The Role of Scaling in the Electrical Industry – How to Build a £1m Electrical Contracting business
Posted by: electime 27th March 2023
All companies need to grow, and scaling will help you to cope with increased demand, and profitability, and ensure that you maintain high levels of service. It involves ensuring that internal operations and processes are both sustainable and repeatable. If they’re not, business growth will be stunted by inefficiency.
What are the three biggest challenges in scaling your electrical business?
- The lack of a plan or strategy: If you don’t have an effective roadmap, it’s impossible to know where you’re going, or how you will get there. This leads to false-starts, wasted time, and wasted money, all of which could be avoided if you’d been able to see the bigger picture from the start.
- Finding the right people: Without the right people business growth is difficult. You need to hire reliable people, and subcontractors who know what they’re doing and can help with specific aspects of a project.
- Using the right technology: The right technology can streamline your business, improve communication, increase efficiency, and increase accountability. Chose the right technology that fits with your current operations and meets your need both now and in the future.
The 5 foundations of scaling your construction business
There are five foundations that you need to get right to grow a successful electrical contractor but first you should decide where you are now, and which area you need to work on the most.
1. Plan
Do you have a clear plan that sets out your turnover targets for the year? What profit margin do you need? If you are aiming for a 30% gross profit margin with a 15% net profit, what are you planning to take out for yourself at year-end?
It may well be that your sub-contractors are earning more than you are, and if so, you need to ‘know your destination’. This involves defining where you are now, where you want to be, and how you’re going to get there. Once you know this, you can put a plan in place to achieve your financial goals.
2. Attract
During a time of business growth, you may need to change the type of client you’re targeting. For example, when you started out you may have been on sites like Checkatrade, but as your business grows these may not be suitable and may be failing to produce the clients you need.
At this point you need to decide what your unique selling point is and be prepared to change It according to the clients you want to attract. You need to know what makes you different from your competition, and why should clients choose you?
Armed with this knowledge, you can build a brand that attracts the type of clients you really want. The next step is to decide what you need to be doing on social media, and on email, to make sure that you’re attracting your ideal client, and getting more leads.
3. Convert
It doesn’t matter how many leads you have coming in; you must convert them into business for them to have any value.
If you’re finding that your conversion rate is low, it could well be that your sales pitch isn’t working, or that you’re still attracting the wrong type of client. All leads need to be qualified and you should be spending your time on those that fulfil your criteria and that will help grow your business.
As in every sales situation, conversion is key, and leads need nurturing. Don’t just send a quote and hope for the best, that’s a recipe for failure. You need to build personal relationships so potential clients get to know you, and your company. Make sure that everything you send to potential clients is effective, tweak things to get the most out of your leads, and when it comes to it, close the sale!
4. Deliver
Once the leads have started to come in, and you’ve converted them into a full pipeline of work for the next six months, you need to deliver.
This is crucial if you want to drive up your profits and to do this effectively you need to have people who can deliver for you and whose time you can leverage to achieve your goals. This might mean putting in project managers to ensure that the work is done exactly as you have promised the client. You have got to get your admin in order so that you know exactly who is doing what in your business and how profitable it is. Everyone needs to know what their role is, and what their targets are, and you need to be able to duplicate this on every project you take on.
Additionally, you need to have a smooth-running office team who can ensure that materials are delivered on time, and on budget. You also need someone to keep on top of the numbers, the paperwork and can chase debts effectively. Obviously, this team needs to be able to grow as your business grows.
5. Scale
If you have successfully achieved the first four foundations, you will be able to scale your business. If you haven’t, you are setting yourself up to fail.
Get it right and you will be able to measure and manage from the top. You will know exactly what is going right with your business, and what might need changing. With this sort of overview, you can stay in control without having to be too hands-on and too caught up in the nitty-gritty to drive your business forward
Obviously, you will need to attract the best people, including the back-end office staff and the trades people. Once you have them you need to gain their loyalty, so they stay with you and help you to deliver your business ambitions.
Conclusion
Growing your business successfully involves planning, attracting the right clients, converting leads into orders, delivering exceptional service, and scaling for success. The secret is to ensure that you are building on the five foundations and making sure that you work on the weakest first. This will set the stage for long-term growth and personal success.