In the construction industry, build a reputation and you can build a business. Without a good reputation, you will find yourself at the mercy of wildly fluctuating, highly competitive markets where owners depreciate your value to the level of a commodity that can be purchased at bargain prices leaving little room for profit. Your reputation makes all the difference.

Success by Reputation - A Case Study 

Two brothers from Brooklyn, N.Y. mustered out of the service after VE day and utilizing their training in the Corps of Engineers began framing single family homes in the housing developments that blossomed in the post war 1950s. Because they worked fast and never failed an inspection, they quickly gained a reputation for being the best framers around. They were paid by the "piece" and could name their price after only two years in business. The developers orchestrating the post war housing boom couldn't build little three-bedroom ranch houses fast enough, and everyone wanted the brothers and their team to frame their cookie cutter developments. Their company quickly grew to more than two hundred carpenters building houses up and down the East Coast.

From the Horse's Mouth

The brothers said: We didn't know any better. We were taught in the service to work quickly and do our best and we subsequently operated our civilian carpentry business the way we were taught. In the early days we employed vets who were trained the same way we were, so gradually we developed a reputation for being not only fast but also the highest quality carpenters, and we started to see ourselves that way. We believe that was the key to our long-term success. When you get good at something, and the marketplace keeps reminding you of that, it becomes your permanent self-image. That self-image fuels everything you do after that. We were proud of ourselves and would let nothing tarnish that...

In the 70s, single family housing started to run out of steam, and we were looking to specialize in another type of building. We didn't want to build just anything that came along, we wanted to build something we would be excellent at. Our reputation was already established, and we knew even then how valuable that reputation was. The next natural step for us was to build the needed residential infrastructure. We started with small elementary schools. We went from being a large subcontractor to a small general contractor because we wanted to be the best elementary school builders in the market. We wouldn't even bother to let subcontractors bid on their part of the project. Rather, we would select the very best HVAC contractor, for example, and invite them to submit a budget for the project under consideration. That way we expanded our project selection step by careful step, never taking our eye off the excellence ball...

That’s how we became the dominant regional contractor, invited to bid on every college, high school, and elementary school that was still going up as the population continued to grow. After all those years of specialization, we had developed deep pockets of expertise in our estimating, in our finance department, and in field operations that all contributed to our continued reputation for excellence.

Project Selection by Reputation

These are the keys to building your business:

• The key to long term success is profit, not cash flow.
• The first key to profit is to resist competitive low bidding for every job.
• The key to avoiding constant low bidding is to be selected (invited) to bid.
• The key to being invited to bid is reputation.
• The key to reputation is excellence.
• The key to excellence is doing what you do best.
• The key to "sticking to your knitting" is project selection.

Look around your marketplace and identify the most successful contractors in your region. Every one of them will have a reputation for excellence. Your reputation is your most valuable asset. To accomplish this: Resist taking a job you have never done before. Resist taking a job in a distant market. Resist taking a job you are not sure you can do better than anyone else just because you need some immediate cash flow. And never ever risk your company's reputation. 

Warren Buffett says: "It takes 20 years to build a reputation and five minutes to ruin it."