3 common mistakes preventing profitable growth in your construction business

Working in construction can sometimes feel like you're darting from project to project. With your hands full and your head down, developing a strategy for growing your business may take a back seat. But when it does come time to chart a path toward scaling, it's easy to conclude that you should just take on more jobs and projects.

That's one of the misconceptions that Nick Schiffer, a builder, entrepreneur, and host of The Modern Craftsman podcast, had a few years ago. As the founder of Boston-based construction firm NS Builders, he was about to learn that growing a business isn't about taking on more work—it's about taking on more profitable work.

"Don't be fooled by the illusion that more work equals more profit," Schiffer said in the webinar The Blueprint for Profitable Growth: How to Scale Your Construction Business with Clarity, Systems, and Margin Protection, presented by Intuit Enterprise Suite.

Ahead, find out how to avoid the three common mistakes that once held Schiffer back from scaling profitably. Plus, what you need to do to course correct on your path to growth.

Construction business profit mistake #1: You don't have systems in place to set the stage for sustainable growth

Taking on more work in the name of more profits makes sense at a surface level. But at a certain point, that method for growth leads straight to burnout. Why? Because the strategy isn't a strategy at all; it's all about volume. "What I eventually realized was that I wasn't building a business," Schiffer revealed in the webinar. "I was just building a machine that was being built as I was going. There wasn't really time to reflect and sit back and understand, 'Am I actually doing something for the betterment of the business? Or am I just creating a more chaotic job?'"

What to do instead: To move forward, Schiffer realized he needed to revamp the structure of his business by understanding where efficiencies could be improved. In order to know how to grow your business at scale, you need to know where it's already ticking up—and which numbers to pay attention to first. When you're bringing in over $3 million in revenue, this can't be based on gut feelings. And when it comes to keeping your books, you need to have an abundantly clear picture of your gross profit and your burn rate.

Construction business profit mistake #2: You lack visibility into your business

You can't understand your business's cash flow without having a way to summon those numbers at a glance. Schiffer admitted he didn't have visibility into the inner workings of his business.

What to do instead: The first step was getting clear on job costing: "We needed to make sure that each project individually was profitable," Schiffer said in discussion with Wes Norris, an Intuit software engineer. He also wanted to look into whether he was overspending on overhead. 

Schiffer wanted to know how much money it was costing to keep the lights on each month. They started looking at it from a job-costing perspective, and then understanding things like the burn rate for the business itself. This allowed them to catch overspending before it hit their bank account.

Key business elements to review holistically:

• Gross profit
• Job costing
• Monthly project progress and margins
• Project timing and budgets
• Burn rates
• Work-in-progress (WIP) reports

The best way to review these numbers at a glance? Partnering with software like Intuit Enterprise Suite makes it easy to take a bird's eye view.

Construction business profit mistake #3: You're not sure how to leverage your software platform's features

Your business's software should cover a few high-level basics, such as managing payroll payments, time tracking, and labor costs, allowing you to understand the health of your business as a whole. But beyond that, you might not know what features you need to power your growth.

What to do instead: Construction businesses should prioritize solutions with project management capabilities assisted by AI. Intuit Enterprise Suite can project budget estimates versus actuals, as well as show the overall performance of all of your projects aggregated into a central spot. In this ERP from Intuit, it’s as simple as hovering over certain projects on your dashboard and seeing where the overall income is for each.

In the webinar demo that Norris, the software engineer, plays out, a hypothetical project isn't on track to meet its profit margin. He shows how you can add tasks to a certain project and assign them to team members, effectively helping build transactions and meet goals. 

That's in addition to other included features, such as:

• profitability time costs by employee or vendor
• a log of unbilled time and expenses
• estimates versus actuals
• work-in-progress reports by project
• project profitability summary reports

It all comes down to asking the right questions about your business and assessing what can be answered through the data and insights within your business's ERP platform, like Intuit Enterprise Suite.

Learn more about how to build systems that scale

Interested in hearing Schiffer's full discussion about construction business growth? In this free webinar, he reveals valuable information about how to grow and scale your construction business. Topics include:

• Mastering job costing & financial clarity: The key to profitable growth is knowing your numbers. When you know the numbers, you can improve your numbers.
• Building systems that scale: It isn't about doing more, it's about doing it better. Sometimes it's adding more people or more revenue, but it should always be about adding more profit.
• Avoiding the growth traps that kill margins: From mismanaging labor to over-promising clients, these common mistakes can turn growth into a nightmare. Mistakes are bound to happen, but it's even more important to correct them as you scale or you risk compounding them.

Watch a replay of the webinar here. Act fast, as this replay will only be available for a limited time.