The construction industry is cutthroat at all levels. There’s competition around every corner, and you never truly know when demand will tank. But fortunately, there are ways that you can keep your business financially afloat so that you can weather the worst of times.
Pay a Competitive Wage
A competitive wage and benefits package is a must if you want to avoid the cost of turnover and lost productivity. The Fairy God Boss blog explains that competitive pay attracts the best employees and helps you retain top talent. Your benefits package should include insurance and other perks that let your employees know that you have their backs.
Utilize Industry Estimating Software
As you already know, pricing presents a significant challenge within the construction industry as supply chain disruptions continue to affect the cost of raw materials, including lumber, which AZ Big Media explains has finally started to drop since its peak in 2021. This creates additional challenges if you’re still estimating by hand. Consider using construction estimating software which can help you determine labor and material costs and send estimates from anywhere. The right software will also allow you to customize your invoices and estimates with your logo and other branding materials. There are plenty of apps that allow you to estimate accurately; you can also use a spreadsheet, but you have to make sure you continually update prices on everything, including transportation costs and labor.
Quit Invoicing by Hand
If you’re writing your estimates out by hand, you’re likely also invoicing manually. This is another pitfall to avoid, especially when there are plenty of free accounting software options available on the market. By utilizing an accounting program, you can avoid errors that can take away from your company’s bottom line. Even better, accounting software can streamline laborious tasks, and even no-cost options allow you to keep track of your tax deductions and expenditures. Check out this ZenBusiness Money vs Quickbooks guide to learn about two of the most popular software options and decide which one will work best for you.
Prioritize Safety Training
Fatalities and serious injuries within the construction industry are alarmingly common and often unnecessary. Not only do these senseless deaths cause emotional harm to the families and coworkers of those lost, but they can also cost your business hundreds of thousands of dollars or more. To reduce the chances of a work-related tragedy, make sure your employees are well trained and that this training is documented, mandatory, and readily available.
Reduce Debt
While some debt is necessary, beneficial, and to be expected, financial consultant Forbes Burton explains that having a lower debt-to-income ratio gives you some financial leverage. Further, reducing your debt means you’ll pay less in interest fees and your business will be in a better position to pounce on new opportunities. To reduce your debt load, start paying off credit cards and loans with the lowest balance. Once these are settled, move up to the next highest and so on. Don’t forget to meet at least the minimum monthly payment on all other debts.
Have A Niche
Finally, define your construction niche. While “general contractor” is a respectable profession, if you become known for a specific type of construction, such as tiny homes, which Upnest says have become increasingly popular since the 2008 housing crisis, or vacation properties, you have a stronger foothold on the market. This is crucial in case of another recession or global crisis that might affect your bottom line.
There is no way to know when a financial downturn is around the corner, but you can keep yourself afloat even in the worst of times by following the tips above. From using accurate invoicing and estimating software to ensuring that you are better in your niche than the competition, every step you take now will build a stronger foundation for tomorrow.
Access great resources and build new relationships that will help your business grow in our community by joining the St. Mary’s County Chamber of Commerce.
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