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March 30, 2023

Building a Successful Construction Company: How to Solve Hard Problems and Thrive in the Market

This blog is a takeaway from the conversation that I had with CEO of Norhart Construction Mike Kaeding on the podcast. Enjoy!


Building a construction company is no easy task, and solving the hard problems that arise in the industry requires determination, strategic thinking, and effective collaboration. In this blog post, we will discuss the various aspects of establishing a construction business, from hiring employees and managing labor to addressing cash flow and market challenges. By the end of this article, you will have a better understanding of the complexities involved in building a successful construction company and how to navigate them.

Hiring Employees and Managing Labor

One of the first steps in building a construction company is assembling a team of skilled employees. The construction business is labor-intensive, and finding the right workers is crucial to your company's success. When hiring, it's essential to look for individuals who have experience in the industry, as well as those who are eager to learn and adapt to the ever-changing construction environment.

To manage labor effectively, you'll need to develop a system for organizing and coordinating project teams, schedules, and resources. This can include adopting construction management software or implementing a project management framework, such as Agile or Lean. These systems can help streamline communication and ensure that everyone is on the same page, minimizing the risk of project delays or cost overruns.

Renting vs. Buying Equipment

Another key consideration when building a construction company is whether to rent or buy equipment. While purchasing equipment may seem like a sound investment, it can also tie up valuable cash flow, which could be better utilized elsewhere in the business. Renting equipment, on the other hand, can provide more flexibility, allowing you to scale up or down as needed based on project demands.

Ultimately, the decision to rent or buy will depend on the specifics of your business and the types of projects you typically take on. A thorough cost-benefit analysis can help you determine which option makes the most sense for your company.

Managing Cash Flow

Cash flow is the lifeblood of any business, and construction companies are no exception. Maintaining positive cash flow can be challenging in this industry due to the nature of construction projects, which often require large upfront investments and can take months or even years to complete.

To ensure that your company remains financially stable, it's essential to develop a comprehensive cash flow management strategy. This may involve negotiating favorable payment terms with clients, regularly reviewing and updating financial projections, and establishing a rainy-day fund to cover unexpected expenses. By closely monitoring your cash flow and taking proactive steps to address potential problems, you can mitigate the risks associated with running a construction business.

Manufacturing and Producing Assemblies

In the construction industry, manufacturing and producing assemblies can be an effective way to streamline processes and reduce project timelines. By leveraging prefabrication and modular construction techniques, construction companies can build components off-site, minimizing the amount of on-site labor and resources required.

To incorporate these methods into your business, it's crucial to find reliable suppliers and manufacturers who can deliver high-quality assemblies on time and within budget. Developing strong relationships with these partners can help ensure that your projects run smoothly and maintain a competitive edge in the market.

Navigating Market Challenges

The construction industry is highly competitive, and staying ahead of the curve requires constant adaptation and innovation. To succeed in the market, your company must be able to identify and capitalize on new opportunities while also addressing emerging challenges.

One way to do this is by regularly conducting market research and staying informed about industry trends and developments. This can help you identify potential growth areas and make strategic decisions about which projects to pursue. Additionally, fostering a culture of innovation and continuous improvement within your company can encourage employees to think creatively and develop novel solutions to problems.


Building a successful construction company is a complex and challenging endeavor that requires a combination of strong leadership, strategic planning,