Times were tough, so Remodeler John decided to lower prices below those of his competitors. He promoted a charge-out rate 20% below the industry average, explaining that his overheads were lower than those of larger companies.

 

The turning point came after advice from his mentor. "You're selling yourself short, John," said the mentor. "With your qualifications and experience, you should charge at least as much as other businesses – if not more. I understand your marketing strategy, but I don't think clients see it that way. They are more likely to interpret lower costs as lower value and quality. In your industry, confidence goes a long way, so you shouldn't be afraid of marketing yourself at a price that reflects your expertise and experience."

 

Then came the call from his accountant. "Aren't the sales figures great?" said John, getting his bit in first. "Yes," said the accountant, "impressive sales indeed. That's the good news. The bad news is that the business has actually lost money over the last quarter."

 

This was how John learned that trading for sales and trading for profit could be different. Chasing sales revenue is fine, provided your prices give you a sustainable profit. John hadn't checked his costs for some time, so the unwelcome news from the accountant came as a shock.

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Topics: Growth Coach, Bookkeeping For Remodel Contractors, Remodel Contractor Coach, Profit and Growth Strategies For Contractors, High Profit Repeat Construction Clients, Bookkeeping Services, Pricing Jobs, Trading for Profit, Trading for Sales

Understanding and managing your gross profit margin is crucial to ensuring the sustainability and profitability of your business as a construction contractor. This key financial metric not only reflects your company's financial health but also helps guide your pricing strategies, project management decisions, and overall strategic planning.

Profit is the money left in your business after all your expenses have been paid. An income statement (also referred to as a profit and loss report) reveals what profit your construction company made last month or last quarter. Your profits are detailed in two figures, namely:

• Gross profit is what's left from sales after deducting the costs of goods sold or services provided.
• Net profit is left from gross profit after operating expenses (your business overheads) are deducted.

Note that net profit isn't the final 'bottom line' profit until all taxes have been paid.

Gaining more significant profits depends on accomplishing all the little things better rather than making one huge change.

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Topics: Accountant, Ten Minutes A Day To Increased Construction Profit, Construction Profits, Profit And Loss Reports, Profit and Growth Strategies For Contractors, Systems And Processes, Boost Construction Profitability, Gross Profit Margin

Construction Company owners like you have probably experienced life-changing events in the past few years, as many of our clients did. Are you struggling to keep your construction business afloat? Do you find yourself facing the same issues over and over again? It's common for construction businesses to meet various challenges, but if you're not addressing them properly, they can quickly become pitfalls. 

 

1. Poor Cash Flow Management 

 

One of the biggest challenges for construction businesses is managing cash flow. You need cash to buy materials, pay workers, and keep your business running. However, you may be in a cash crunch if you don't correctly deal with your cash flow. To avoid this, you should create a cash flow forecast and regularly update it. This will help you anticipate cash flow issues and take steps to address them before they become a problem. 

 

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Topics: Profit and Growth Strategies For Contractors, Leadership Styles, Project Management, Construction Productivity

For a business to thrive and grow, it needs a strategic plan and the ability to find new customers and continually tap into promising markets. However, this can be easier said than done in a highly competitive trade industry.

 

With time, the quality of your work will speak for itself, which is the most valuable testimonial of all. While your good reputation preceding you is undoubtedly essential, there are a few other ways that you'll want to market your services to ensure that you have a steady stream of work.

 

The untapped potential in existing markets

 

Start by re-evaluating your existing customer base. Profiling them will help you more accurately define your target consumers. 

 

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Topics: Profit and Growth Strategies For Contractors, Construction Marketing, Contractor Marketing, handyman marketing, Inbound Marketing For Contractors

As a construction business owner, improving productivity is essential to your company's success. But you may often find yourself pulled in different directions by competing responsibilities. At some point, we all experience that.

 

Classifying tasks and tackling the most time-consuming ones can feel daunting. But why is it so hard for us to start – or even finish – seemingly insignificant tasks? Why do these tiny tasks become the bane of our existence, tempting us into procrastination limbo? 

 

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Topics: Profit and Growth Strategies For Contractors, Leadership Styles, Project Management, Construction Productivity

As a construction business owner, you have a lot on your plate. You need to manage your employees, oversee projects, ensure compliance with regulations, and keep your clients happy. Amidst all this, you may be tempted to handle your payroll to save costs and maintain control.

 

At face value, it seems like a great idea. If you're a small business owner with just a few employees, you probably think hiring a payroll specialist is an expense you can avoid.

 

You feel that you can handle it yourself. You intend to keep your staff paid right and on time. What could go wrong, right? Well, lots, actually. And before you know it, it's now a costly mistake, and you need to spend more money to make it right.

 

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Topics: Payroll Processing, Profit and Growth Strategies For Contractors, Payroll Options, Payroll For Construction Contractors

When you're ready to take your construction business to the next level, you might start thinking about "scaling." No, it's not just a fancy term for growth; it's about doing more with less. Scaling is about increasing your revenue without proportionately increasing your resources—fancy yet practical, right? It's like sending an email: your effort is the same whether you send it to 100 people or 100,000. 

 

But, as of now, we also probably feel like we are in the thick of a cost-of-living crisis. This challenges entrepreneurs and is a nerve-wracking time for many small construction business owners.

 

If you've had sleepless nights worrying about how you'll pay your suppliers or support your staff, you're not alone. You've likely already considered where to cut costs, but it seems impossible when suppliers raise prices. 

 

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Topics: Construction Strategy, Profit and Growth Strategies For Contractors, Success In Owning A Construction Business, MAP vs. PAM, Construction Business Inflation, Scaling Your Construction Business

Once your construction business is up and running, it’s essential not to rest on your laurels. Successful business owners always look for ways to grow and maximize their profits. We’ve compiled a guide and checklist to help you identify ways to get the most out of your contracting company.

 

1. Grow your sales

 

Contact your best clients.

 

One of the easiest ways to increase sales is to sell more to your existing clients. For example, you could try contacting every customer and offering a complementary product or service they might need now. You could also determine when clients need maintenance checks.

 

Create a client loyalty scheme.

 

You’re looking to create a customer care program using customer contact software and implementing a customer loyalty scheme.

 

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Topics: Growth Coach, Profit and Growth Strategies For Contractors, Construction Business Interest Rates, Grow Your Construction Business

Operating and growing your construction business requires more than functional and skilled employees, but it's an excellent start. You need a steady stream of quality, paying clients to keep your company afloat. Likewise, deciding on an online marketing plan can be overwhelming for company owners like you who are looking for affordable ways to nurture consistent, sustainable growth. With time in short supply, the key is to find one or two growth strategies that will get results at a minimal cost.

Building a construction business requires collaboration and partnership. The deployment of employees in a way that allows them to work together to problem-solve and act with a shared sense of urgency; and increasing brand awareness through an alliance with people in the industry are simple, cost-effective ideas for building your company within, in the office or job site, or externally through referral and online connections.

 

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Topics: Profit and Growth Strategies For Contractors, Construction Bookkeeping And Accounting, construction business partnership, Boost Construction Profitability, Construction Collaboration

Many surveys and reports show that nearly half of all new construction companies close their doors within the first five years of opening them. When we speak with contractors who failed, most say it was due to a lack of cash flow. It was pretty obvious, yet when questioned, all of them said they were "Blind-Sided" and were not aware they were running out of cash until it was too late.

 

There is a point when a contracting company starts to fail, and nothing short of a massive cash infusion can stop it, and a domino effect begins, which is when a series of similar or related events occur as a direct and inevitable result of one initial event.

 

Planning is essential to give your business the best chances for success. Planning means anticipating challenges and developing ways to successfully address them, so they don't upset your startup. 

 

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Topics: New Contractors, Start Construction Company, Profit and Growth Strategies For Contractors, New Business Startup, New Business, Contractor Guidance, Construction Business Goals