September 11th 2018

Five steps to follow to build a brighter future for your construction company

Posted by:

Stuart Stead

stuart-stead

Today you have other things on your mind like building your business, but ultimately you’d like to step away and take life easy in a comfortable financial position. And that’s a long way off; at the moment you’re building a dynamic, new construction business. You’ll sort that future out when the time comes, but not now, you’re only just starting out.

The fact is, to achieve a successful exit strategy and ideally deliver a solid future income from your business, early planning, ideally from your 20’s, is absolutely essential.

For any business owner, planning for a scenario where you eventually relinquish the helm requires a long-term approach and it is important that you take advice as early on as possible in your career.

Achieving a decent return on the sale of a business, especially in the construction sector, isn’t simple. Often client relationships are direct and very personal which results in a legitimate fear that, on sale, clients will be lost. So, what can you do to mitigate against that and protect the value of your most important asset.

Preparation is key

Some simple strategies can be implemented to maximise the value of the business and ultimately make it more saleable. Many are common sense, such as investing in an experienced management team or ensuring there is strong pipeline of future work.

It is also important to protect the hard-earned cash and assets your business has created. Ill-thought-out corporate structures can restrict funding opportunities, increase tax liabilities and put profits at unnecessary risk.

So, what can you do to build a brighter future ?

1. How solid are your foundations?

Have an up to date company valuation, together with a clear evaluation of your personal assets, in order to understand exactly where you stand. If you don’t know what the company is worth how can you sell it ?

This will also help with measuring future growth. Highlighting areas for improvement can help you to understand where the true value of the business lies. Businesses are more valuable if they can demonstrate robust and sustainable profits alongside further growth potential. Achieving this in the construction sector isn’t always easy but it is possible to make improvements.

2. Planning for the future

To ensure your assets are capable of providing the capital you’ll need to fund your future lifestyle will mean mapping out a sound strategy for achieving your goals. The earlier you start to plan to easier it will be to quickly achieve your goals.

3. Bridging the gap

People often find there’s a shortfall between their aspirations and what the business can deliver financially. It’s essential to maximise profitability at the earliest opportunity, which may mean acquiring complementary companies, taking a critical look at existing business sector performance and focusing on areas that can be grown quickly. Taking a realistic review and being prepared to deliver a hard-headed plan will pay dividends later.

4. Making the leap

Once you have your figures firmly worked out and the strategy in place to reach them the time will come to jump. This may ultimately mean selling to a third party or a management team. Whatever the option, the process is guaranteed to be time-consuming, laborious and distracting. Therefore, it’s important to surround yourself with a trusted professional team to ensure you achieve the best value. The longer your advisers have known you and your business the better the relationship you will have to work through that process together.

5. Keep in the know

It is also important to stay on top of what is happening in your sector. Occasionally “special” buyers enter the market and can offer surprisingly large sums for certain types of business. You then need to be in a position to move quickly and continual observance of market conditions will be useful.

Conclusion

Allying the potential growth and value of your company with your family’s long-term personal needs is absolutely fundamental.

Having a sound personal investment strategy in place from the earliest possible stage is important and will ensure that you can enjoy your retirement and reap the benefits of your hard work.


This article is for general guidance only. It provides an outline, and may not include points which are important to your situation. You should not depend on this blog without taking advice based on the full facts of your case. The information given was correct at the time of publication.