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The First Rule of the New Business Model of Construction Contracting

Major trends of managing a business have emerged. Several astute professionals have commented and written on the proper approach to business. All of it is well meaning. However, some of it is misplaced in our unique business. Those that tout growth are wrong from more than half of our industry. Others who believe networking and cold calling the way find great customers don't know our industry. Those that believe technology is the pathway to a great business have forgotten the variable cost nature of our business.

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We have a new business model for construction contracting. As it is new it is a change. We have seen many changes over our careers, some positive and some not so. More change is certain to come just as death and taxes. The construction business is not an idle place.

 

We are fortunate not to be in the technology business. According to Karl Fisch, what a student learns in college in first year of a high tech degree program will soon be outdated. He states that 50% of the learned knowledge will change by his or her senior year. We can be sure that will not be the case in our bricks and mortar business.

 

Major trends of managing a business have emerged. Several astute professionals have commented and written on the proper approach to business. All of it is well meaning. However, some of it is misplaced in our unique business. Those that tout growth are wrong from more than half of our industry. Others who believe networking and cold calling are the way find great customers don't know our market. Those that believe technology is the pathway to a great construction business have forgotten our variable cost nature.

 

Let me offer my belief. I believe it is qualified as I have been in this industry all of my adult life and part of my teen years. As I have been working with construction companies since 1994 as a management consultant.

 

The first rule of this business in this new millennium is to strive toward the contracting company owner's goals. As an example, some owners want to just provide a living for themselves. Others want a large business that will build serious wealth. Each is correct. As growth is dangerous in our business it is the only way to produce large profit dollars on an 3% average net income before tax. Keeping a business small allows the owner to have options, not the least of which is family and pursuing their personal dreams. There are many other reasons to own a construction firm. The point is that the answer is not singular. There is no wrong, just choices motivated by goals and desires.

 

For more information on this critical subject, purchase a copy of my McGraw-Hill book, Managing a Construction Firm on Just 24 Hours a Day. We offer a bundle with Excel templates that are featured in the book and 5 on-line courses to help teach construction business concepts.

 

Our workbook companion with 10 case studies for Managing a Construction Firm on Just 24 Hours a Day is now available. This text is focused as an assist for Colleges, Associations and other learning insitutions that teach the business of construction.

 

My next book, The New Business Model of Construction Contracting is planned for December 2007. It focus concerns the changing construction environment and what processes address those changes.

 

Matt Stevens is President of Stevens Construction Institute, Inc. A management consulting firm which works only with construction contractors. Learn more at www.stevensci.com

 

 

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