Another genius business idea: The construction broker

February 19, 2014 by Joshua
in Entrepreneurship

Here’s another post in my Genius Business Idea series one day after the first. This one came during the same homework assignment as yesterday’s, I hope indicating great ideas can come quickly. Like many ideas, this one also came from personal experience. For all I know, such a profession already exists, but I don’t know about it so I’m writing it up anyway.

The unmet need

If you’ve had your home renovated, you know overruns in time and budget happen a lot. Home renovations often involve experienced contractors and an inexperienced homeowner so homeowners don’t know if the contractor is doing a good job and don’t understand sources of overruns. Contractors often can’t explain reasons for overruns and aren’t good at managing clients. Since no one involved can speak the languages of both parties, communication suffers.

This situation doesn’t work well for anyone. Some contractors use their better knowledge to milk money from the homeowner. Such short-term gains probably hold them back from future referrals, perhaps hurting them in the long run. In any case, difficult relationships extend projects and make life worse for everyone involved.

The service

The idea is to apply what works in selling apartments, where brokers facilitate transactions. How about an “Home renovations broker”? The idea could work in commercial work too, but I’ll refer to the client as a homeowner for simplicity.

The renovations broker’s role is to manage process, representing the homeowner. This person would be skilled in renovations so he or she can speak language of contractor and skilled in client management so he or she can speak language of homeowner. This person would visit the construction site regularly, updating the homeowner on the one side and helping the contractor on the other, solving problems representing the homeowner’s interests.

While you might at first think the contractor wouldn’t want the extra person meddling, this person would relieve contractor of client management, which they often aren’t skilled at. I expect they’d prefer to work with a skilled, knowledgeable person who speaks their language than an unskilled, ignorant person who is liable to speak with more emotion than reason.

The most important result is that it makes the project finish faster. Since contractors generally get paid on a project basis, finishing faster means more jobs, which means more money. The homeowner obviously likes getting their home back sooner too. My stepfather, who has plenty of construction experience, did the role for my sister, who has little, when she had her home renovated and everyone involved said it improved their experience and got the job done faster.

At the same time, this person could reassure the client (the homeowner) on the contractor’s work quality and effort.

This person wouldn’t provide much physical labor, though could help if necessary on small parts of the project. Mostly this person needs experience having done construction work themselves.

This person’s web page would have ratings and past customers reviews for transparency.

Want to do it?

If you like the idea, feel free to run with it. You wouldn’t need that much capital to start it. Mostly finding people with contracting experience willing to take on the role and marketing, I’d think, then it’s mostly salaries. You’d probably have to train them in client management skills, maybe in negotiation.

I haven’t searched to see if people are doing it already.

About entrepreneurship

I want to reinforce that the main point of this series is to show how ideas are easy to create. I don’t claim to have much experience in this field, so people with experience could improve it. I hope they do, and run with it. If you do, please let me know because I’d love to find my ideas made the world better for someone.

Learn to make Meaningful Connections

with a simple, effective exercise from my book, Leadership Step by Step.

Including

  • Step by step instructions
  • Video examples of me and Marshall Goldsmith
  • An excerpt from my book

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12 responses on “Another genius business idea: The construction broker

  1. It’s funny I came across your above article…I’m actually in the process of creating something similar. It’s a long difficult journey to create everything the way I have it planned, but it’s sort of like your idea but blown up a bit.

  2. Joshua, I actually have my company up and running. TheconstructionBroker.com. Getting some good prospect to date. Been in the industry for over 30 years, time to re invent myself.

  3. have you had anything further on this? Would be interested to hear as i thought of this idea also independently.

  4. Great Site. Having worked as a Project Manager for a Class A contractor and saw how subs got bullied and Home Owners ripped off. Extensive knowledge of Brokering and contracts would be needed aside from the contract knowledge IMO. I have the brokering skills so I’m going to give it a whirl in the Hampton Roads area. Will keep you posted!

    • Thank you!

      Good luck if you take on the practice. I’d love to hear you succeed and help home owners and contractors alike. I’d love to hear that you help start an industry that put the problems I faced into the past.

  5. Thanks Josh. I’m already in discussions with a few contractors. I’m trying to decide how to schedule my fees. Do you think %10 is fair, or to high/low. On a 30k bathroom remodel job that would leave me 3k for finding the job and offering project management services. I get paid on the draws by the contractor.

    • All right! … I like seeing someone taking action instead of just planning forever.

      Pricing is always a challenge for a new product or service. You have to make sure you’ll cover your costs and it doesn’t take more of your time than it’s worth, but you don’t want to lose too many customers. My strategy is generally to start low, telling early customers that they’re guinea pigs to manage expectations, and say part of the reason I’m giving them a discount is that if they are satisfied, to motivate them to leave stellar testimonials, ideally by video.

      Another strategy is to segment the market by offering tiered service. Some people want white-glove turnkey service and are willing to pay a premium for it. Others want the bare minimum and a discount. Can you offer perks or tiers that allow you to charge more for people willing to pay for it or ways to discount people who can’t? Then you can let them choose how much they’ll pay.

      Then, with experience, you can raise prices as you learn your market more and your skills improve.

  6. Thank you Joshua and you all for the comments and ideas, I am about to embark in this new business model, I have 25 years of selling and marketing experiemcr in different industries, and have done construccion for 5 years now. I was approach by a few subcontractors asking for help to get bigger projects, now I have a better idea how to start, charge and services to offer.

    • You’re welcome and thank you for updating us.

      Congratulations on diving in and good luck! Please keep us apprised. I hope to hear you have satisfied customer on both sides and are hiring more people. I wish I could have hired someone in this position when I renovated.

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