Getting Back to Basics: The Golden Triangle for SME Building Contractors

Peter Searle
Jul 17
3 min read

In uncertain or challenging trading conditions, government schemes, grants or tax breaks may offer some support, but these can only go so far. Ultimately, it's the business owner or director who must assess the position and make decisions that keep the company solvent and future-ready.

Whether times are booming about to bust or simply stagnating, SME construction businesses are constantly faced with decisions that aren't always easy to quantify—especially in fast-changing or unpredictable markets. And while you can (and should) seek help from specialists—whether in credit control, HR or bid strategy—it’s still you, the business leader, who must decide to select who can provide the best support, brief them properly and implement the recommendations.

This is often daunting, particularly for those who have grown their business by word of mouth to get to grips with the business fundamentals.

For SME contractors, everything flows from three core pillars:

Lead Generation and the Tender Pipeline
Winning tenders that will make a profit then manging the cash and controlling costs during the delivery
People

As the leader, what should you be looking for in each of these?

1. Lead Generation and Tender Pipeline

The most straightforward place to begin is by reviewing your work pipeline. What enquiries, frameworks, or tenders are you currently pursuing? What’s likely to land and when? Where are the gaps?

Be honest with yourself about the strength of each opportunity. Make a judgement on what is solid, what is likely, and what is speculative. Create a timeline for reassessing if key projects don’t materialise. Your future workload is the foundation for all further planning.

If your pipeline is drying up, take immediate action to boost lead generation. This might mean refreshing your prequalification credentials, improving bid strategy, or investing in a stronger presence on portals or through key contacts. Avoid the temptation to chase every opportunity—focus on fit and profitability. The alternative is to reduce the overhead you need to add to projects to cover the overhead costs to keep you competitive and profitable, which leads onto:

2. Cash and Cost Control

Once you’ve reviewed your future work, ensure that you bit tenders at the highest price the market will bear. One element of doing this is to align your overhead to your expected income. If workload is set to drop, costs must follow.

For contractors, costs are made up of overheads, and direct project costs i.e. Labour, Plant and Materials which are usually supplied by subcontractors. While it's tough, you will need to consider how you cut your overheads or reduce project costs by having detailed discussions with your supply chain. The alternative is to increase income by ensuring you are recovering all additional costs due under the contract.

Credit control is also critical. Stay on top of payment cycles, monitor debtor days, and resolve any disputes quickly. If clients are slow to pay, or retentions are dragging, these issues must be tackled firmly. Good cash management is the difference between survival and collapse—even with a full order book.

3. People & suppliers

Once the business is financially balanced, turn your attention to retaining and motivating the people who remain. A leaner team should be your best team.

Open communication, clear targets, and modest investment in training or incentives go a long way. If you're relying heavily on subcontractors, ensure you’ve reviewed terms and capacity to maintain delivery standards without inflating risk.

Complacency can creep in when times are good. But staff are the heart of the business and the face of your brand. Treat them as such—especially in times of uncertainty.

Stay Focused on the Fundamentals

As construction gets more competitive, especially with the risk of “suicide tendering” increasing, remember that the three golden rules remain unchanged: