According to some studies, contractors and home improvement businesses make anywhere between 1.4% and 2.4% gross profit from a project. That’s pre-tax. This means you have to manage your profits closely for your company, employees, and family. Keep these four tips in mind when planning how to protect your profits.
Takeaways
- What cost-effective skills you need to fine tune
- The benefit of high quality products
- Client satisfaction tips
Finding and ordering materials
Compare prices often. You don’t know how much money you’re leaving on the table by not shopping around different retailers or finding a different distributor that can offer you more materials at a lower price.
Another important thing to remember is material shipping times. Having a reliable system or distributor in place that guarantees prompt and on-time delivery of critical building materials is important. You don’t want to lose money and days of work because your materials didn’t arrive on time.
Improve your project planning
Proper project planning can save you money. Accurate measurements, materials pricing, and labor requirements will help you understand if you have any room for adjustments with your project budget. Make sure to build a production timeline that will allow you to track real progress and hire the right crew. Also, create a plan if there are problems during the project like the need for change orders. Some companies include change order clauses in customer’s contracts.
Also, keep in mind any permits you may need for your project you may have not considered. Even if you’ve done a job in one town, the next one may require a permit for your job. Save money and time by getting your permits in order before starting a job.
Buy quality materials and tools
Like we mentioned earlier, you may have a preference when it comes to what brands you prefer. Great tools and materials can determine if your job is profitable or not. Stay up to date on the latest tools and materials through your network and online research, and don’t be afraid to splash the cash on higher quality whenever you need to replace or purchase a new tool. Also, renting tools for special jobs might help you save money in equipment purchasing and storage costs.
You know your business best, but keep in mind that a slightly more expensive purchase now may save you money in broken tools, lost work hours, and troubleshooting. Also, protect your equipment investments by subscribing to tool inventory technology. Tracking where your tools are being used and who is using them can help you prevent loss.
Consistent client check-ins
Keeping your clients engaged throughout the building process can mean the difference between quick and easy payment and costly project changes near the end of the project cycle. Keep regular meetings with your clients to give them progress reports. If it’s a short project, updates in the morning and evening would be helpful. For long-term projects, weekly meetings will keep your clients excited about their project and improve the chances they will be happy with the job when completed. That way, collecting payment is a cinch.
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At the end of the day, time is money. The less time you spend thinking about your next steps, finding the right tool, or waiting for money is more time for the important things like securing your next project.
