A well-executed revenue diversification strategy can breathe new life into your construction business and pave the way for sustained growth. To embark on this journey successfully, it’s essential to have a clear plan in place. 

Planning provides clarity, which is key to getting stuff done. When you don’t know what to do next, one of three things typically happens:

1) You do nothing – the most common outcome.

2) You spend hours (and hours) trying to decide what to do, and still do nothing.

3) You do the wrong thing and don’t realise until it’s too late.

When you have a step-by-step plan, you don’t need to agonise over decision-making. You know what needs to be done, so you get on and do it.

Yes, planning is an upfront commitment. You’ll need to prioritise the process and set aside the time to knuckle down and get it done. But the time, effort, and money saved in the long run far outweigh the minimal upfront costs.

Planning can seem like an uphill battle if you don’t know where to start. Therefore, we’ve created a step-by-step guide on how to plan and execute a revenue diversification strategy, including tips on assessing market demand, setting goals, and allocating resources.

Step 1: Market Research and Analysis

Begin by researching and identifying potential areas of diversification. Consider your existing strengths and resources, and look for opportunities that align with your expertise. If you haven’t already, read Part 1 of this blog – ‘Profitable Pivots: Strategies for Diversifying Your Construction Business Revenue’ for an in-depth guide into opportunities for revenue diversification with 30+ examples.

Part of your market research should assess the demand for your chosen diversification areas. You don’t want to put time and money into a new product or service when there’s little to no demand for it. Analyse market trends, customer preferences, and competitors to ensure there’s a viable market for your expanded services or products.

Studying your competitors in the new market segment is a great way to see what’s in demand, what’s working, and what you should steer clear of. Understand their strengths, weaknesses, pricing strategies, and customer base to formulate a competitive edge.

Step 2: Set Clear Diversification Goals

Establish SMART goals for your diversification efforts. SMART goals are a framework for creating effective and well-defined objectives. Each letter stands for a specific characteristic of a goal, making it easier and faster to set and achieve meaningful targets. Here’s a bullet point description of SMART goals:

Specific

• Clearly state what you want to accomplish.
• Avoid vague or ambiguous language.
• Answer the who, what, where, when, and why.

Measurable

• Define specific criteria to track progress and success.
• Use concrete metrics, numbers, or data to quantify your goal.
• Ask questions like “How much?” or “How many?” to make it measurable.

Achievable

• Ensure your goal is realistic and attainable, given your resources.
• Assess whether you have the skills and capabilities.
• Set goals that are challenging, but not impossible to reach.

Relevant

• Align your goal with your overall objectives and values.
• Make sure it matters and is worth pursuing.
• Avoid setting goals that don’t contribute to your long-term goals.

Time-Bound

• Set a specific timeframe or deadline for achieving your goal.
• Create a sense of urgency to keep yourself motivated.
• Break down your goal into smaller milestones with deadlines.

Once you’ve set your SMART goals, you’ll have mapped out the bones of your diversification plan, because you’ll have a better idea of the areas you need to focus, and a timeframe for the activity to take place.

For example, if part of measuring your goal is to track profit generated, you know that you need to focus on revenue generating and expense optimisation strategies.

Step 3: Allocate Resources

Start by conducting a comprehensive financial analysis. Being thorough in your budgeting process will provide you with a clear financial roadmap. Calculate the budget required for your diversification efforts, taking into account every piece of your strategy. This should encompass not only the immediate costs, but also potential long-term investments. 

Make sure to factor in elements such as marketing, research, product development, staffing, and any other necessary expenses. It’s also wise to allocate a portion for unforeseen challenges or opportunities. A contingency fund can act as a safety net, allowing you to adapt to unexpected situations without derailing your diversification efforts.

Also remember that flexibility and adaptability are key as you navigate this process. Periodically revisit your resource allocation plan and make necessary adjustments to stay on course and achieve your diversification goals. 

Step 4: Product or Service Development

Now that you’ve done your research, set goals, and allocated resources, it’s time to dig into actually developing your new product or service and turning your ideas into reality. 

The specifics of this step will vary depending on what you’re doing, but the main focus for every business owner needs to be innovation and quality. Ensure that what you offer meets or exceeds industry standards and offers something new or improved to the market.

Before a full-scale launch, conduct testing and gather feedback from a select group of customers, and use their input to refine your offerings.

Step 5: Develop a Marketing Strategy

Even the most successful businesses with a robust client base need to develop a marketing strategy for a new product or service. Here’s a more detailed breakdown of this pivotal step:

1. Define Your Target Audience:

To effectively penetrate the new market segment, you must first gain a deep understanding of your potential customers. Develop detailed customer personas that paint a vivid picture of your ideal clients within this segment. Consider factors such as demographics, interests, pain points, and purchasing behaviour. By creating these personas, you’ll have a clearer view of your audience and tailor your marketing efforts accordingly.

2. Craft Compelling Messaging:

Your branding and messaging should resonate with your new audience. Highlight how your construction expertise translates into value for them. Emphasise the unique benefits and solutions your company offers, and show how your services meet their specific needs and address pain points. Be sure to develop a compelling narrative that illustrates why your construction business is the ideal choice for them.

3. Choose Effective Marketing Channels:

Selecting the right marketing channels is pivotal to reaching your target audience. Consider a mix of both traditional and digital channels based on your audience’s preferences and behaviour. Some potential channels to explore include:

• Digital Marketing: Leverage online platforms, such as your website, search engine optimisation (SEO), pay-per-click advertising (PPC), and email marketing. Create valuable and relevant content that positions your construction business as an industry authority. This could include blog posts, white papers, case studies, videos, and webinars. Share this content through various channels to educate your audience and demonstrate your expertise.
• Social Media: Establish a strong presence on social media platforms where your audience is active. Share informative content, engage with your followers, and use paid advertising to expand your reach.
• Trade Shows and Events: Participate in industry-related trade shows and events to showcase your expertise and connect with potential clients face-to-face. This can build trust and credibility.
• Partnerships: Collaborate with complementary businesses or organisations within the new market segment. Strategic partnerships can expand your reach and introduce your services to a broader audience.

Step 6: Implement, Monitor, Evaluate and Adjust:

Put your diversification plan into action according to the established timeline, and monitor progress closely to ensure alignment with your goals. Continuously gather feedback from customers and stakeholders, and be prepared to adapt your strategy based on market responses and evolving circumstances.

Don’t forget to establish key performance indicators (KPIs) to measure the success of your diversification efforts, and be sure to track these metrics regularly. Periodically review your strategy’s performance against your objectives, and if necessary, adjust your tactics, budget, or goals to stay on course.

Start your revenue diversification planning today!

A well-crafted revenue diversification strategy is the compass that can guide your construction business towards sustainable growth and success. While the road ahead may seem daunting, the benefits of careful planning and execution are undeniable.

By embarking on this journey with a clear plan, you equip yourself with the tools needed to navigate the challenges and uncertainties that come with diversification. Without a roadmap, you risk falling into the trap of inaction, indecision, or pursuing the wrong path. Planning eliminates these obstacles, allowing you to focus your energy on productive actions that drive your business forward.

In the end, the upfront commitment to planning and executing a revenue diversification strategy is an investment in the future of your construction business. It’s the roadmap that leads to growth, adaptability, and long-term prosperity. So, take that first step, plan diligently, and watch as your business thrives in an ever-changing landscape.