Issue 7 of 9: Growth Strategy

Construction Ownership Transition Issue 7 of 9: In general, with all other key factors including cash flow, profitability, and customer satisfaction being equal, a contractor that is growing will be able to better handle an ownership transition.

D. Brown Management Profile Picture
Share
Succession: Ownership Transition Issues - Number 7 Growth Strategy. Impact. Nothing will have a more dramatic impact on a contractor than bringing on a more quality revenue on a recurring basis.

Without executing a profitable and sustainable growth strategy, the value is significantly lower for all parties. 

Consider this the same as investing in a piece of real estate.

  • Minimal growth is the equivalent of buying the home you are living in with a 10-15 year mortgage.  The mortgage will eat up most of your disposable income for that period of time, and in the end you will own the house along with any market appreciation it had. Not a bad deal but not a major creation of wealth, though it was a good forced savings plan for the new owners.   
  • Strategic growth is the equivalent of buying a 20-unit apartment complex in a good neighborhood that will cash-flow a mortgage as-is with existing occupancy rates and rents. However, part of the deal includes an adjacent lot where you can develop another 50 units over the next ten years in three phases.  

The second structure is more complicated with more risks and financing required. It will also create more value for both past and future ownership groups, as well as more opportunities for employees.  

What is your strategic growth plan and how does that factor into succession? This is where an experienced but unbiased third party can be extremely valuable to bring into the discussion.


Succession
Continue building value in your business, yourself and your key team members with a good succession strategy....

Succession
Continue building value in your business, yourself and your key team members with a good succession strategy....

Cash Flow Myth 3 - Having Enough Capital
We have enough capital to not worry about Cash Flow. From the time this type of thinking starts to permeate the organization it is just a matter of time before there will be a cash flow crisis.
Advanced Business Development for General Contractors
Finally, a resource designed specifically for Senior Management in the construction industry. This workshop will help explain the “Art and Science of Business Development” and what you can do to maximize the processes you already have.
Lean Principle - People First (Then Process and Tools)
To optimize productivity, a contractor must focus on their people first, then processes and tools including technology as an integrated management system with a hierarchy. This is not a linear process: S.M.A.R.T. Experiments + Continuous Improvement.