compete on price. Being affordable is the most straightforward tactic to implement (reduce all your fees but know your worth), though this is the last thing to consider, as it is often a losing strategy. The chances that you can be the cheapest and survive are not good because you will usually compete against companies with far more financial muscle than you have.

Having the most considerable margins is your ultimate goal. You can position yourself away from the cheap end of the market if you develop other competitive advantages, such as excellent, friendly service, good after-sales service, a more specialized range of products, more knowledgeable staff, and so on.

Here are some ways to get ahead of your competition and grow your construction business:

1. Awesome staff

Your staff will be one of your best (or worst) competitive advantages. The advantage of having friendly, knowledgeable, proactive staff must never be underestimated. The key is ensuring your staff is motivated, trained, and performing well. Do this by:

• Establishing clear performance standards.
• Starting incentive schemes.
• Sending them on training courses.
• Encouraging them to develop their product/service knowledge.
• Holding yearly selling courses.

2. Unique or exclusive products

You have an advantage if you can source products or deliver services that the competition cannot. If you're competing against larger or similar businesses, can you establish a reputation for unique products people can't find anywhere else?

3. A great website

A website that is more attractive or easier to navigate than competitors can be a distinct advantage. Can you create a better, more effortless online scheduling experience? More competitive payment options?

4. Become a star

Your own image can be a competitive advantage. No one else has quite your mix of skills, and you can build a 'character owner' image by having your name on as much material as possible, including:

• A signed mission statement for online and in-person visitors.
• Signing your name at the end of all newsletters and correspondence.
• Offering personal guarantees.
• Becoming prominent in your community.
• Becoming an authority in your field and a spokesperson for the industry.

5. Brush up on your technical knowledge

If you can't compete on price, offer superior knowledge to other businesses around you. Consequently, it would be best to ensure staff are well trained. You could ask your suppliers to provide training.

6. Get to know your suppliers

Being on good terms with your suppliers and their sales representatives is an often-overlooked competitive advantage over other businesses that haven't bothered to develop this closeness. A good relationship will provide the following:

• Better service and support.
• Better supply and faster delivery.
• Better return policy and customer support.
• Early notification of specials or discounts. You might get promotional material, displays, signs, and staff training.

Being linked to a large, well-known supplier is a definite competitive advantage. They might do most of the market research, develop new products, conduct customer analysis, and provide nationwide branding and advertising that enhances your credibility. An independent will find it more challenging to compete with you.

7. Display your other services

To gain an advantage, offer things that the competitors don't, especially if they cost very little. Sometimes this may involve displaying what you already do for customers, but most may have been unaware of it. Don't simply expect customers to be automatically aware of your competitive advantages. You must advertise and promote them.

8. Strategic alliances and joint ventures

One of the best ways to compete against larger businesses is to form alliances and joint ventures with other companies. For example, by banding together with other businesses in your industry, you can often gain better group discounts from suppliers than you would if you ordered on your own.

The ability to form intelligent alliances and joint ventures is an increasingly essential and distinguishing feature in the success of many businesses. Joint venture marketing is another way of sharing advertising costs. You can brainstorm many variations on this theme with your staff.

9. Speed

People want quick service, so the faster you can deliver your product or service, the better. Hold regular staff meetings on how to streamline your business processes and fulfill or exceed client requirements without sacrificing the quality of delivery.

Final thoughts

There's room enough in most industries for competition. While knowing who you're up against is a good idea, ultimately, your clients are your priority. Focus on providing meaningful goods and services to them, addressing their pain points, and improving their lives. Market yourself to make those aspects clear. Show them why you're the ideal company to hire for their project.

Using these strategies can effectively take on the competition and help your construction business be successful. Take it one step further by hiring an expert to help you with the things you are not an expert on - for instance, hiring a Website/Social Media Manager to take care of your online presence, as this is your digital office.

Of course, a financial advisor or a construction accountant who has been where you want to go and can guide you will benefit your construction business. We want to be that person for you. Optimize your time and skills by doing what you love and do best.

About The Author:

Sharie DeHart, QPA, co-founded Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com