July’s Big Dig Breakdown
It all begins with an idea.
This month’s Big Dig: Expanding Opportunities for Small Residential Construction Companies, is the final product of a yearlong research project I took on this past year. The paper explores notable differences between small and large construction companies in the Boston area, through a structured industry model development process. But don’t worry, you don’t need to read the entire 30-page paper, or even be in the construction industry to get value out of it. In this month’s Big Dig Breakdown, we’ll cover the notable differences between small and large construction companies that we uncovered, how small companies can use these differences to their advantage, and how these opportunities relate to industries beyond construction.
When I started this research, I chose this topic because I was once a small business owner in the home maintenance industry. I had heard over and over again, as I’m sure many of you have also, “Well ___ can do it cheaper”. But I knew that my company, as well as all the other small businesses around, had something better to offer than the big corporations these clients kept throwing out. The most notable advantage that bigger companies have is financial resources. They have the time and money to expand operational capacity, leverage industries of scale, and to hyperfocus their marketing efforts to maximize their demand. I wanted to find the things that small businesses can do to leverage their own advantages. Here is what I found:
The paper goes into excruciating detail of the differences we found and how we found them, but there are two principal findings you should know:
1. Smaller businesses lack differentiation amongst one another.
2. Smaller businesses have yet to widely adopt technologies which offer significant cost saving opportunities.
We found that while it is a good sentiment, and likely succeeds in driving some level of demand, small businesses focus their differentiation on “customer focus”, while larger companies focus their differentiation on things like “innovation”, “sustainability”, or another factor which conveys their differentiation in greater detail than “customer focus”.
While being customer oriented is a great thing, I will say this: You better be focused on your customer! If your building a deck for me, I would hope that you build it to look the way I want, and that you are able to cater to my schedule to some extent. The point is, people expect companies to be focused on their customers. When Joe builder and Scott contracting both tell me they are focused on the customer, that doesn’t help me decide who to choose. Smaller companies need to focus on what really makes them different and convey that to their audience.
One significant differentiator that we uncovered in our research is that many small businesses are able to act as a ‘one-stop-shop’ for construction projects, whether some aspects are contracted out or not, taking the hassle of permitting, and energy auditing out of your clients hands is going to play a major role in winning bids. Conveying differentiators like this, will be much more successful in driving demand than telling customers something they already expect you to do.
To touch briefly on the second principal finding, for construction companies, technology like BIM offers massive cost saving opportunities, but it is expensive and challenging to implement. Nevertheless, small companies should begin considering how they can start adopting technologies like BIM soon, as the competitive advantage is immense.
Finally, it is worth noting how these findings apply beyond the construction industry. Based on my findings and experience I believe all small businesses should be getting creative with how they are differentiating themselves. For example, if you own a restaurant, don’t just tell me your food tastes the best and your service exceeds competition, show me the flare that your servers bring to the table, show me the unique ingredients and techniques your chefs use. The business landscape is getting more and more competitive throughout industries, and it is time for small businesses to get creative in conveying their competitive advantage.