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If you’re looking to increase the value of your construction company, you should start by documenting your core business processes.
With traditional financial markets in flux, private equity firms are looking for alternative investment opportunities that are ripe for disruption. One largely outdated sector that they are setting their sights on is the construction industry. And there is a ton of money flooding into this space like never before.
Outside investors are looking to purchase specialty contracting companies that will maximize a return on their investment. So, whether contractors are looking to take on a strategic equity partner or make a full exit to cash-in while the market’s hot, you’ll need to prove that your business can run like clockwork and generate the same returns for them as they do for you.
Unfortunately, many contractors cannot definitively prove the reliability of their business model, let alone that the machine will continue to run profitability in their absence. That’s because operational systems in small- to medium-sized construction companies are often undocumented, unorganized, unmeasurable, and only clear in the owner-operator’s head. If you’ve ever worked in a specialty contractor’s office, you probably know what I mean!
Unless the owner-operator is physically in the office making sure things are humming along, employees often don’t know what needs to be done, who’s responsible for doing it, when it’s due, how to complete it properly, or how it contributes to the company’s overall success. Employees often rely on their mental checklists for what to do next, which leads to poor communication, low-quality work, and missed deadlines. In the construction industry, time is definitely money, and the contractors who can clearly communicate their expectations, standards, and due dates to their employees have a significant advantage over the competition.
All contractors tend to pay around the same price for materials and labor. But where a contractor can really stand out and improve their profitability, is the level of efficiency at which they process their work. By actually documenting each task in your company’s core repeatable processes, writing a standard operating procedure for each task, and holding employees accountable to task-completion deadlines, you are well on your way to being able to prove the certainty of your company’s future profitability to an outside investor.
Not only that, investors will love the fact that they will be able to hire additional employees and train them quickly — and confidently — with your detailed workflows and standard operating procedures. It is this “systemazation” of core business processes that improves a contractor’s efficiency and is the “secret sauce” that most investors are looking for.
Subtrak allows contractors to systematize their workflows through documentation of standard operating procedures, automated assignment of deadline-driven tasks, and analysis of each employee’s task completion efficiency so that managers — and outside investors — can clearly see how efficiently your construction office is operating. And the more proof of success you can provide to investors, the more they will value and pay you for your business.
If you’re interested in learning more, or would like to talk about how you can start systematizing your construction company today, please feel free to drop us a note. We’d love to hear from you!
