To increase profit ultimately you have to create greater revenue or make a reduction in your costs. Contractors often have to work harder and for longer in order to achieve higher revenues and lower overheads but is there a better, less stressful way? The answer is yes. Cutting costs is simple. Its not about making short cuts or cutting corners but about better business management.
Waste: A recent study claimed that 12% of materials used in building or masonry end up in the skip. In simple terms if you are building one house then you will be wasting an average 2 to 4 tons. This is double bad as you lose the cost of the materials and then you have to stump up the fee to have them removed and disposed of. To prevent this from happening it is advisable to accurately calculate what you will need for a project. Planning is essential as no two jobs are the same. If you do overcook it then you can take advantage of waste recovery programs such as EPA programs that aim to recycle as much building materials as possible.
Job bidding: When it comes to choosing what jobs you do sometimes less is more. It is better to charge a premium and take longer and provide a better service. Bidding itself takes time so don’t bid on projects that are long shots. If you think you have a high job of winning then focus your bids on them. Also avoid doing jobs that you have less experience in as you could incorrectly calculate the cost and end up making a terrible profit. It is also a good to keep a record of past projects so that you can see if you have been under or over past projections. This allows you to factor in your constant underestimations into future projects.
Your Crew: Team work is how dreams work. It really is simple, if they like or respect you then they will work harder. If you provide achievable incentives that are rewarding to your team then you can increase work ethic and save time and money. A few easy ways of doing this are; buying lunch for your employees, company parties, and flexibility if someone needs to get off a bit earlier. Asking people to make up time often reduces productiveness. An hour or two over a project is nothing so it is best to let it go and allow your worker to be happy.
Tools: Tools are expensive. A lot of contractors go for named products which are a premium and unnecessary as cheaper tools often do the same job for a lot cheaper. The tools might need to be replaced more often but if an expensive tool is lost or damaged then it is definitely more cost efficient to go with the cheaper one.
There are plenty of ways to make your construction business more profitable without having to work longer and harder. In short: using the right tools, spending less time on job bidding, and encouraging teamwork.