Working in construction is full of risks. Even if you ignore all the safety concerns (which you shouldn’t), there are all kinds of risks you take in your business each day. Although you want to minimize the effects of taking chances, this can sometimes make you too eager to avoid taking risks at all. Here’s how to know that your contracting business is too risk-averse, with some ideas on how you can branch out.
You’re Stuck Using Old Technology
There have been tons of innovations in the construction industry in the past 10-20 years. In fact, every year reveals a huge introduction of products on the market, from sustainable building technologies that save you money to tools and apps that make your job easier. It’s all very exciting but also terrifying, because when you adopt something brand-new, you’re putting your business success on the line. Sticking to the things you picked up years ago may feel safer, but it’s more likely to render your services obsolete. Instead, you should invest some time to test out new technologies and research the latest innovations. If you get a chance to try them out, you may feel more comfortable putting a few of them into your workflow.
You Consistently Bid Too Low
It’s easy to understand why many contractors bid low on a project. They’re worried they won’t get it if they bid the price they actually need to receive. The problem is that this can be risky no matter how you look at it. Bidding low may help you secure more work, especially when business is slow or you’re still trying to get established in your area. But over time, razor-thin profit margins will make it harder for you to grow and improve. Bidding the lowest often gets labeled as the safe bet, when it’s actually one of the most-effective ways to kill a budding business. Research competitive rates for similar projects in your area and use those numbers as a jumping-off point for your own bids.
You’re Usually Taking Someone Else’s Lead
Let’s face it: Construction as an industry is not particularly bold when adopting new innovations. There’s some wisdom in it, too. If you’re too quick to take risks on the latest gadget or building concept, you might find out that it was a big waste of money. But refusing to take the lead on changing practices that aren’t working for your business may cause you bigger issues down the road. Keep in mind that everyone makes decisions differently, depending on their goals, the local economy and what’s available to them at the time. Even if your long-term mentor with 40 years of experience goes in one direction, you don’t necessarily have to follow. Being willing to experience things for yourself and make your own decisions is a huge reason to start a contracting business in the first place. It’s all right to let yourself do just that.
You’re Not Practicing Risk Management
Part of being risk-averse is a serious desire to avoid unexpected harm, which makes sense. If you don’t know what the risks are, you’re more likely to feel stuck in neutral. Risk management is designed to help you bridge the gap between never trying anything and jumping the gun on every project. If you’re not evaluating your business practices for the level of risk they represent, outside of safety, you’re missing a big opportunity to guide your decision-making in a better direction. Sometimes, just knowing what you can expect and what is likely to happen will help you feel easier branching out from your comfort zone.
Starting a business is a risky venture, but there are lots of ways to make it work. By finding a balance between risky and risk-averse decisions, you will have a higher likelihood of a sustainable business. To learn more about what it takes to run a successful contracting business, contact CSLS today!