Profit can be increased in two ways:
by increasing revenue.
or by decreasing costs.
Contractors often have to work longer and harder in order to earn more money. Even though you’re already putting in a lot of time, the idea of working even more is probably not appealing.
That means that you can save money. There is no talk of slashing corners or paying your employees less. At the end of the day, it’s all about running a better business that gives you more money in your wallet.
Here are five tips to help you save money and increase the profitability of your construction project.
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Make yourself more competitive when it comes to job bidding.
Offers are important, but they take time to prepare for. Failure to do so will result in financial loss. It’s possible to lose out on work if you bid too high. If it’s too low, you’ll end up losing money at work.
Reduce the amount of time you spend on bids to begin saving money right away. Bidding can be more profitable if you only participate in projects with a high likelihood of success. Leave projects you have no interest in or expertise in.
You should qualify for every project first, even if you believe you have a good chance of winning the bid. Before bidding on a remodeling project, you should meet with your clients. Clients should be educated about what you have to offer that your competitors don’t. Communicate why they should choose you, even if your bid is higher than the competition’s lowest.
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Think about delivering your proposal in person. You’ll be able to answer any questions about the proposal and establish a personal connection with the potential client right away.
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What if you do this?
Select only those projects that you are confident will pay off.
It’s time to see how accurate your cost estimates were. Improve profits by making adjustments to future bids.
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Make the most of your team’s potential.
Managing an effective team does not necessitate constant yelling and scolding. Treat your employees as if they are an integral part of your business.
According to research, employee well-being is important. According to the New York Times, “when people don’t show up consistently, they produce less, or their work quality suffers when they don’t care about their jobs or their employers.”
A happy workforce means a more successful business. Some low-cost incentives to boost employee morale include:
Consider buying a meal for your team from time to time.
Paid time off for your employees who need to care for children, visit the doctor, or run errands so they can focus on their jobs.
During the holidays, you can reward your employees by throwing a company party.
Excluding overtime is a cost-saving strategy that can also boost output. Overtime increases your labor costs, and employees are less productive when they work extra hours. According to one study, 50- and 60-hour work weeks can reduce productivity by up to 15%. This means that if your crew works overtime, you could be wasting 15% of your money.
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Adhere to industry best practices.
Maintain a positive working environment. On the job, assist them in resolving their issues. If you’re pleased with their performance, reward them with additional perks.
Limit the number of hours worked past the normal working day. Plan your work meticulously and leave yourself plenty of time to complete it.
Think about the total cost of the tools and equipment you need, not just the purchase price.
Increasing the amount of money spent on equipment and components may seem counterintuitive. Why spend more money if you can get the same results with a cheaper option? The price of the tool isn’t the most important consideration.
As a rule of thumb, lower-quality tools and parts require replacement more frequently. According to Concrete Network, upgrading from a standard diamond blade to one with a higher concentration of diamonds and a longer blade life can increase the price by 20% or more. However, even though the initial cost is lower, the long-term cost per cut is less expensive.
Consider the long-term cost of your tools, including the cost of operating them, and carefully evaluate their impact on your business. It’s cheaper to cut dry rather than wet and not use slurry, whether you’re cutting masonry or tile.
What if you do this?
Before making a purchase, calculate the total cost of ownership. In order to save cash, look for saws with a lower cost per cut. This spreadsheet can be used to figure out how much money you’ll save by buying a saw.
Make sure you take good care of your tools.
The cost of repairs and replacements can be reduced if proper maintenance is performed. Keeping tools in good working order also ensures that they are safe.
In order to get the most out of your tools,
Battery chargers should be cleaned with a brush, vacuum, or damp cloth.
Replace power cords with frayed jackets or exposed wires if you notice any nicks.
Put a drop of Loctite on the threads of any loose screws or bolts to keep them in place.
At the year’s end,
Look for hairline cracks in the motor housing and avoid using a tool that has such a crack.
Lubricate parts where metal rubs on metal.
Follow the instructions in each tool’s manual for specific maintenance procedures.
What if you do this?
Make a checklist like this one for each of your tools.
Every piece of equipment that needs to be serviced should have a maintenance log. The best way to keep track of this is to use a calendar or notebook.
Cut back on the amount of resources you use.
According to one estimate, approximately 12% of masonry materials are discarded during a typical construction project and end up in a landfill.
Waste generated in this manner is roughly 2.5–4 tons when building an average-sized home (about 3 to 5 pounds of waste per square foot). It costs you twice: once for the materials and once for the disposal of waste.
What if you do this?
Measure and cut back on waste to save money.
Your material needs must be accurately estimated.
Protect all materials from damage or theft by storing, stacking, and covering them.
Utilize programs for the recovery of construction and demolition debris to reduce disposal costs.