Strategy for SME contracting businesses

The word strategy strikes fear into many SME business owners. It is thought to be something which corporates do and is not required for an SME. Yet the meaning of the word is straight forward in the business sense, it is simply, “a plan of action designed to achieve a long-term or overall aim”.

Numerous business models have been developed for making strategic plans, but they are simply a starting point. Very often what happens is completely different and unexpected opportunities arise. SME’s are sufficiently nimble that they can take advantage of these opportunities and a new emergent strategy happens, advancing the business owner towards their long-term goal.

For an SME business owner wanting to develop a high-level strategy, it can be broken down into three steps:

1.     Where do we want to get to?

2.     Where are we now?

3.     How do we get there?

Step 1 Where do we want to get to?

Setting a long-term goal was covered in the blog, “Start with the end in mind” https://bit.ly/3Z6FdPy. It covers deciding the approximate size of the “pension pot” you will need when you exit the business. The form that income will take will influence the business strategy. It might be simply taking money out of the business and investing it. It might be building a business to sell or acquiring property. Each broad approach has a different optimum model, which will set the general direction of the business. A long term maintenance contractor is a lot more attractive to a business buyer compared to a general building contractor.

Step 2 Where are we now?

Broadly speaking all businesses go through the same stages. Descriptions of those stages were described in the blog, “Business pains as a business grows” https://bit.ly/4d8e1Wr. It looks at the stages businesses go through as they grow over time. The amount of time to prepare for exit can vary considerably and thus the scope to impact the outcome can vary considerably. The potential scope or urgency of a plan plays a significant part in the next step.

Step 3 How do we get there?

The next step requires gaps to be identified which require addressing to achieve the goal. A common analysis used for this is the SWOT analysis. It examines the internal Strengths and Weaknesses of the business, and the External Opportunities and Threats. For construction businesses, which are project based the analysis breaks down into two elements: the business elements and the project elements. These are then further broken down into subheadings:

1.      Business elements

• People

• Financial

• Existing Customers

• New Customers

• Suppliers

• Business sustainability

• Organization structure

• Service replication

• IT systems

• Leadership

  
  

2. Project elements

• Health and safety

• Estimating

• Planning

• Qs'ing

• Risk management

• Site records

• Snagging

• Document controls

• Post contract management

Depending upon where you are starting from and where you want to get to, there are any number of actions required. Every business is different, and that’s why I offer bespoke advice or mentoring for business owners. If you would like to cut through the noise and develop a plan, over a few months which you own & understand, get in touch for a no obligation discussion. Peter.Searle@ba4cs.co.uk