The Risk Involved In Taking That Next Big Step
A construction company is like any other business in that it is always looking for the chance to take that next big step in the company’s growth. A company should never sit still; it should always be looking for ways to grow. But when a construction company decides to take that next big step, there can be a lot of risk involved. We act as consultants to our clients and help them to understand the risks involved with growth, and the way that we can protect them from financial disaster.
Teaming Up With A Larger Contractor
In the world of contracting, you can be a general contractor, a subcontractor, or a secondary general contractor. Many of the largest projects in the world were completed by two large contractors teaming up to pool their resources. If teaming up with a larger contractor to take on your company’s biggest contracts is old hat to you, then you understand the risks involved. But if this is your first cooperative effort, then there is plenty of risk you need to avoid.
Many large contractors create partnerships with other contractors to take on bigger work, and negotiating those partnerships is tricky business. But we have found that the best way to protect yourself in a cooperative effort is to create a separate entity with a partnership agreement that outlines all of the details of the arrangement.
One of the first steps a contractor takes when it is ready to grow is to start expanding their marketing to a national market. But if you do not understand the laws in the states where you are marketing, then you could get yourself in trouble. Do you need to be licensed in each state to advertise there? What kind of business requirements does each state have, such as requiring you to have a field office in their state to advertise?
The most subtle but important step of growing a contracting business is to slowly expand marketing to a national audience. The reason it is done slowly is because it takes time researching the laws in each state as they apply to contracting, and then setting up all of the legal means necessary to follow those laws.
The Right Personnel
When your construction business is ready to move up to a new level, having the right personnel in place is critically important. We always sit down with out clients to review the protection they have in place such as life insurance and key personnel insurance to make sure everything is in place. Then we discuss future personnel needs to prepare for upcoming changes. If your construction company is ready to make the move to a bigger league, then losing a key manager or executive could be devastating if you are not prepared.
Any company preparing to make a move into a new level of business should never take anything for granted. Complex and comprehensive planning needs to go into a move of that magnitude, and that includes discussing risk management issues with your risk mitigation experts. As your company prepares to make the jump to something bigger, it gives you peace of mind to know that you are covered in case the move creates problems that would otherwise bring your business to an end.