According to statistics, roughly half of all small businesses fail within just five years of operations – and the situation is much worse for construction companies. With only 35% ever reaching their fifth year of business, construction has the lowest success rate of all industry sectors. One of the reasons for this is the lack of proper knowledge in business management.
In a study entitled Critical Factors to Company Success in the Construction Industry, it was revealed that business management is the most critical factor in company success. According to the evaluation of the sub-factors of business management, organising and planning were also considered as the most important success factor. Yet, poor leadership, lack of strategic planning and uncontrolled growth are the most cited reasons for why contractors fail.
Why Do Builders Need to Study Business Management?
The construction sector has become increasingly complex over the course of time. Innovations in construction methods, designs, and materials, as well as business, legal, and technical issues mean that the management of construction projects requires professionals with the knowledge and skills to deliver on time and budget in a demanding and rapidly evolving industry.
Benefits of Studying Business Management
As construction companies grow, the owners and managers need to become more like business people than just builders. Studying business management is the path to growth and prosperity in the construction industry.
Here are the advantages builders can gain from studying business management:
1. Learn and Improve Business Skills
The main advantage of studying business management is that it can equip builders with essential skills and knowledge crucial to sustaining long-term business growth. A construction business owner with no formal business training might be ill-prepared to handle tasks on the business side of the company, such as creating a business plan, managing staff, financial accounting and negotiating. Studying business management can enhance a builder’s ability to analyse data, improve financial decisions, effectively lead people, and make better forecasts about the company’s future.
2. Increase Credibility
Studying business management usually involves pursuing a Master of Business Administration (MBA) degree. An MBA degree can benefit construction company owners by providing an additional level of credibility to the owners and their company. This could lead to an easier time securing financing from banks, private investors, and venture capitalists. While obtaining an MBA does not come cheap, the benefits it can provide surely outweigh the cost.
3. Gain Insights From Industry Peers
The value of studying or undergoing a business management training goes far beyond the bits of information that builders might pick up during their day to day operations. It also includes the insight and interaction from their peers – fellow students who have plenty to offer from their own experiences. It also includes the chance to find mentoring opportunities through lecturers and even fellow students. As any business owner knows, networking is a significant part of being a successful entrepreneur.
Leading a construction company on the path of success can be extremely challenging. However, you can beat the odds if you are equipped with the right knowledge and skills required to manage the key facets of your construction business.
To learn more about how Bizprac can help your building business succeed in today’s competitive market, call us at 1800 009 970 or send an email to email@example.com.