The new year is a natural time to decide what you want to achieve and how. Businesses tend to progress more consistently if the owner sets financial goals and makes a plan to achieve them. 

 

Your construction business (and personal) budget is one area where you should keep your resolutions from slipping. While it’s true that there’s also next year when it comes to your financial goals, putting it off has real consequences that equal less money and more work. So here are seven steps you should take in January to start your 2023 budget.

 

The end of the year is typically a reflective time. Something about that lull between holiday festivities and New Year's Eve sets the stage for introspection and review. While you're busy reflecting on the year ending and making plans for the new one about to begin, make sure you take some time to consider your finances. 

Preparing your End of Financial Year (EOFY) information often feels stressful—there are receipts to sort out and reports to review. You must ensure you have all the necessary information about your income and expenses. It can be overwhelming, and it can make the EOFY feel daunting.

The end of the financial year isn't just a time to collect receipts and find invoices. It's also a time to reflect on how your past year went, what went well and what didn't, and what you can change for next year.

 

The year is almost over. Fourth-quarter and year-end deadlines are approaching. Most construction business owners who reach out to us describe this as their "Year End Madness" to prepare their documents for the tax accountant. 

The end of the year tends to be chaotic for construction company owners, but it's an excellent time to get some extra housekeeping done for your business. If you're on QuickBooks, you can click the Help Menu; depending on the year and version you're using, you can access the Year-End Guide, which will show you how to wrap up your business year. It's not an easy process, but it's all worth it. 

Why? Because tax preparers will take what you give them - they don't have the time, and it's much work that you've paid for, but a good tax preparer will know how much you can save if you can track your money. Bottomline - pay your taxes right, but it doesn't have to be more than what you owe.

Enlightened contractors like you understand the value of developing your own unique Construction Contracting System, a collection of documented repeatable processes and operation manuals. The key is continuously refining your construction company's practices and procedures.

Your office ensures your contracting company has a steady flow of projects. Proper accounting and bookkeeping develop timely financial reports to show which jobs are profitable so you can pursue more. Thus, you can focus more on the following:

• Acquiring the right clients
• Doing the project as close to on time and on budget as possible
• Get job deposits and timely progress payments
• Follow-up with clients to monitor satisfaction and line up new projects
  
  

Cutting costs can be a quick and easy way to improve the profitability of your construction business. Introducing cost-control measures can bring immediate savings and ensure you remain profitable in the long term.

But cost-control measures must be carefully managed. Eliminating errant expenses is beneficial, but indiscriminate cost-cutting could lead to a drop in quality or poor morale if staff fear being made redundant or are not given the tools they need to do their job efficiently.

This risk is heavily reduced by identifying where you can safely trim costs, setting clear cost-reduction targets, and researching any cost-saving initiatives before making changes to your contracting business.

Depending on the nature of your construction business, you may have workers who are employees or contractors, or you may have both. Each has its merits, but it's important to review which are to meet your tax obligations.

With so much discussion about employees, payroll, and payroll taxes, you may feel like missing out by not hiring many employees. The reality is that as a small business owner, you do not have to hire employees.

To hire or not to hire employees is one of the few optional things where the business owner can choose, change their mind, and change direction as needed.

When you have an employee, you must withhold income tax and report on additional benefits. Contractors generally look after their tax obligations.

Is it time for your construction business to invest in some new equipment? And if so, is it a more brilliant business decision and cost-effective to rent or buy?

Black Friday, followed by Cyber Monday, is coming. The real question is what equipment is on your business shopping list. It is all a question of your budget, income, cash flow, profit & loss, and taxes.

Why you might need new equipment:

• The right equipment can enhance your processes, productivity, innovation capacity, and bottom line, but should you buy now or wait till a later date?
• A few reasons you might need to purchase new equipment now are because:
  - You have some big contracts coming up and need to increase production.
  - Your construction business is expanding at a fast rate.
  - You need to replace some aging equipment to maintain your business’s high standards and keep up with the competition.
  
  

Long-standing customers form the backbone of a robust and well-established business. Make it your mission to ensure that most of your current customers stay with your company for many years.

Understanding the High-Profit Client

Most of them have personality traits commonly known as drivers. Folks accustomed to getting things done quickly and efficiently do not mind paying professionals for servicing, repairing, remodeling, or building new construction projects related to their houses and commercial buildings.

Why it's vital to keep existing customers

Your current customers already have personal experiences dealing with your business and using its services. You won't need to spend much time, money, and energy convincing them to continue hiring you.