Matt Lockett Matt Lockett

Market share is not a measure of success; profitability is.

Chasing market share without a focus on profitability is like running on a treadmill. You may be moving, but you're not getting anywhere.

Chasing market share without a focus on profitability is like running on a treadmill. You may be moving, but you're not getting anywhere.

Sometimes building contractors prioritise market share over profitability. That may be a good short term strategy, but it's unsustainable and there's a strict time limit on that whether their leadership will admit it or not.

In order to succeed, building contractors must balance these two key objectives: growing market share and achieving profitability. Prioritising market share over profitability will have long-term consequences.

Gaining market share, or increasing the percentage of the overall market that a business serves, is often seen as a sign of success and growth. A contractor that is growing its market share is likely to be seen as more attractive to potential clients and investors. However, if a contractor prioritises market share over profitability, it can lead to decreased financial stability.

For example, a contractor that is focused on growing market share may be more likely to accept low-margin projects, bid aggressively on contracts, or offer discounts to win business. These actions can negatively impact profitability and lead to reduced cash flow, making it more difficult for the contractor to pay its bills, invest in resources, or hire and retain top talent.

Moreover, market share growth is not always sustainable, and there is a strict time limit on its effectiveness. Companies that prioritise market share over profitability may find that their growth slows down or stops entirely as they run out of cash or are unable to invest in the resources necessary to continue expanding. In the long run, these companies will find themselves struggling to compete in the marketplace, while their more profitable competitors continue to thrive.

So building contractors operating in the construction industry must find a balance between growing market share and achieving profitability. While prioritising market share can help contractors grow in the short term, it is not a sustainable strategy in the long run. Contractors should prioritise striving for profitability in their operations, which will allow them to build a strong foundation for long-term success.

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