Customers - Are disloyal price buyers who purchase commodities and services with cost as their primary consideration.
Clients - Are loyal value buyers who purchase goods and services with suitability as their primary consideration.
Your Business Strategy - Will determine which group you want to serve and there is no right or wrong answer, just different approaches.
High Volume And Low Margin - Construction projects can generate the same net profit and cash flow as low volume and high margin projects.
The Key Is To Think - Long and hard about what you want your construction business to be known for delivering.
I Have Deep Background In Construction - Having owned and operated several construction businesses and having served a plumbing apprenticeship then earning a Washington State Journeyman Plumber License (PL010) in 1981. Let me share a little bit about my experiences and how it relates to any construction business.
One Of My Businesses - Began as a new construction plumbing contractor. High volume and low margin tract homes, mixed use commercial and residential, commercial tenant improvement (T.I.) where price was king.
Land Developers, Builders And General Contractors - Have very little loyalty to their trade contractors because to them everything and everyone is a commodity. The is due in part because they are at risk for the entire project and in a lot of cases the property owners they work for are unbelievably vicious.
We Had Lots Of Repeat Business - Because before going into plumbing I had been to college for accounting and have a talent for developing systems for streamlining production.
A Few Years Later - We decided to shift away from new construction plumbing into and become a service, repair and remodel plumbing contractor. Low volume and high profit with a target market of upper end residential and commercial, remodel, service and repair plumbing projects which included drain cleaning and repair/replacement of defective side sewers.
The Key To Making Money - Is implementing a strategy to operate and grow your construction business profitably regardless of the economic conditions. When times are slow work on your business process management system so that when the economy heats up your company will be in a positon to optimize cash flow and profits.
New Construction - Was rough and tumble which meant physical confrontations (I advise strongly against this method now) were sometimes required to communicate the importance of making certain our part of the job got done on time and without back charges or significant cost over-runs due to other trades getting in the way or scheduling issues with the superintendent (we loved Gantt Charts, WIP reports, time-line graphs). Read More...
Remodel, Service And Repair Construction - Was and is a kinder gentler construction method with a completely different set of tools, people and methods. When we switched from one to the other we finished all the current projects, let the entire crew go and hired new people to staff the new business. There is a very good reason for this and if you are interested you can read about it in Leveling Up Makes You Money and Construction Psychology.
I Sincerely Recommend - You pick one or the other because if you try to serve both customers and clients you will inevitably wear yourself, you crew, your family and everyone you care about into the dirt.
For What It Is Worth - We only serve clients in our construction accounting and bookkeeping services firm, Business Consulting And Accounting. I invite you to contact us and perhaps we can work together.
About The Author: