It’s a simple fact of the business world that businesses fail. Your construction company is not immune to the potential risks. The reason why those failed businessmen men and women are now riding high and enjoying success is that they learned from their mistakes. The shocking fact is that the construction industry has a high rate of business collapse, with just 36.4% of construction companies reaching the five-year trading mark. If you are facing the reality of your company going under, it can be frustrating and very worrying. However, if you have a plan in place, you can very easily recover from the hit and move forward proactively. Treat your hard knocks as a lesson in what not to do, and start your recovery process now.
1. Trying again
The most important thing to do if you’re planning on jumping straight into a new construction business venture is to ensure that you have learned lessons. A business can fail for any number of reasons, and the more that you understand the reasons why your construction business didn’t work, the stronger your next business will be. It won’t always make sense to leap straight back into a new business, so use your fresh outlook to assess the three factors that may have contributed to your lack of business impact:
a. Was there a customer base for your product or service, and were you communicating with them in modern and valid ways? Being out of touch with a customer’s needs is the fastest way to watch profits deteriorate. With cash flow being one of the three main reasons why a construction company fails, it’s imperative that you have the customer in mind at all times. Learning how to reach new audiences and connect with them in ways that will promote brand loyalty is easier than ever. Go into your business with a customer-centric focus, and your business will stand a much better chance of signing contracts, improving cash flow, and minimising risk.
b. Was your company unique? While it’s important that you make your construction business unique, the fact is that there is always going to be another company out there that can do much the same, or a company that is working in a similar area as you. A lack of market research is one of the major reasons for business failure, so if you’re planning to get back to trading as quickly as possible, understanding both your clients and your competitors is essential.
c. Do you understand value propositions? If your business has little to no value in the eyes of your potential customers, then you will quite simply fail to attract contracts. Learning how to assess and improve your value proposition is going to be the key to transforming your failure into success. One of the main reasons why construction companies fail is because of too-rapid growth and low-profit margins. Address this mistake, and you will be better placed to benefit from your errors.
Spend some serious time analysing just where you went wrong. You’re certainly not alone. Up to 80% of business shut down and close their doors just 18 months after their launch date, and construction companies are especially prone to failure. If you are facing the reality of a failed business, the more that you understand the reasons behind that failure, the more you’ll be able to avoid them in the future.
2. Dealing with debt
When your business goes under, there is a good chance that you will end up with some debts. The construction industry is a high-cost one. It will be challenging to start the process of launching a new and better business model if you have debt repayments to make to suppliers or refunds for customers. Your finances are the lifeblood of any business, and debts will make your new construction venture much harder to achieve. There are ways to lessen the impact of those debts, with a wide variety of options to consider. If your debts are over a certain amount, then there is the potential for additional aid. There are a number of debt relief companies that can help you with this, with freedom from debt possible by choosing the right avenue. Don’t fall into the trap of thinking that your debts will limit your potential to try launching a new business. With the right repayment strategies, you could be trading again much sooner than you think.
3. Not starting your own business
Not everyone is ready to own a business. If you have family that rely on you, launching a new business after the failure of your first one can be risky. It costs money to start a construction company, and you need to ensure that you are being both reasonable and responsible. It might be that you have to commit to becoming an employee rather than an employer. However, the skills and lessons that you have learned throughout running your business will be a fantastic boost to your CV, and will make you an excellent candidate for any business position.
Running a business in this sector is difficult, and learning from mistakes is the only way to move forward. The more that you understand the reasons why customers didn’t sign a contract, the better you’ll be able to know your next steps. Don’t be discouraged by business failure. It can happen to everyone, and all you have to do is learn not to make the same mistakes again.