The construction industry is in the middle of a time of rapid growth. A hot market is the perfect environment for construction companies of all sizes to take a step back, get a sense of the big picture and strategize ways to grow by branching out into new types of projects.
During the last recession, many companies focused on only one type of project—usually because it was the only option. For example, it may be building more big box retail than ever built before, but that doesn’t mean that big box retail needs to be its only focus.
In today’s market, with so much more demand for new construction across sectors, it is much easier to start branching out and getting into other types of work. It is true that the company might get a lower return and larger ramp-up when building new types of projects, but now is the time to take on those new opportunities to begin broadening the portfolio.
Entering new sectors or segments can set a company up for stability when the market begins to get colder again—as it inevitably will—and can help companies maximize their future profitability and growth.
Not taking steps toward diversification can be just as risky, or even riskier, than taking on new types of projects. When the last recession hit, many contractors with a narrow focus stumbled, while those with multiple project options were better able to weather the storm.
By only building one type of project, companies are cutting themselves off from a lot of opportunity. Business owners should not get so caught up in the company’s current projects that they cannot take the time to see the big picture or make a new roadmap to greater success. Deliberate and calculated diversification is smart growth.