Construction is a cut-throat industry, and making your construction business more profitable can be a challenge. Making more money isn’t rocket science, by following our five tips you’ll be increasing your profits in no time!
Evaluate Your Competition and Charge Competitive Rates
Understanding your competition is key to making your construction business more profitable. You may have set up your business and though what you were charging is fair. There may be a disconnect between your knowledge of your industry and what the industry charges.
You should not feel bad for making more money, and increasing your rates to match an industry standard is not a crime. Don’t miss out on valuable lost profit because you think what you’re charging is too much.
Enhance Your Services To Help Making Your Construction Business More Profitable
Sure you do drywall installation really well, but do you offer drywall taping as well? Maybe you do plumbing installation but do you do retrofitting and maintenance? Look at your existing services and see how you can supplement them using skills you already have.
By adding additional services you can reach new customers who may not have heard of you before. This can help you with future work. For example, if someone hires you to do plumbing maintenance, the next time they are building their house or doing a renovation you may be top of the list to call.
Change Orders Are Opportunities
One of most common stereo types of the construction industry is that change orders are a key part of making a construction business more profitable. People aren’t wrong, but in order to make your business more profitable you don’t need to be a criminal on changes.
Changes are a natural part of any project and can seriously disrupt your business. It’s only fair that changes are priced differently than the competitive price you gave on the main project. To avoid conflict with owners, agree on rates and what you’re allowed to charge up front with an owner. That being said, consider adding items such as markup (fee), insurance, office and computer allowances, and of course project management and staff costs.
Reduce Your Project Costs By Shortening Your Schedules
If you self perform work you’ll know that the faster the project get’s completed, the faster you can move onto the next one. What that also means is that you use the money earned in a more efficient manner (you’ve spent less time on a project).
Essentially what the above means is you’re making more money for every hour you spent on a project. If you’re looking for ways to improve your schedule and increase productivity make sure to check out our article.
Create Trust and People Will Pay You More
By doing a good job on your project or task people will begin to trust you. In our business, repeat customers are a regular thing. Often times with repeat customers you don’t need to tender or submit a competitive bid. Most instances you can name your price which will allow you to get paid more.
For obvious reasons you don’t want to take advantage of others kindness, however this does help you to make a few extra dollars on a project. This is also a really great way to get more construction business!
What do you do that to help in making your construction business more profitable? Share it with the community below in the comments or on social media. If you’ve enjoyed this article make sure to download our free construction e-book for more great advice!