Issue 9 of 9: Low Barriers to Entry

Construction Ownership Transition Issue 9 of 9: There are Few Barriers to Entry for New Contractors.

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Succession: Ownership Transition Issues - Number 9 Barrier to Entry. Don't Let an Ownership Transition Create Another Construction Contractor to Compete With You.

About 500 construction contractors start up each day.  

  • Many of those are just people having an “entrepreneurial seizure,” as Michael Gerber describes in The E-Myth Contractor.  
  • A few of these will have the grit and skills to build the ENR Top 400/600 contractors of tomorrow.  
  • Others are experienced construction executives who will go on to build substantial construction businesses relatively quickly.  
  • In most cases, a new contractor starting up will cause a serious talent drain on the contractor they leave, as well as changing the competitive landscape.

Make sure that your ownership transition plans don’t create another competitor.  


Succession
Continue building value in your business, yourself and your key team members with a good succession strategy....

Succession
Continue building value in your business, yourself and your key team members with a good succession strategy....

Business Operating Layer
Execution is the discipline of getting things done and is especially critical for contractors because we work in a highly competitive business with relatively low margins compared to the risks taken.
The Right People - Jim Collins
What differentiates contractors is their ability to execute basic strategies consistently. Effective execution comes down to people, process and tools - in that order.
Key Drivers of Value
Valuation is a very critical factor during ownership transitions because it has to be a number that fairly represents the value of the business for the outgoing owners while providing a solid return for the buyers.