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5 Successful Construction Business Models

12 January 2024 by Shweta Jhajharia

Construction business models that work are followed by successful construction companies. A company’s target market, employment procedures, financial requirements, marketing strategies and business growth are all influenced by its business model.

One of the biggest employers in the world, the construction sector employs millions of people. Construction projects produce considerable investments and help the local economy, making them an important factor in economic growth. Other businesses, like manufacturing, transportation, and services, are also boosted by construction projects.

In fact, by the end of 2023, the construction industry will add 168.5k jobs, 10k more than expected a year ago.

Strong and durable business model innovation is becoming more and more necessary as the construction sector changes. A strong business model is one that can endure shifting market conditions and is well-suited to the needs of the project, the owner, and the industry. 

Let’s take a look at some successful construction business models here.

What is a business model?

A business model establishes the direction and framework for your company. It’s one of the first choices you have to make when beginning a business because it determines the target market, target audience, and marketing message. It also affects your company’s operations, location, personnel, and financial requirements.

Your company’s business strategy should align with your skills, those of your staff, the level of competition already present, and the market size. Before settling on a model, you must evaluate your education, training, and experience to determine where your talents best complement the regional market.

One business may be pursuing several different business concepts at once. In general, larger businesses have the labour and financial capacity to provide a variety of business models and pursue business model innovation. 

A small construction company should concentrate just on one until they have achieved success and gained a market share. From there, businesses can diversify their offerings by adding new markets.

5 successful construction business models

In 2021, the UK construction market was valued at $448.7 billion. Key construction sectors are expected to see annual average growth rates (AAGR) of over 1% between 2023 and 2026, supported by infrastructure initiatives for transportation, energy, housing, healthcare, education, and telecommunications.

The selection process can be overwhelming for potential construction businesses due to the abundance of models. So how do you decide? You must first think about your strengths and weaknesses.

Additionally, you’ll devote endless hours to reading books and conducting market research. Here are some of the most effective business models for the construction industry.

General construction management

Companies specialising in general construction offer their clients non-specialized services. They might concentrate on a single customer segment or provide more broadly applicable services to a larger market. 

One company that offers broad construction industry services is a general contractor. They may concentrate on appealing to certain market segments, such as exclusively residential buildings or a particular area within the construction business, such as refurbishment.

To provide services to their clients, general contractors work with other contractors or experienced tradespeople like project managers. They can provide their clients with a wide range of construction services thanks to the utilisation of subcontractors.

Niche construction services

Niche contractors offer specialised construction services that call for licensing, specialised training, or knowledge. They frequently employ construction professionals to give the specialised talents required to complete the assignment. General service contractors use these businesses to carry out specialised construction projects and trade work.

Despite the great need for niche contractors, there can be fierce competition. Before launching this kind of business, it’s crucial to investigate the market and demand in your area.

Production

Materials used in building projects are produced or manufactured by production and manufacturing organisations. They can offer a vast selection of regular and unique items and materials. These businesses are in high demand all the time.

Investigate the goods and resources required in your local market before launching one of these businesses. You might discover a void that your expertise and abilities can fill. These businesses frequently need significant financing to launch.

Supply

Suppliers are in charge of marketing and distributing goods produced by others rather than creating or manufacturing construction materials. These companies might be shops that cater to the local market or e-commerce websites that cater to a broader customer base. 

General and trade contractors who rely on their materials are among their clients. They require less money to get going.

Commission-based model

The commission you receive for acting as the middleman between buyers and sellers is the foundation of this type of business model. You’ll collaborate with a different house construction business to locate potential clients for their goods and services.

Every time you bring in a paying customer, you’ll receive a portion of the revenue. You will earn more money the more transactions you close. Because you won’t need to make a significant financial investment in this firm, this business plan is ideal for those who don’t want to take chances.

Want To Learn More? Book a Free Business Strategy Review Today!

One of the initial steps in launching a new firm is choosing a business model. It establishes who the company’s clients are, which impacts the hiring decisions they make and how they focus their marketing efforts. Contractors looking for work should know who their target market is and where to locate them.

If you want help growing your construction business within the construction industry, our team at Growth Idea can assist you. 

As well as our expert Business Growth Consultancy Services, we offer a free business strategy review where we will assess your current situation and develop a plan for how you can scale your business effectively.

Book your free business strategy review today, or simply get in touch to find out more!

Successful construction business models FAQs

How do you structure a construction company?

Typically, the general manager, department managers, project managers, project supervisors, project coordinators, and employees are listed in the organisational chart from top to bottom. The owner/CEO is positioned at the top.

What are the qualities of a good construction company?

The five characteristics of a successful construction company, starting with the head and using the body as an example, are leadership, planning, work performance, project management, and accounting.

What does the future look like in construction?

Robotics, automation, and emerging technologies in construction. Future construction sites are projected to make greater use of cutting-edge equipment including 3-D printing, exoskeletons, autonomous vehicles, drones, and building information modelling (BIM).

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Shweta Jhajharia

Shweta Jhajharia is one of the leading authorities on Business Value Building and the creator of the unique 6M Model. Shweta is widely respected as an impactful, intelligent and results orientated professional who helps business leaders unleash their potential to reach meaningful, higher objectives. This realisation of potential and maximisation... Read more
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