Running and Selling a Business in the California Construction Industry
As long as there are people still moving to California, buying houses, remodeling older ones, building new ones, and as long as there are companies in need of a physical presence, there will be a need for construction companies in California.
Despite the doomsayers who say everyone is leaving California for other states, there are still a lot of individuals and companies who move here both for the lifestyle, the weather and for the opportunities owning a business here provides. A plentiful and skilled workforce and colleges and trade schools preparing new workers make California a great place for employers and employees alike.
But the construction industry is different, isn’t it? Well, in some ways, it is. But here is what it takes to run and sell a business in the California construction industry.
The California Construction Workforce
The construction industry is in an interesting place nationwide, but the situation is even more pronounced in California. Essentially, construction workers and managers are aging out of the industry, and there are few younger workers to replace them.
In a recent Comstock Magazine article, this was referred to as the “Silver Tsunami.” For every five workers who retire, there is one skilled worker ready to replace them. But it’s more than just about numbers. The other issue is the knowledge lost. Executives who retire but have no one to pass along their experience to often leave companies without continuity and with a large knowledge gap.
Young people don’t always see construction as the most viable career field to go into. However, for those who are young and have skills and a thirst for knowledge, there is a huge opportunity here.
Innovation in Construction
Innovation in construction? That’s right. Construction is ripe for innovation using modern tech. The construction industry tends to lag a little behind in this area, but from portable plans displayed on iPads and other tablets to digital measuring and estimate apps, the industry is catching up.
This tech is not new, but the application to construction is happening for the first time in a long time. Improving crew efficiency, keeping workers safer, and offering new and unique services to homeowners are just a few of the advantages. Think of the smart home industry.
Not long ago, it was considered innovative to install integrated stereo systems, energy-saving appliances, and other “technology.” Now, a smart home can include security, outlets, and lighting that can be turned on and off from anywhere, extended and thorough high-speed internet services, electric vehicle charging stations, and more. From new construction to remodels, these are all services contractors can offer.
The keys are several. Convincing young people that construction is not just a blue-collar or even “dirty” job, but is a viable, exciting and innovative career is top on that list. Add robotics, autonomous assembly, and more to the list, and construction will rapidly change in the next decade. This is both a challenge and an opportunity.
The other good news? Construction goes well beyond framing and building new homes and renovations. There are a variety of jobs and industries within the construction sector. Specialization, as in other industries, is key to business success.
The Variety of Construction Industries
A close look at the construction industry will open your eyes to the number of specialties available. New construction contracting is just one of them, and a contractor is often overseeing a team of specialists.
Here at Rogerson Business Services, we see these specialties all the time, and we’ve sold businesses in several.
- Kitchen and Bath Construction and Remodeling.
- Flooring Experts.
- The HVAC Industry (which includes ongoing service as well)
- New Landscape Development
- Pools and Outdoor Experiences
- Industrial construction from restaurants to warehouses
This is far from a comprehensive list. If you can build it, modify it, remodel it, or in any way conceptualize it, it can and probably will be built, and that involves the construction industry.
The California Regulation of the Construction Industry
No discussion about construction in California would be complete without discussing the regulation of the industry. Contractors must be licensed, and that means extensive testing and most often experience in a particular area. This is done through the California Contractors State Licensing Board. This is not only where contractors apply for licensing, but where consumers can also check on those licenses.
The thing that many people and potential contractors don’t know is that there are often regional, local, and even city licensing requirements for certain specialties. This makes California one of the most heavily regulated states for contractors.
That can be seen as a challenge, or it can be seen as an opportunity. Provided you can meet all the requirements, you’ll be one of the most reliable and well-paid contractors in the nation, and you’ll have the trust of your customers right away.
The key is to make sure that you have or can obtain all the licensing necessary before starting your business or buying one. Many contractors diversify by purchasing an existing business, but to do so, you still need to meet the requirements of that specific niche.
Between the variety of industries represented and the regulation requirements, there is a lot of opportunity in the California Construction industry.
Running and Growing a Profitable California Construction Company
So how do you run and grow a profitable California Construction company? There are a few keys going forward, and some things to keep an eye on for sure.
- First, innovation. Everything from meeting remotely with Teams or Zoom or being able to file permits and other paperwork digitally, innovation in construction is on the rise. Be ready for it, and better yet, be ahead of it.
- Second, specialize. Focus on those things you do best and do them well. This will keep you profitable, keep your customers and others happy, and prevent you from receiving poor and potentially damaging reviews.
- Third, market yourself. Use social media and other digital means but remember that word of mouth and physical marketing still work as well.
- Fourth, run a tight ship. Watch your cashflow, figure ROI and profit carefully, save money carefully, but provide real value for your customers, too.
- Finally, keep up with changes as they happen. The global pandemic and other events will impact your business. Be prepared and nimble.
The construction industry in California will likely be profitable for years to come, and if you are flexible and a true innovator, you can take advantage of it.
When You’re Ready to Sell
The one thing we know here at Rogerson Business Services is that every owner will exit their business at one time or another, no matter what the circumstances. That means you should run your business like you are going to sell it tomorrow and run it like that all the time.
But there are some key things to remember when you are ready to sell:
- Make sure your business is actually profitable and appealing to buyers.
- Know the value of your business. Every business sale starts with a business valuation.
- Have your paperwork up to date and in order.
- Know the legal intricacies of selling a business in California.
- Recast your books to show true earning potential rather than the least tax liability if necessary.
- If you lease the location you operate your business out of, negotiate your lease ahead of time. There’s nothing worse than a deal being killed by a landlord unwilling to negotiate.
Finally, you’ll want to hire a Certified Business Broker. They will be like the quarterback of your sales team, making sure the process goes smoothly and that everyone involved has all the information they will need, from an initial Letter of Intent to escrow and closing.
Are you ready to sell your business in the California construction industry? Contact us today at Rogerson Business Services. We’d love to be your business broker. Get started selling your business today!