PAVING YOUR WAY TO BETTER FORTUNES
BY DEBRA WOOD
More than a quarter of construction firms are more profitable now than two years ago, according to an AGC-sponsored study, proving that solid business development practices, strategic thinking and following through on a carefully crafted plan can pave the way to greater fortunes.
“Business development is no longer a department; it has to be part of the fabric of your business,” says Cynthia C. Paul, author of the Associated General Contractors of America—FMI 2012 Business Development Survey and managing director of FMI Corp. in Denver, a member of AGC of Colorado Building Chapter and the Colorado Contractors Association.
The report describes business development as the strategic integration of marketing, sales and customer service efforts. Success requires proactive strategies to build market share and reactive approaches based on past performances and making intelligent decisions about where to invest time and resources.
“Companies have had to evolve,” says Michael Stark, senior director of the Building Division for AGC. “The lowest price might not get the job. You need to develop relationships and highlight your strengths and experience for your perspective clients.”
PLANNING, AN ESSENTIAL STEP
Business development begins with a plan: a stated vision, competitive analysis, market research, strategies, targets and contact plans for moving forward. It also should include an analysis of the firm’s most- and least-profitable clients, advises Dana Birkes, chair of the AGC Construction Marketing Forum and corporate vice president of Business Development and Marketing at Flintco in Tulsa, Okla., an AGC of Oklahoma Building Chapter.
The plan should include a go or no-go strategy for approaching new work, adds Paul, who recommends evaluating whether the company has experience in the type of construction needed, if the right people are available and if the firm can preposition with that customer and be competitive.
“There are some opportunities that don’t warrant time and repositioning and some do,” Paul says. “[Some companies] tend to put the same effort on everything, overspending in some cases and under spending on other opportunities.”
David Cayemitte, CEO of the Minority Business Development Institute, a nonprofit in Bordentown, N.J., devoted to helping minority contractors improve managerial and financial functions, obtain surety bonding and develop road maps for continued growth, emphasized the importance of targeting only those projects that align with the company’s financial and operational capabilities.
“It all goes back to having a focused strategy that aligns with resources,” Cayemitte says.
A business development plan keeps the firm’s team members focused on key clients and targeted project goals, adds Marisa Varga, director of Business Development and Marketing at Barton Malow Co. in Southfield, Mich., a member of AGC of Michigan.
The value of the business development plan lies in the process of preparing one, focusing on business development issues and the collaboration that comes out of it, Birkes adds. Then the company should assess follow-through and evaluate results.
“A written business plan provides to everyone involved in the sales process a common objective,” adds Bryan Cox, marketing manager for Turner International, part of Turner Construction Co. in New York, a member of multiple AGC chapters. “With your business development team on the same page, the message to clients is consistent.”
That message, Cox adds, may be difficult to pin down and is often subjective, yet the message must be based on the strengths and the character of the company.
Barton Malow places key messages about core values, strengths and other topics, on index cards placed at everyone’s desk and posters around the office.
Cayemitte recommends that everyone know the message and be able to describe the company and what it can deliver within 30 seconds.
Some construction firms rely on internal expertise to craft messages and reach out to potential clients, while others find consultants helpful in achieving their goals.
“Understanding exactly what you can do internally and where it makes sense to turn to outside experts is a key first step to a successful relationship,” says Chris Peck, Texas Division vice president for McCarthy Building Cos. in Dallas, a member of TEXO.
Despite some firms’ convictions about the value of a business development plan, 48 percent of respondents to the AGC/FMI survey do not have a business development plan.
“Having a plan is hugely valuable,” says Paul, adding that many companies absorb business development into operational plans.
SELLING THE FIRM
Selling construction requires a team approach, with business development, preconstruction and operations professionals part of the sales process, Peck says.
Birkes agrees, adding that marketing is a great way to develop internal leadership.
“Anyone who wants to be in management and grow in the company needs to step up and be involved in the process,” Birkes says. That also provides a better pulse on the community.
“You never know where a lead will come from,” Stark says. Everyone at VJS Construction Services of Pewaukee, Wis., a member of AGC of Greater Milwaukee, knows to watch for opportunities. Recently someone in accounting heard about a building project at church and brought it back, so partner Rick Andritsch could meet with the pastor and building chair.
“Everyone needs to keep an ear to the ground to hear about opportunities for the kind of work we do,” Andritsch says. “If only the owner does that, it will limit the opportunities.”
Barton Malow takes a similar approach. One of its finance people met a facilities director for a key manufacturer in Michigan on a flight to Florida, talked with him about the firm and has stayed in touch, developing a relationship and opportunity for the firm.
Employees must project the proper image desired for the company, perform as promised and share in responsibility for the company’s success, says Terry Wooding, executive vice president of Petra Construction Corporation of North Haven, Conn., an AGC of Connecticut member and immediate past chair of AGC of America’s Building Division.
“Everyone in the organization needs to know that business development includes everything from the inception of the discussion to the finished project and through the warranty period and any assistance you might provide after,” Wooding adds.
Cox indicates that a combination of people are needed to successfully sell a company, all with a passion for what the firm does and able to communicate that.
A sales or business development person may lead an effort, but that person needs to be supported and engaged with operations staff,” Cox adds. “Each brings talents and personality to build relationships with clients or build a presence in a market.”
Paul reports a trend toward more “seller-doers,” project managers and other field people who actively pursue jobs as well as build them. The business development person may make the initial contact, but then the seller-doer takes over.
“Clients prefer seller-doers, which means they don’t want to talk to someone in marketing but someone who really understands construction,” Birkes says. “The business development person acts as an orchestra leader.”
CULTIVATING REPEAT BUSINESS
The AGC/FMI report found the share of revenue from repeat business the most noticeable point of differentiation between profitable firms and their less-successful peers. The authors call that ability to convert existing relationships into new business essential in the current economy.
“The best way to recapture current clients and ensure repeat business is performance,” Cox says. That begins on each jobsite. Barton Malow self-performs much of its concrete work, ensuring high quality and safety.
“You must do a good job, or they won’t hire you again,” Andritsch adds. “Repeat business is the way we all survive.”
Andritsch encourages project managers to take owners and architects to breakfast, lunch or a ballgame, or if that’s not possible to at least join them for a cup of coffee in the office to talk not just about the project but about whatever is of interest to the client.
“You must get to know the client; that builds rapport and repeat business,” says Andritsch, adding, “Never burn bridges. If it’s a bad job, do whatever you can to patch the relationship. Otherwise it can have a domino effect.”
Flintco trains everyone in business development skills, including how to create a good experience for the owner.
“We sell services, and the person they see every day is the project manager and superintendent,” Birkes says. We need to make sure they represent the company well.”
Petra Construction’s jobsite professionals make themselves available to clients 24/7 and will resolve issues at all hours.
“We will do whatever it takes,” Wooding says.
Ultimately, “you are only as valuable as the customer thinks you are,” Stark says. “This is a relationship business and you have to be strategic.”
NETWORKING TO BUILD CONTACTS
Community involvement and leadership remains crucial, because construction is a trust-based decision, Birkes says.
“People want to know you are invested in their community,” Birkes adds.
Contractors can join owner/client or community service organizations, if the person involved is actually passionate about the cause, genuine and sincere, she adds.
“Get feet on the street, get your people out,” Paul advises.
Success requires more than joining organizations, indicates Andritsch, who has built deep roots in the communities VJS serves.
“You have to be on the board or on a committee and work hard,” Andritsch says. “It’s a waste of time and money, if you don’t get involved.”
Varga agrees, saying the benefit comes from building relationships with people from other companies.
“You have to have a plan for what committees to join, who will belong and who will be accountable,” Birkes says. “You have to have a deep bench, not just one star player.”
Everyone can participate in community events. But that may require some education about how to take part, such as going left when entering a venue, rather than right where the “people people” are hanging out, Paul says. They also might need to learn how recognizing body language indicating someone is open to an encounter, and how to shake hands, ask a few questions and pick up a business card for later follow up.
The strategy for maintaining contact with customers requires individual plans. Some people may require face-to-face time, while others do not want you to become that friendly, Paul says. Still, firms must find a way to educate potential clients about the business reason for working with your firm rather than others.
“You need to figure out the client’s hot button,” Paul says. “Your objective is to sell the client their project better than they thought about it.”
Andritsch returned to school to earn a master’s degree in business, so he could better understand his clients’ businesses and help them minimize disruptions and maximize profits during construction.
Peck suggested building a personal plan for each client, based on those companies’ specific needs. Email newsletters, social media and inviting current and potential clients to lunch are a few tactics McCarthy uses.
Petra’s business development team and project managers call and meet with former clients and architects to maintain their relationship and ask about what projects might be coming along. The company also is dabbling in social media with Twitter and LinkedIn.
“Electronic media is going to be an expanding area, but one thing we try to keep in mind is that there is still a human on the end of that,” says Wooding. People make the decisions.
Social media does offer a way to keep in touch and top of mind, but companies cannot control the message and must keep up with postings, Paul cautions. Eighty percent of the content should be about things of interest to clients and only 20 percent about the company.
“Where people miss the boat is telling their story, what’s happening at their company, instead of thinking about it from the client perspective,” Birkes adds. “Our outreach is around solutions related to construction that could help our clients and prospects.”
That includes ways to create the most value for one’s construction dollars and optimizing money spent, perhaps through a case study.
Barton Malow produces YouTube videos and sends them to people in its customer database. The company also sends e-newsletters, highlighting its community involvement.
VJS maintains a presence on Facebook and LinkedIn and keeps its website current. “Most importantly, we created an iPhone, iPad app for the company, so clients can access contacts,” Andritsch says. “For instance, a facilities manager can quickly access our special projects person or an owner.”
Regular branding efforts help clients will think of your firm when a project develops, says Birkes, concluding “You need a structured methodology for holding your clients close to you and developing new clients in that manner.”