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5 Vital Tips on How to Scale Your Contracting Business

by BBB Staff BBB Staff | May 28, 2018 9:29:21 AM

It's time to grow. It's time to grow. It's time to grow. You can say it over and over, but if you don't take action your contracting business will never grow to its full potential. But what do you have to do to scale your contracting business and not lose your shirt in the process? Follow along and learn the do’s and don'ts of successfully expanding your business and turning it into a powerhouse to be reckoned with.

Stay Small But Dominate

Before you work up a complex plan for expanding your business, you need to ask and answer a very important question. Is bigger really better? Do you want to be the big fish in a small pond, or be the small fish in a big pond?

Let's say you're known within the community as the go-to company for home renovations, or office park construction, or building apartment complexes, it doesn't matter as long as you're dominating that niche. You can tell if you're the big fish in a small pond if:

  • Your market is stable, with a moderate year-to-year growth. Too much growth and competition will be drawn into the market.
  • Your reputation for quality work is solid.
  • You have steady new and repeat business.
  • Your overhead is relatively low compared to what it would need to be if you expanded.

If you have already positioned your contracting business into a niche in the marketplace and you are dominating that area of specialization, you may want to stay right where you are. If you expand your business, you risk the chance of becoming the small fish in a big pond with plenty of competition. Remember, small fish are quickly gobbled up by bigger fish.

Get Your Own House In Order

If you're adamant about expanding your business, be sure that every facet of your business is on solid ground. A total and honest review of your entire business will be necessary.

  • ALWAYS follow best practices. You can consult the National Association of State Contractors Licensing Agencies for guidance.
  • Make sure you have plenty of cash flow. Cash is king! Start by standardizing your billing process. Then, complete projects on time and minimize the total time between project completion and payment. Incentivize early payment, and penalize late payments. Accurately account for incidentals and bid for projects accordingly to avoid cost overruns. Ask for it up front to avoid arguing for it later.
  • Don't try to be everything to everybody. Have heard the axiom jack of all trades and king of none? Specialization is a big key to a successful expansion venture.
  • Use technology to streamline reoccurring tasks. Also, review your overhead budget with a fine-toothed comb to eliminate or reduce unnecessary costs.
  • Offer your vendors and existing clients incentives for referrals to keep new projects (and money) rolling in.
  • Standardize your procedures so that every employee knows what is expected and what will not be tolerated.
  • Review your inventory and avoid overstock. That's not materials and supplies sitting on those shelves; it's money!
  • Keep your quality standards high. In the end, your customers will appreciate higher quality over a lower price.

Hire Only the Best - And Pay Them!

Across the board, review your employees and the quality that they add to your business. Continue to do this even after your expansion. This may mean letting go of longtime employees who aren't adding value to your business and the bottom line.

In almost every survey or study you can find, employees have three main complaints: communication, pay, and recognition. Address these three concerns to expedite business growth. Keep in mind; it is less expensive to keep good employees than it is to continually hire new ones.

  • Communication. Keep an open door policy and create an atmosphere in which your employees don't feel intimidated to talk to you. Likewise, standardized company procedures will help your employees know what is expected of them.
  • Recognition. When your team does a great job, tell them how much you appreciate their efforts. Even if it's only one employee, who went above and beyond expectations, let them know and make it public to the rest of your employees. By doing this consistently, your employees will be motivated to do their best.
  • Salary. When it comes to hiring the best people, you must take into consideration that they may be overqualified. They are superstars, and they know it. Show them how valuable they are to your business by paying them accordingly. Retain top talent by paying them 10 or even 20 percent more than the standard rate for their position. Consult the Board of Labor Statistics for guidance. Don't guess what your competitors are likely paying their talent.

Do What You Do Best and Pay For the Rest (Out Sourcing)

Don't waste time and money by trying to do everything internally. Some examples of things you might want to consider outsourcing are:

  • Accounting, Taxes, and Payroll
  • Vehicle Maintenance and Equipment Repairs
  • Marketing

Ultimately, it may be less expensive to pay someone else to do the job so you can maintain focus on your core business.

Network with Others, Even the Competition

Be seen. Let others know that you're a player and ready to run with the big dogs. Attend trade shows as often as possible and be sure to join industry associations, like Associated General ContractorsNational Association of Small Business Contractors or Associated Builders and Contractors. Networking is a great way to grab "freebie" projects others can't or won't do that cost you nothing to acquire and add profit to your bottom line.


To expand or not to expand is a risk that individual business owners will have to evaluate on a case by case basis. Either way, keep these vital elements in mind when making your decision.

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