As you begin the new year, you may be setting some resolutions to make improvements to your personal or professional life. As a contractor, you can make a resolution for your construction or remodeling business, too: Become more profitable.
The key to achieving your goals is more than simply setting them, though. You need actionable points you can work on and defined, measurable benchmarks to reach.
Here are some tips for making your contracting business more profitable in 2018:
The most important part of becoming profitable is having a plan. It'd be a lucky break to just wing your goals and come out ahead; the most successful companies typically have a detailed plan, complete with mathematical formulas and measurable objectives.
Construction Business Owner writer George Hedley noted that, out of 2,500 construction business owners and managers that he surveyed, only 40 percent had defined net profit goals. These construction companies are likely the ones who'll know whether they're on track to meet their target and when they reach those goals.
To figure out what you need to be profitable, you'll need to sit down and calculate a few figures:
Using these numbers, you can calculate how much you'll need to earn each month and quarter to be as profitable as you hope. You can also use these figures to create a sort of road map so you can track how you're doing throughout the year.
Chances are, you're not the only construction company in your community. You have competitors, and they offer similar if not the same type of work as your company. If this is the case, it's easy to wind up competing on price rather than quality or type of work. Perhaps you've lowered your prices across the board, or maybe you're quick to throw in a few add-ons for free. In either case, you're lessening your profits with every job you take, and it's challenging to make it up.
To avoid this, choose a few areas where you can make your services stand out, For Construction Pros suggested. Consider becoming the company that specializes in historic home restoration, commercial building construction or the go-to company for building smaller homes. Then, tailor your advertising and marketing campaigns to reflect this; be sure to update assets like your business cards, websites and social media portfolio to remind all your customers what it is you do best.
When you stop competing on price and begin to charge accurately for each job, you should find your company will start to become more profitable. However, you may feel worried about your pricing structure or that your customers will seek out lower cost, lower quality options. Offering a financing program can be a good compromise between charging what a job is worth while still making it affordable for your clients. The right financing program can offer advantages like loans anywhere from $1,000 to $100,000 and APRs as low as 5.99 percent. You may also be able to offer discounted APRs, same as cash deals and deferred payments, all of which can make your high-quality work more affordable and convenient for your customers. To learn about how you can begin offering these programs, reach out to Aqua Finance.