Successful Construction Business Models and Tips

Here, we will be discussing the successful construction business models you should adopt.

Construction models are the bedrock of a successful business. While these are several models one can adopt, the most important thing is having it align with your skills,  available market, existing competition as well as the skills of your crew.

Value Proposition

In construction, you’ll need to state the value your business will bring to your customers. This is a promise which also acts as a sort of assurance. Here, you are selling your service or range of services as the best value the client can get.

A value proposition can be given for an entire construction service or you may decide to go into further details by providing such for each type of service you offer.

Since we are talking about selling your construction business to clients, such clients need to know certain things about your business. First, you’ll need to identify your customers. Such details like gender, income level, and age play an important role.

Other things to know include their dreams, things that make them happy or frustrated, as well as what they consider fun.

Secondly, you need to measure your services (solutions) against your client’s problem or situation. In other words, how can you address their construction problems? How does your construction business benefit your client? And, what makes your business different from those of your competition?

All these are vital sections the value proposition model must possess.

Core Competency

Core competency is one of the key business models. It has to do with a combination of multiple resources and skills required to distinguish your construction company in the marketplace. This is meant to add to its competitiveness.

Core competencies in construction include construction skills, management skills, and processes (sticking to what works.

Other areas include professionalism, sticking to safety (safe operations), risk management, standards (abiding by global best practices in construction) and sustainability. These can be further discussed to better clarify a construction company’s area of core competence.

Target Customer

Here, you are focused on defining your ideal client. In other words, you are talking about both the broader as well as the smaller segments of the market. This allows you to target your marketing activities to achieve the best results.

Broader segments of your target clients will include private, public, industrial and commercial.

To further define the target customer, such things as private housing, commercial office buildings or public educational facilities or structures are considered. Target customers can be further defined by regions with high construction activity, high population densities and so forth.

This business model enables you to craft the right message for your marketing campaign.

Distribution Channel

The distribution channel considers a whole range of processes involved in construction. These are necessary for construction material or products to reach end-users. It focuses on the major participants or players involved. When we talk about major players in the construction industry, we are referring to banks, insurance companies, transport companies, and warehouses.

Others include key accounts, retailers, wholesalers, and producers. These participants are involved in the movement of construction materials of all sorts. Such materials include bricks, cement, roof, tiles, rods, pipes and so on. A successful construction business model will have all of these well documented.

Relationship Management

As a construction business, you need to establish and maintain a good working relationship between the business and the market. Not only is important between a business and its clients, but also good for stakeholders, business competitors and partnerships.

Ineffective management of relationships has its adverse effects on projects. Common problems like cost overruns, quality defects and time delays among others. This construction business model is essential to ensuring that business moves smoothly and hitch-free.

Value Configuration

The transformation of inputs into products is what a value chain configuration seeks to achieve. In other words, this system is meant to rig a construction business into delivering the best results when it comes to the provision of value.

This construction model is vital and essential to the smooth running of a construction business.

Partner Network

A partnership is very necessary for the construction business. It is a relationship that seeks to promote a business through referral. Partners form a mutually beneficial relationship where they refer to business. Building a partner network isn’t automatic. It takes an understanding of who you want to work with as a partner.

Such partners must also be strategically aligned. In other words, a member of your partner network should get your complete trust. Such must be able to serve your ideal target client or customer. You should also be as confident to refer them to a customer. You have complete trust in their ability to perform or handle a particular construction contract or job.

Cost Structure

This is an accounting language that deals with the variable and fixed cost incurred by a construction business. Cost structure can further be broken down into product cost structure, geographic, customer, product and division cost structures.

Used as a pricing tool, this construction business model is used in determining the best ways to cut down on cost. A successful construction business model must have this clearly stated in detail.

Revenue Model

The revenue model is a component of the construction company’s business model. It considers such things as creating a framework through which revenue generation will be pursued. This helps pinpoint the revenue sources to be pursued.

What more? Such revenue will need to be exchanged for value. Pricing of this value as well as identifying who (in this case the client) will be paying such values are very important.

This is an overview of what a successful business model should look like. The points listed are quite broad. However, we’ve tried to condense the contents for easy understanding of the concepts. The success of your construction business starts with how well these are well defined and implemented.