Many contractors start their businesses with a goal of making more money. What ends up happening to many is that they give themselves a job inside their own company instead of managing it to greater profits. Most of the time, it happens unintentionally and one day you wake up and realize that all you do is work your rear-end off. You could do that with a job and lose a lot of heartaches. The reality is there are only two ways to increase your profits:
- Increase your revenues
- Decrease your expenses
We are going to show you a few ways to increase your revenues and become more efficient so that your profits can grow to new levels.
Bidding on Jobs
One of the core things you can do is get better at bidding on jobs. While it takes time, it’s important that you take the time to get it right. One of the best ways to make bidding more profitable is only bid on projects where you have a high probability of winning. Skip projects you aren’t interested in or fall outside your expertise. No matter how strong you think the odds are you will be the winning bidder, take the time to meet with your prospective client. Ask them very specific questions and expect them to give you very specific answers. The more details you have, the more likely it will be you don’t run into surprises when you start the project. Finally, consider presenting your bid in person. You can explain the bid and answer questions right on the spot, plus make a personal connection with your potential client.
Create High Morale on Your Team
Efficient teams are profitable teams! However, that doesn’t mean you have to crack the whip. The fact is that if you have done a good job qualifying your team up front, you will have a hard-working team on your projects. When people do well, reward them for their efforts. It could be as simple as public praise or it could be a bonus. You can also do little things like bring them lunch, take them out for a special evening, and when they need your ear for something personal be available to them.
Tools are More Than Just an Expense
When it comes to tools, don’t just evaluate the cost of the tools to your immediate bottom line. It’s not just the price of the tool that matters. Cheaper tools need to be replaced more often. The key is to think about the cost of the tool long-term. How long will it last? What is the cost over the long-term if you have to replace cheaper parts?
Waste Less Materials
This is where being a penny pincher can become really helpful to your profit margins. If you lose 10% or more of your materials on a job that goes to waste, you are losing money on buying more materials. Always measure and make cuts to reduce waste and accurately calculate your materials requirements. A little bit here and there can add up to a significant amount of money! There you have it… four ways you can begin to immediately put money back into the bottom line and increase your profits. Remember, it’s wiser to work smarter, not harder. The more you pay attention to the little things the higher your profits will go.
