Tips for Contractors: Managing Success and Expansion

Starting a new business in the construction industry can be tough, if not downright brutal. Our industry has one of the highest failure rates for small businesses entering the market—although many of the smallest businesses don’t fail so much as the owner decides to take a job with a larger firm. Yet, there are also plenty of exceptions to this rule. Teddy was one of these exceptions. After going through vocational school and then apprenticing under a master carpenter, he set out on his own and entered the market at just the right time for sunroom remodeling and additions in Florida. He always did right by all his customers, but like a lot of new contractors, he really did a number for that first handful or so of customers.

 

Accounting and Payroll

Before long, he had more projects than he could handle. And that led to paperwork. At first, it was just subcontractors and 1099s, but then the business got so big and so busy that we eventually took on a couple employees and that led to W-2s and 941s and weekly payroll processing. As luck would have it, Teddy seemed to have perfect timing yet again. He started with a small W-2/1099 preparation software company, and then right around the time we hired our first employee, they came out with a payroll software product.

 

Reliable Help and Team Building

We never really came up against the 25-employee rule that we heard so much about and which can certainly apply to larger construction businesses and other even more labor-intensive industries. That said, one of the big obstacles was finding reliable and skilled subcontractors to help with some of the labor-intensive aspects of the installation. Teddy had plenty of fits and starts with this early carousel of subcontractors, but eventually went on to assemble a solid collection of people he could count on, one or two of whom went on to become great employees of our company.

 

Navigating the Construction Industry

Diversification, capital, and technology aren’t exactly niche terms, but there are a number of growth factors specifically for businesses within the construction industry. Teddy was always really good about seeing potential issues ahead of time. This simultaneously made customer service and job selection a lot easier. For a while there, job selection was really just about cherry-picking the sweetest options, as it were. When we started getting into the luxury sunroom, outdoor landscaping, and six-figure bids, that was when the real fun started. Diversification came naturally. We did some commercial additions for restaurants and a couple big gazebos for parks and green space. As a carpenter, Teddy was also willing to jump on some of the more complex deck builds, but we usually stayed away from the basic stuff that other homeowners would take on as DIY projects. We also did carports, patio covers, you name it. We had a subcontractor and later an employee who would also do concrete, brick, or stone patios. But the sunroom was always our first love.

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