As long as people continue to move to California, purchase homes, renovate older ones, and construct new ones, and as long as companies require a physical presence, there will be a need for construction companies in California.
Despite the doomsayers who claim that everyone is leaving California for other states, many individuals and companies continue to move here, drawn by the lifestyle, weather, and the opportunities that owning a business in California provides. A plentiful and skilled workforce, combined with colleges and trade schools that prepare new workers, makes California a great place for both employers and employees.
But the construction industry in California 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 a unique position nationwide, but the situation is even more pronounced in California. Essentially, construction workers and managers are retiring from the industry, and there are few younger workers to replace them.
In a recent article in Comstock Magazine, this phenomenon was referred to as the “Silver Tsunami.” For every five workers who retire, there is one skilled worker ready to take their place. But it’s more than just about numbers. The other issue is the loss of knowledge. Executives who retire but have no one to pass along their experience to often leave companies without continuity and with a significant knowledge gap.
Young people often don’t see construction as the most viable career field to pursue. However, for those who are young, possess skills, and have 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. Still, from portable plans displayed on iPads and other tablets to digital measuring and estimating 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 controlled remotely, as well as 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 is expected to undergo rapid changes in the next decade. This is both a challenge and an opportunity.
The other good news? Construction extends far beyond framing and building new homes, encompassing renovations as well. The construction sector includes a diverse range of jobs and industries. Specialization, as in other industries, is key to business success.
The Variety of Construction Industries
A close examination of the construction industry will reveal the numerous specialties available. New construction contracting is just one example, and a contractor often oversees a team of specialists.
Here at Rogerson Business Services, we frequently encounter these specialties, and we’ve sold businesses in several of them.
- 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 by no means a comprehensive list. If you can build, modify, remodel, or conceptualize it in any way, it can and probably will be built, which 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, which requires extensive testing and, more often than not, experience in a specific area. This is done through the California Contractors State Licensing Board. This is not only where contractors apply for licensing, but also where consumers can check on those licenses.
One thing that many people and potential contractors may not be aware of 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 viewed as a challenge or 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 ensure that you have or can obtain all the necessary licenses before starting your business or purchasing one. Many contractors diversify by buying 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 regulatory requirements, there are numerous opportunities in the California Construction industry.
Running and Growing a Profitable California Construction Company
So, how do you run and grow a profitable construction company in California? As we advance, there are a few key points to keep in mind and some things to watch closely.
- First, innovation. From meeting remotely with Teams or Zoom to filing permits and other paperwork digitally, innovation in construction is on the rise. Be prepared for it, and even better, 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. Utilize social media and other digital channels, but remember that word of mouth and traditional marketing methods remain effective as well.
- Fourth, run a tight ship. Watch your cash flow, calculate ROI and profit carefully, save money wisely, and provide real value to your customers as well.
- Finally, stay up-to-date with changes as they occur. 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
One thing we know here at Rogerson Business Services is that every owner will eventually exit their business, regardless of the circumstances. That means you should run your business as if you are going to sell it tomorrow, and do so consistently.
But there are some key things to remember when you are ready to sell:
- Ensure your business is both 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 lowest tax liability, if necessary.
- If you lease the location where you operate your business, 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, ensuring the process runs smoothly and that everyone involved has all the necessary information, from the 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!
Andrew Rogerson is a certified business broker based in Sacramento, California. Call Toll-Free at (844) 414-9700. If you prefer, email him at support@rogersonbusinessservices.com. Andrew services the whole state of California.