A Diverse Construction Business Plan with Multiple Revenue Streams

If you were the owner of a professional football team, your No. 1 goal would be to fill all the seats every week. Filling the seats takes a multiple approach: You must put a winning product on the field, and you must sell seats. It takes a huge effort to create sellouts at profitable ticket prices.

Over the last ten years, you didn’t have to sell very hard to keep profitable revenue flowing into your company’s coffers. If you put a mediocre team on the field, called the usual plays and used an average business strategy, your customers would keep coming back for more, as long as your price was somewhat competitive. And because business was plentiful, you didn’t have to win over many new customers. 

Because there was enough work, you also didn’t have to try different types of projects, customers or contract delivery methods. In fact, you even prided yourself as a specialist in a very focused business niche.

Now, fast forward to today, when it is hard to fill the seats, revenue is scarce and customers are hard to find. You’ve cut your overhead and reduced your expenses as low as you can to survive. You continue to bid more and more work against too many competitors at lower and lower prices. You are even calling on potential customers you never wanted to work for before. You’re trying to get on any bid list you can, including public works, which you always avoided because of the paperwork and prevailing wage issues. 

You’ve assigned your office manager or estimator to cold-calling and e-mailing any lead they can find in hopes of a miracle. Nothing is working, and getting new business at a reasonable price seems next to impossible.

Multiple Streams of Income

Now what? You’re thinking you’ve got to fill the seats with paying customers or go broke. The sudden economic slowdown should have taught everyone one thing: Putting all your eggs in one basket won’t work forever. Many contractors and business owners focused their efforts on doing only one kind of project and service for one type of customer to keep revenue and jobs flowing in. 

For example, many focused on only building housing tracts, shopping centers, industrial parks, custom homes or office building interiors. Some focused on building for general contractors, developers or home builders. Some expanded and did more than one type of project. But most didn’t cross over into diverse types of work, and offering a service component to their revenue stream wasn’t even considered because they were too busy to mess with little jobs.

A diverse business plan includes three types of revenue streams with many different types of projects per stream. Here is a partial list of the unlimited revenue and business opportunities contractors can choose from:

1. Contracts & Bids

Private Construction

• Retail shopping centers
• National chain stores
• Industrial buildings
• Manufacturing and factories
• Metal buildings
• Office buildings
• Banks
• Medical buildings
• Hospitals
• Self storage buildings
• Renovations
• Interior improvements
• Utility company projects
• Housing tracts
• Custom homes
• Residential remodeling
• Residential upgrades
• Residential replacement work
• Site improvements

Public Works Construction

• Schools
• Offices
• Hospitals
• Facilities
• Roads and highways
• Transportation projects
• Sewer and water projects
• Storm drain systems
• Manufacturing plants

2. Service Work & Ongoing Accounts

Ongoing Monthly or Annual Accounts

• Property management
• HVAC maintenance
• Electrical maintenance
• Plumbing maintenance
• Landscape maintenance
• Site service and management
• Spring and winterization
• Light bulb replacement
• Roof service
• Road and drainage repair work
• Generator service
• Energy management and controls
• Repairs and Service For Broken Components
• Plumbing and mechanical repairs and upgrades
• Window replacement
• Tenant improvements
• Tenant relocation
• Carpet and flooring service
• Building damage repair
• Clean-up and debris removal

3. Wealth Building & Passive Income

Own Income-Producing Real Estate:

• Rental homes
• Apartments
• Shops and yards
• Industrial buildings
• Offices
• Shopping centers

Own Income-Producing Businesses:

• Rental equipment companies
• Wholesale materials
• Suppliers
• Services

In order for a professional football team to sell tickets, they start with a list of customer targets they want. Taking out advertisements in the newspaper is a shotgun approach, is expensive and yields a low return. You also won’t be successful in your business bidding to just any customer that offers you a set of plans. 

Creating an effective marketing program starts with determining what you want to accomplish. A football team wants to first sell their expensive private boxes, then sell to high-end season ticket holders, groups, individual season ticket holders, multiple game plans and, lastly, individual game tickets.

Who Do You Want to Sell?

Start with a focused and diverse approach. You already have a list of past customers and project types you were successful with. In a tough economy, those targets are not enough. You must decide to attack and seek business in all three revenue streams to weather the long-anticipated slowdown. From each revenue stream listed above, choose one or two new revenue targets, project types and customer types you will attack over the next several years to grow your business.

What Kind of Tickets Will You Sell?

After you make a detailed target list of customers, projects, services and assets you want to pursue, rank them in order of priority and potential. Consider the following: the most revenue-generating, ease of success, profit potential, learning curve, your perception in the marketplace and other factors that will determine which is best for your company to market and attack.

After you identify the targets to market and have ranked them in order, it’s time to sell tickets. Think like a professional football team owner. Selling private boxes to major corporations or high net worth business leaders requires a different approach than selling one game to individual ticket buyers. In your business, selling to high-end homeowners is much different than selling to design-build general contractors, public works entities or major national corporations. Each requires a unique selling and marketing strategy to be successful. Now, let’s look at what different types of customers want and what you can offer them.

What Target Customers Want

• Public Works Contractors
  • Lowest price possible
  • Reliability
  • Fastest schedule and large crew
  • Performance under pressure
• Design-Build General Contractors
  • Fair and competitive open-book pricing
  • Technical and engineering expertise
  • Professional presentation skills
  • Trained crews and quality work
• Real Estate/Property Owners
  • Fair and honest competitive pricing
  • Reliability and trust
  • Quality full-value workmanship
  • Fast full-service 24/7
• National Corporations
  • Fair and competitive pricing
  • Financial strength and reputation
  • Safety and quality program
  • Trained crews and excellent work
• High Price Homeowners
  • Fair and honest open-book pricing
  • Reliability and trust
  • Creative and innovative approach
  • Reputation and referrals
• Low Price Homeowners
  • Lowest price possible
  • Fastest schedule
  • Easy to do business with
  • No hassles
• Custom Homebuilders
  • Fair and competitive open-book pricing
  • Experience in similar work
  • References and reputation
  • Quality workmanship and service
• Tract Homebuilders
  • Lowest price possible
  • Fastest schedule and large crew
  • Financially strong
  • Systematic and clean paperwork

  To successfully attack your customer targets, determine what you can offer based on what they want and how you can help them. For example, national restaurant chains want to hire full-service contractors they can trust to get work finished promptly without disruptions to their operations and know will keep their property clean during renovations. Restaurant owners also want to hire contractors who offer a full line of services, perform design-build and permit procession, don’t require much supervision, are willing to work during non-business hours and can perform repairs immediately when the need occurs. Can you add this type of work to your construction business?

  A general contractor told me that after building several Starbucks stores, he approached them about also providing ongoing service for all of their stores in his county. Now his company has three full-time service crews who do nothing but work on the Starbucks’ account performing service, repairs, alterations, upgrades, painting and remodeling, as well as cleaning and fixing coffee machines. This little service has added over $1 million in steady revenue and over $350,000 gross profit to his bottom line for his $5 million construction business – not bad for work he once didn’t want and thought was too much of a hassle to perform.

  If you want to get into design-build services, what would you need to add this to your capabilities? Perhaps you must add an engineer to your staff who can estimate, sell and manage work. Or you can approach an independent engineer about joint venturing with your company to add that capability to your offerings. 

  Years ago, our company was heavily focused on building industrial and office parks for developers. To ensure this work didn’t slow down, we made a decision to enter the retail construction market. I hired a full-charge retail construction division manager who brought contacts, clients and experience to our company. This decision allowed us to expand into a new market, gain ongoing repeat customers and grow our business as the economy changed. Adding a new market or project type will require you to add new people to your management team who can help your company grow in a down market.

  Create Your Sales Strategy

  You must have a sales system that will deliver the revenue results you want. Effective sales is not just bidding more work. It involves proactively attacking customer targets to get them to give you more work at your price. Just like in professional football ticket sales, each of your targets requires a different selling strategy. The high-end ticket buyers need the personal touch, while low-end buyers just need low prices.

  Make a list of the target customers you will attack. Start by identifying your existing, repeat and past customers. Sort them by revenue stream and customer type. For each customer type, you need a minimum of at least six existing and six new targets per customer and project type. Add to your existing customer target list to create at least ninety-six total targets. Use this chart to create your target list.

  Sample Customer Target Chart:

  1. Contracts and Bids Customer Targets

  Project Types – Customer Targets (Top 6 of each of the following)

  • Shopping Centers – Current Customer Targets & New Customer Targets
  • Banks – Current Customer Targets & New Customer Targets

  
  New Project Types – Customer Targets (Top 6 of each of the following)

  • Public Works Schools – New Customers Targets
  • Hospitals and Medical – New Customer Targets
  • Major Corporate Facilities – New Customer Targets

  2. Service Work and Ongoing Accounts Customer Targets

  Service Work – Types Customer Targets (Top 6 of each of the following)

  • Building Repairs – Current Customer Targets & New Customer Targets
  • Annual Maintenance – Current Customer Targets & New Customer Targets

  
  New customer targets are not hard to find. For example, if you want to target hospital and medical construction, search on Google or look in the phone book for hospitals and medical complexes in your market area. Call each one of them, and ask for the manager in charge of facility construction, maintenance, improvements or remodeling. With diligence, you can find the right person to call on at every hospital and medical facility.

  Start Your Sales Program

  Next, contact targeted customers to determine the qualification process to be on their approved contractor or service provider list. Referrals are your best source of getting a meeting with the right person. Look at your target’s website to see if you know anyone on their board of directors or management team. If you do, call them and ask for a referral to the decision maker you. If you know someone who has done business with your targeted customer, also ask them for referrals as well.

  Now, use your referral to get an appointment or cold-call the decision maker. Use the phone as a tool to set appointments. Call the target customer and explain that you want to become a preferred provider of services. Tell them you have similar long-time customers and have ongoing relationships with many other companies. Ask them for a short meeting so they can explain the process to get on their approved list. Follow up with a thank-you letter and a small photo-filled brochure showing what your company can do for them. If they won’t return your call, revert to sending them a formal request for information on what it takes to be a preferred provider. 

  Remember: don’t give up. Most sales people give up after the first or second rejection. But those who persevere will win. Most sales don’t occur until after the sixth or seventh try.

  If you dedicate time to selling in a consistent and diligent manner, you can sell enough tickets to keep your revenue flowing. By attempting to get at least four customer meetings every week with targeted customers, you will attack at least ninety-six customers four times each per year. The key is to do it.

  After the first meeting, your job is to stay in touch. Send them something every month like a postcard, article, job photo, birthday gift, tip sheet, trade magazine or business book. To deepen the relationship, go see them at least every three months. Take them to lunch, an industry dinner, a ballgame or golfing. Ask if you can give a “lunch and learn” seminar for their company on a topic you know will help their people do a better job. When you meet one-on-one, ask them how you can do a better job or what else you can do for them to increase your service offerings.

  Sales is not easy. Most business owners are good at it but don’t like to do it. If you are confident in what you do, selling comes naturally. Just tell customers how much you care about doing a good job and taking care of their needs. Customers will share in the excitement you spread. 

  You can grow your business in any economy. All you have to do is go out and start selling tickets to the game. No ticket sales = no game. No sales calls = no work. No new customer targets =  no business growth. Stop waiting and start selling to win in 2010.

  Construction Business Owner, January 2010