You may be running your business correctly and making a profit, but with just a little fine tuning of your “old ways”, you could be making more profit with less effort.
There are two ways to increase profit: increase revenue or reduce costs. For contractors, making more money often means working harder and longer. But if you’re already putting in long hours, working more probably sounds like a stressful option. For an alternative, take a look at these 4 tips that will help you save money and grow your construction business the smart way:
Bidding on jobs takes time, but it’s very important. You need to get it right or you can get burned. Give a quote too high and you might not get the work, too low and you lose money on the job. Pricing your jobs to be competitive will price you right out of this business. Successful builders and tradesmen understand this and price their jobs accordingly.The key to a successful tender process is ensuring that your builders have the right information to base the quote on. The clients are always very cautious of quotes that appear too good to be true, because they usually are. If a single quote comes in well below the others, it is likely either to have gaps or the contractor may be planning to make up the difference once they have secured the contract. Don’t ever rely on such tactics to win a project, because it will come back to you. You need to make your quotes as accurate as possible and you will win the job.
Why spend more money on expensive tools, if the cheaper ones can do the same job? Well, it’s actually not the price of the tool that matters most. Cheaper tools and parts often need to be replaced more often. Always consider the long-term cost of your tools, including how much it costs to operate them, and carefully evaluate their impact on your business. It’s best to not necessarily go with the most expensive tool sets that you can find, because some of the prices are just ridiculous, especially when you can get more or less the same quality for a cheaper price. Pay extra attention to what a tool can do for your business and how much the overall cost of operation would be. In the end, you buy the tool to generate value and make money. Don’t be a cheapskate, but definitely do the math.
The main rule you need to follow is hire and properly train employees before you need them, not after the fact. This requires proper planning, which takes time. In the end, however, it is completely worth the effort. Your workers are an important part of your business, so treat them that way. Keep them happy and your business will benefit too. Avoiding overtime can also save you money and increase productivity. Overtime means you’re paying more for labor, and workers are typically less productive when they work overtime. You also need to pay attention to the size of your workforce: If you have more employees than your volume of work requires, you will lose money, plain and simple. It is difficult to let employees go, but if you don’t have a positive cash flow, eventually the whole business will go down in flames. So, be proactive with hiring and fire quickly and your business will flourish.
Increasingly, people are looking online to find tradesmen, checking website reviews, online platforms, and telling all their friends on social media about a job well (or badly) done. You have a few options here: You can either build your own website $ social profiles and start investing in maintaining and popularizing them or you can sign up with an online platform that lets you advertise your business for free or for a fee. There are various online listing sites that do well in the search rankings, so listing your business with them could be an easier way to increase your visibility online. But be careful, because many of these online platforms are really costly (you can read more about it here: The true cost of online platforms in the home improvement industry ) and can rather quickly negatively affect your bottom line.
So, what’s the moral of the story? Work hard and rewards will come. And this is actually true for all types of business, not only construction. Make sure to run your company like a business and not a hobby and learn from your mistakes. Be on top of your costs, price your work adequately, invest in your employees, and advertise smartly. Results will follow.
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