Successful Construction Business Models

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Over the years, the very definition of the word “business model” has drastically changed. An early mention of a related term goes back way in the 1950s when people started selling and trading products and services. Presently, the definition of a business model is “the design or architecture” of a business. Some define it as a story of how a company works. 

If you’re planning to start a business, it’s crucial to have a business model. But why would you need one? And what are successful construction business models?

Business Model, What and Why?

Before writing a business model, you first need to understand what it is and why it is necessary for a company’s success. Despite what most people think, the concept of a business model has existed way back in the 1950s. However, it first gained traction during the 1990s. Back then, many business experts defined it as a “plan on how to make money with the company”, a way to attract customers.

Over the years, many people expressed their view of the term “business model”. Today, many people define it as the “blueprint” of a business. It determines how the company operates, how it serves customers, and how to earn profits, among other things. It is, however, not to be confused with a business plan, which is another separate thing.

Why do you need a business model? Imagine building a house without a blueprint. Not only is it unlikely to succeed, but reckless as well. For a building to stand against time, you will need an excellent design. The same can be said when starting a business. The business model will determine whether your company will “stand” or will end up in failure.

Successful Business Models, How?

Before coming up with a successful construction business model, there are several questions that you need to answer first. 

  1. What is your company’s mission?
  2. Who are your target customers?
  3. What do your customers value? 
  4. What outcomes do you expect?
  5. What is your plan for the business?

After considering the answers to these questions, you can now develop a business model. But how? To make it easier, you can use the widely used business model canvas.

There are nine sections of the business model canvas. They are the following:

  • Value Proposition – It is the combination of your company’s unique products and services. Your business promises to deliver said services and products that will satisfy your customers’ needs.
  • Key Partners –  This section includes who your partner and suppliers are. For instance, if you’re starting a flooring company, who will supply you composite decking and decking accessories? What is the best composite decking sold around the market? Also part of this section is your motivation for the said partnerships. 
  • Key Resources – It is the assets and the resources of your company that is principal to how your company will serve your clients. It includes human, financial, physical and intellectual resources.
  • Key Activities – It’s all activities necessary for your company’s value proposition. It includes marketing, designing, training, and networking. This section should be revised whenever possible. 
  • Customer Segments – It is the process of grouping customers so that the company can cater to each of the divisions more effectively. Somewhere down the line, it will show who your most important customers are.
  • Customer Relationships – For a company to be successful, it needs to establish communication and relationship with the customers. It includes automated services, personal assistance, customer communities, among others. 
  • Distribution Channel – It’s the way of how a company presents its products and services to its customers. It can be a company owned channel, like a store, or a partner channel through a distributor. 
  • Revenue Stream – It’s the methodology of how a company sells its products and services to its customers—the ways to make it include usage fee, asset sales, lendings, subscription fees, etc. 
  • Cost Structure – It determines the cost of running the company. For this section, you need to determine all the cost required, together with the plans of covering it.

When devising a construction business model, the easiest way is to use the business model canvas. The only thing left to do is do a lot of research. Even after finishing the business model, it’s crucial that you keep updating it. Doing so, you can create a successful construction company.