3 Ways Construction Contractors Can Expand to New Markets


Expanding your contracting business to new markets can bring benefits, but also challenges. Find out how to expand wisely.

The construction industry’s future looks pretty bright, according to a recent report that found residential and commercial construction will keep growing in the near future. There’s plenty of work out there for contractors, which means they’ve been hurrying to hire. It also means some businesses are looking for ways to expand their operations into new markets.

Expanding into new markets helps diversify a business, which can bring in more work. And if the economy eventually slows and the construction market you’re in plateaus, diversifying may help you ride out any turbulence. Getting into new markets may seem daunting, though, and actually executing an expansion is challenging. There’s no one single strategy to make it happen. Let’s take a look at three ways you can expand your business, including the steps you should take to achieve lasting success.

Offer New Services

Contractors can expand their businesses organically by offering expanded services. The smartest, most effective way to do this is to grow into an area adjacent to your business. Identify what you’re good at and think about what one step beyond that would look like.

For example, if you build roads, you could expand to building bridges. If you’re in residential construction, you might expand to commercial buildings. Many contractors have also been expanding to include design services recently so they can offer design-build project delivery to clients, rather than the traditional design-bid-build method where owners hire separate companies to handle the design and execution of a project.

Providing new services will likely involve creating new departments and bringing in new talent. It will also require studying up. You need to know the markets you’re entering, including the challenges that currently exist in those markets.

Expand to New Locations

Maybe expanding the types of services your business offers isn’t feasible or even something you’re interested in. If that’s the case, instead of changing the type of work you do, change the location. Moving into new cities or regions is a big challenge, but it opens the business up to many new clients.

To do this, contractors can expand the areas they work in from their home office or set up a satellite office in a new city. That’s definitely easier said than done, and many businesses make a key mistake right out of the gate: They don’t send their best people. If you want a new office to succeed, you need to send your top talent to get things set up and establish your brand, find new clients, get projects off the ground and turn a profit.

Start with a business expansion strategy that gets down to the details like:

  • How will we bridge technology between offices?
  • What tools will we use for communication between offices?
  • What local factors will make running the new office different?

An integrated construction ERP system makes it easier to communicate and bridge the gap between locations. People can access the information they need in real time rather than making phone calls or sending emails and waiting for responses. If you plan to operate offices in multiple time zones, this kind of immediate access to data is especially important.

Consider Mergers and Acquisitions

Building a new team in house or setting up a new office can be big undertakings. But expansion doesn’t have to be organic. Alternatively, many contractors are opting to expand by acquiring or merging with companies who already have the skills and clients they’re looking for.

Keep in mind that a merger can go south quickly if it’s not well planned. Contractors should look for businesses that have similar core values and culture, even if they’re in a different market. Contractors might also consider whether they could acquire any of their competitors to get into new locations or markets.

As with any other type of expansion, make sure you have a strategic plan for merging. Dot all your I’s and cross your T’s ahead of time so your plans don’t fall apart down the road due to differences in opinion or unrealistic expectations.

Have questions about how construction software can help your business through expansions? Check out Viewpoint’s solutions or get in touch.