5 Ways Small Contractors Can Compete With the Big Guys

How A Small Construction Company Avoids Becoming Extinct

By Lloyd Facen

Competition is fierce and challenging for business in general and particularly for small construction companies.  How do small construction businesses compete successfully with the “Big Guys” who have access to resources, infrastructure and many other competitive advantages that seemingly turn the competition into one of ecology?

Ecology is defined as the struggle between individuals of the same or different species for food, space, light, or projects when supply is inadequate for the needs of all.

Then how does a small construction company avoid becoming extinct?

One of the things small construction companies should consider implementing to compete with bigger guys is to develop a strategy and understand who you are, what you do well and how to profit from that.  It is at this point you gain insight into your business and can better determine what opportunities afford you the greatest probability of success.  This will help you focus more on your strengths and less on competitors.

Being all things to all people is a very ineffective business model.  While we may all want to take on every new opportunity, we have to do that within a framework that is profitable and efficient for our company.   Larger construction companies may have the resources to take on new business at very thin margins or, for some strategic reason, even at a loss.

Most small general contractors, electricians and plumbers, for example, may not have this luxury, so developing a clear picture of your strategy will afford you the option to forgo those less than desirable opportunities and provide you a competitive advantage in the areas you have identified.

Here are a few specific suggestions that may help smaller companies compete with the Big Guys:

1. Be Agile

Large construction companies typically standardize their services, and in many instances these services are rigid and pricey.  On the other hand, as a small company you may be hungry for almost any new business and can be more flexible in meeting potential clients’ needs.

You have the ability to make quick and firm decisions as opposed to the slow methodical bureaucratic processes that often paralyze larger competitors.  If you are able to be nimble while offering quality services, you may have just found a competitive advantage over the big boys.

2. Keep the Main Thing the Main Thing

Large construction companies probably have multiple service lines across the nation.  But you as a small business do not – nor do you need to.  Focus on developing excellence in your main line of service.  Focus on being the “best of the best,” and this may be just what you need to outshine larger competitors.

3. Shoot for the Bull’s-eye

Understand who your potential customers are, how you can reach them and most importantly how you can meet and solve their challenges.  Focus on defining, identifying and hitting your desired target!

4. Go After the Middle Markets and Under-Served Customer Segments

There are far more middle markets and under-served customers than there are big ones.  In fact, most of us have a tendency to focus on the sexier large customer and discount the smaller ones.  Many times this is precisely what larger competitors do, with little regard for the second and third tier customers.  Do your homework and find the diamonds in the rough.

5. Think Global and Act Local

The more you understand the Big Picture (so the speak) of the construction industry, the more creditability you will have with current and potential customers.  Take this wide industry knowledge to your local market, demonstrating your ability to bring larger industry dynamics to solve the problems of regional and local customers.  In short, stay current on issues and trends affecting our industry.

Now, this will not prevent the Big Guys from trying to eat your lunch.  However, it is not about them; it is about you developing and focusing on your competitive advantages!

Lloyd Facen is Director of Business Development with Triune, a leading integrated design-build general contractor founded in 1997.  Triune is headquartered in Dallas, TX – www.tmvllc.us

The Punch List is Triune’s proprietary blog for discussing issues and providing insights specific to the commercial construction industry. Copyright 2013 TMV, LLC (Triune). Any and all rights reserved.

Vince Fudzie – the blogger’s Reality Bite:  Lloyd has made some good points based on his experience working for both behemoths and smaller companies.

The main point I want to add is that you must recognize and believe that you can compete with larger competitors. You need to make a concerted effort to identify those areas where you can compete and then implement them.