Construction is a good business bet these days, but it’s not invulnerable. Though construction is perpetually in high demand nationwide, nearly half of all construction companies fail within five years, suggesting that construction entrepreneurs need to work especially hard to see their ventures survive and thrive. To that end, here are a few ways to affordably mitigate risks, keep your employees engaged and safe at work, and enjoy success well into the future.

 

Develop reliable processes

The number-one risk across construction projects is undoubtedly delays. For a construction project to conclude and for the business to receive its full payment, so many details need to come together in the right order — and inevitably, something will go wrong to push the delivery date back. 

To reduce the number of delays in a project, you should build reliable processes that facilitate the completion of projects on time and in order. You also need to make sure everyone involved in a project is communicating effectively so that when delays do occur, you can find solutions quickly to avoid drastic changes to the project timeline.

 

Acquire business insurance

This is good advice for all businesses, not just those related to construction. Business insurance helps reduce a business’s liability in the event of unforeseen catastrophes, like documentation errors, worker injuries, property damage, and more. If such a catastrophe occurs, your insurance should cover certain damages, allowing you to maintain continuity in business services.

There are a few different types of business insurance that construction companies can benefit from, such as general liability insurance, errors and omissions insurance, and worker’s compensation insurance. You may also want to acquire commercial vehicle insurance if your business owns vehicles that employees use on the job. Then again, if your construction company is small and new, you might allow the use of personal vehicles at work, which could save your business money but does bring up concerns about liability and security. You’ll need to consider whether the cost savings and flexibility are ultimately worth those liability and safety issues.

 

Build better relationships

Another exceedingly common risk in the construction industry is the reliance you must have on other businesses in the industry, like subcontractors and suppliers. Construction projects often involve labor from subcontractors, who may supply expertise that your business lacks. But for a million different reasons, subcontractors may default on their contracts with you, and the consequences can be dire. The same goes for suppliers; if your project fails to receive the supplies it needs, delays will ensue and costs will increase.

Thus, you need to put time and energy into developing strong relationships with high-quality business partners. By consistently working with the same subcontractors, you can incorporate their processes into your projects, reducing the likelihood of default. You should also work to improve your relationships with suppliers, though you may want to make sure that your supply chain as a whole is flexible and diversified to account for global material shortages and other fluctuations in supply.

 

Ensure site safety

Construction is consistently at the top of lists of the most dangerous industries; there is potential for serious injury even during relatively insignificant construction projects. You pay doubly or perhaps triply when injuries occur on your sites: first in the loss of a healthy worker, second in the costs of increased insurance premiums, and perhaps third in penalties from safety violations. 

Thus, ensuring the health and safety of workers should be high on your list of risk mitigation priorities. You should work with experts to identify the prominent health and safety concerns on your construction sites, and you should pay attention to how shifts in environmental factors may impact your existing safety strategies.

 

Invest in employees

There is a severe and persistent shortage of labor in the construction sector. According to one survey from Associated General Contractors, roughly 88% of construction companies are struggling to find any workers to hire, let alone reliable and qualified employees. Without human workers to complete projects, your construction company will fail, so you need to invest in strategies that will attract and retain a high-quality workforce.

There are many reasons for the dwindling labor force in construction, some of which you cannot change, such as the physical demands of the work. However, you can make construction jobs more enticing by offering higher wages and better benefits to your employees. Even something as simple as health insurance can convince a well-qualified construction worker to stick around. 

You should also encourage loyalty among your workforce by investing in your workers and providing access to professional development and education. When appropriate, you should elevate members of your construction crew to management positions, which will improve worker commitment and morale.

You don’t have to break the bank to safeguard your business from the wide variety of risks involved in construction. You can almost certainly build a construction company that survives, but by planning for certain risks, you will be able to build a construction company that thriv