Running a successful construction company is not an easy task. Research by AB Drylining using information provided by Companies House found that between 2019 and 2023, 43% of new construction companies failed.
Many firms start with high hopes, but too many don’t make it. The reasons are varied, but with 40 years of experience working in the business at Libra Construction, we know they all share one thing in common. The mistakes could have been avoided. If you’re building a construction business, knowing the pitfalls regarding how to run a successful construction company can save you from costly mistakes. Let’s look at ten leading reasons construction companies fail and how you can steer clear of them.
Cash is the fuel of any business, and in construction, it’s more important than ever. Costs add up fast – materials, labour, equipment hire. If cash flow isn’t steady, you’re constantly juggling payments, and soon enough, bills go unpaid. Without a healthy cash flow, even a profitable job can end in trouble. To run a successful building company, you must keep close track of all expenses and have a financial cushion for the unexpected.
Projects in construction often cost more than planned. It’s easy to overlook a few extras – maybe a few more bags of cement or a longer equipment rental period. Underestimating these costs means cutting corners or eating into profits just to finish. Accurate estimating keeps you grounded. You need figures that include every nail, every paving stone, and every hour of work. Anything less, and you risk sinking the project or working for less than the minimum wage.
The construction industry relies on skilled hands and knowledgeable minds. But finding the right people isn’t always easy. Skilled labour shortages can lead to delays, sloppy work, and dissatisfied clients. A good team makes all the difference, so invest in recruiting and keeping talent. Reliable workers are an asset, and if you are running a construction company with the right crew you can weather any storm.
The construction industry is always evolving. We have to keep up with new technology, green building standards, and updated regulations . Companies that ignore these changes risk becoming below par and outdated. Adaptability is essential. Stay informed about new materials, construction methods, and industry shifts. Adapting to change doesn’t mean you must jump on every trend. It means keeping pace with what matters, so your company stays competitive.
Every construction project has moving parts, from coordinating tradespeople to managing deadlines. Without strong project management, chaos sets in. Deadlines are missed. Costs spiral. Clients get frustrated. A skilled project manager keeps everyone on track, ensures tasks are completed in the right order, and solves issues before they become problems. Successful construction companies understand that good project management is essential to every job, big or small.
Safety isn’t just about following rules. It’s about protecting lives and avoiding setbacks. An accident on site can shut down work, delay the project, and increase insurance costs. Worse, it can hurt the people who rely on you to create a safe workspace. A commitment to safety means you must perform regular checks, proper equipment, and precise training. Ignoring safety is one of the fastest ways for a construction company to fail.
It’s tempting to take on every project that comes your way. But spreading yourself thin can lead to disaster. When a company tries to handle too much, quality slips, deadlines are missed, and clients are disappointed. Successful construction companies know their limits. Focus on quality over quantity and never take on more than you can handle. This way, you deliver on promises and maintain a sound reputation.
In construction, relationships matter. Poor communication or failing to listen can turn a good project into a nightmare. Clients want updates. They want to feel heard. If they feel ignored or misled, they won’t return, and they’ll probably tell others to stay away. Good communication, regular updates, and handling problems openly and honestly go a long way in building strong client relationships.
Even the best construction company needs to market itself. Relying on word-of-mouth alone limits growth. A lack of networking can mean missed opportunities. Construction companies need to build a brand, maintain an online presence, and connect with other businesses. Effective marketing lets clients know who you are and what you stand for. Networking opens doors to new projects and partnerships that can make all the difference.
The construction business is unpredictable. Economic downturns, fluctuating materials costs, and shifts in demand can all impact success. Companies that don’t plan for the future find themselves blindsided by change. Have a clear vision for where you want your company to go. Invest in growth, keep a financial buffer, and always be prepared for the unexpected. Planning for the future gives you a stable foundation, no matter what comes your way.
Building a successful construction company is demanding, but avoiding these common mistakes can make a world of difference. Stay aware, stay prepared, and make decisions that keep your business strong and growing.
Richard Green is the director and founder of Libra Construction, with over 40 years of experience in the building sector. As the heart and soul of the company, Richard leads with boundless drive and passion, making him not an outstanding leader and an inspiration for everyone around him.
Like other long-established companies, when first starting out Richard faced many of the challenges outlined in this article. But he used each trial as an opportunity to learn, and Libra Construction developed into one of Kent’s leading construction firms.
Specialising in refurbishment projects, planned maintenance services, and emergency plumbing and electrical issues, among other skills, Libra Construction are ready to tackle any building project or repair – no matter how big or small.
Long-standing companies have built valuable relationships with suppliers and subcontractors, often leading to better pricing and faster delivery times.
With experience comes expertise. Established companies have seen and resolved a wide range of challenges, equipping them to handle complex projects smoothly.
An established building company has years of projects behind them, showing consistent quality and craftsmanship.
Long-standing companies attract skilled and experienced tradespeople, ensuring high-quality work across every part of your project.
Established companies are often more financially stable, which means they are less likely to encounter financial setbacks during your project.
Contact us through this link. We will discuss the basics of your project and arrange a convenient time to visit you.
Once at your home, we will discuss your project further, survey the site, and answer any questions you have.
You will receive a thorough quote from us, with a complete breakdown of costs, including materials, labour, and equipment if needed. Each part of the job is listed separately with its price, so you know exactly what you are paying for.
Once you have agreed to our quote, will give you written details covering the project timeline, payment schedule, the scope of work, waste removal, guarantees, and our insurance specifics. We then sign the necessary contracts and paperwork, and work will begin!
