From trades to transformation: Practical growth for SME construction firms

Scaling a construction business beyond the £1M mark often feels like climbing a mountain. Despite ample opportunities in housing developments and infrastructure projects, many SME construction firms struggle to overcome common growth barriers. Understanding and openly addressing these challenges is crucial for sustainable success.

Greg Wilkes, with over twenty years of experience running construction companies, openly shares both his successes and failures. Through Develop Coaching, Wilkes provides SMEs with a clear, actionable roadmap to transition from mere survival to thriving growth, building trust through humility and confidence.

Mastering Cash Flow

Cash flow is the lifeblood of construction SMEs. Regular contracts do not automatically ensure financial stability. Landing a £500,000 project may appear impressive, but delayed client payments combined with upfront supplier demands can quickly lead to cash flow issues, something Wilkes has experienced firsthand.

To avoid these pitfalls, businesses should implement a rolling 90-day cash flow forecast, invoice clearly at project milestones, and negotiate extended payment terms with suppliers. Offering early payment discounts or introducing penalties for late payments can further stabilise cash flow.

Strategic Pricing and Protecting Margins

A common mistake many SMEs make is pricing projects like billion-dollar corporations, targeting margins of just 5-10%. While larger companies can sustain operations at these slim margins due to their scale, SMEs simply cannot. Wilkes has seen firsthand how continually cutting margins can limit growth potential.

Instead, construction SMEs should prioritise profitability by aiming for a minimum of 25% gross profit margin. Accurate costing—including materials, labour, overheads, and administration is essential. Protecting margins by being willing to adjust project scope rather than compromise profit is vital for long-term sustainability.

Implementing Solid Operational Systems

Overwhelmed by daily firefighting? Maybe you can relate to that. You have every intention of starting the day strong with clear tasks ahead, but by day’s end, you realise you’ve been firefighting nonstop. Everyone else has run your day, rather than you running it.

Wilkes emphasises the importance of robust operational systems to overcome this. Without documented procedures, SME owners can easily become trapped in constant firefighting mode.

Comprehensive Standard Operating Procedures (SOPs) are essential. Documenting estimating, invoicing, project management, and client communication processes ensures consistency and reduces mistakes. Digital tools like Asana, Buildertrend, or Trello can streamline these systems, freeing management to focus strategically.

Proactive Hiring and Team Development

Wilkes highlights proactive hiring as crucial. Delaying recruitment until overwhelmed often results in rushed decisions and weak teams. Maintaining active recruitment efforts even during quieter periods ensures a steady pipeline of potential talent.

Additionally, structured internal training and mentoring reduce recruitment costs, build loyalty, and enhance team performance. Regular performance reviews and clear role definitions further increase effectiveness and motivation.

Effective Leadership and Clear Communication

From personal experience, Wilkes recognises that poor staff performance often stems from weak leadership and unclear communication. Regular team meetings should set clear goals, track progress, and address challenges openly. Consistent feedback and recognition of achievements foster a positive, motivated work culture.

Wilkes encourages SMEs to shift from traditional ‘command-and-control’ leadership towards a collaborative approach, significantly improving staff retention and project outcomes.

Investing in Smart Growth and Innovation

Businesses that scale successfully do so through strategic investments in innovation, training, and growth. Wilkes advises ongoing training, mentoring, and embracing new technologies.

Attending industry events and utilising construction management software enhances operational productivity. This strategic approach supports smarter, profitable, and sustainable growth.

Creating a People-First Culture

Wilkes advocates a positive workplace culture as vital for retaining talent. SMEs should prioritise staff wellbeing and professional development through regular leadership workshops, mental health training, and clear career pathways.

Embedding daily routines, like appointing mental-health first aiders on sites and encouraging regular micro-breaks, promotes wellbeing, reduces fatigue-related errors, and enhances productivity and morale.

Conclusion: Strategic Actions for Sustainable Growth

Growing an SME construction firm requires strategic action across multiple business dimensions. Effective cash flow management, strategic pricing, robust operational systems, proactive hiring, clear leadership, innovation investment, and a people-first culture are essential for overcoming growth barriers.

Article submitted by Greg Wilkes, Founder of Develop Coaching