According to the Bureau of Labor Statistics, the construction sector employs around 235,000 managers and 827,000 laborers annually. Despite this sector’s size, many construction companies struggle to reliably make a profit. If you work in this industry, check out these ways to boost your construction profits.
Keep Track of Your Costs
The costs for each construction project vary widely, so keeping track of your spending is key. Write down every bill, from your construction insurance premiums to your employees’ overtime pay. Watch out for extra costs when customers request expensive materials such as specialty wood or stones. Also, don’t forget to record costs for permits and licenses, especially if you work in different counties or states.
Cut Down on Wasted Time
Ramping up productivity is one of the best ways to improve your bottom line. For a few days, keep track of how many hours it takes you to install each foot of framing or remove each cubic yard of dirt. Then, look at your data and determine where you’re losing time to poor scheduling, improper training, or equipment malfunctioning.
Think About Profit During Contract Negotiations
If you don’t think about making a profit when you submit a bid for a new project, you will probably lose money or break even on the job. The most profitable area of construction is commercial construction, but even these bids can cost you if you lower your offers too much. Ask your potential clients lots of questions about what materials they want you to use and how quickly they want the building completed, and look at their plans before making your offer. That way, you have time to prepare a bid that accounts for your construction costs and adds to your cash flow.
Maximize Your Workforce
As your construction insurance provider can tell you, having too many workers is a great way to lose money. If you have extra employees, you’re paying for unnecessary workers’ compensation coverage, wages, and overtime hours. Think about how many employees you have versus the amount of work that needs to get done. If you have too many, either bid on more projects or let some of them go.
Think About the Future
Successful construction workers always have an eye on what comes next. Make a five-year plan that details how much profit you want to earn each year and what contracts you want to land. Keep your goals realistic so that you don’t get discouraged during the off-season.
Talk to Your Team
Analyzing your profits is key to determining whether you’re successfully increasing profitability. As you assess your progress, talk to your investors, construction insurance company, and employees about your findings. They may have innovative ideas for reducing wasted time and money.
About Haughn & Associates
Founded by Michael Haughn in 1986, Haughn & Associates is a full-service, family-owned, independent insurance agency based out of Dublin, Ohio. H&A strives to provide the best possible price and unique insurance solutions across a myriad of industries, including construction, IT, Habitation & Commercial Property, Agriculture, and Engineering. Devoted to providing the best of business insurance, life and disability insurance, personal insurance, employee benefits, and bonds, H&A is proof that success lies in long-standing client relations and satisfaction. To learn more about how H&A can be of service to you, contact us at (877) 802-2278.
