5 Ways Contractors Can Cut Costs.
As a contractor, you are always looking for ways to increase your earnings. After all, that is why you went into business for yourself in the first place. You want to build your business and improve your bottom line and are open to ideas on how to get that done.
Growing your business is one way to increase the earnings generated by your contracting business. You can attempt this in a variety of ways. A targeted marketing campaign designed to appeal to customers who can benefit from any specialized services you can offer is one way to go. Performing quality work and growing steadily through word of mouth is another path toward increasing your customer base.
The flip side of increasing the amount of income that your business produces is found in saving money. Cutting the costs of your business leads directly to more money in your pocket. In some cases, it can make the difference between a successful business and one that has to close its doors.
Here are 5 ways that contractors can cut costs and increase their income.
1. Shop Around for Supplies and Materials
Don’t get locked into using suppliers just because you have done business with them before. Though a personal relationship with your suppliers and subcontractors is nice to have, there can be substantial savings found in comparison shopping for your materials. If you are looking to boost your income, this is one of the first places to look.
Small savings can add up over time. Based on the number of jobs you are involved in at any point, you can be spending a considerable amount of money on your materials. Searching for a better deal or making a large, wholesale purchase of an item you know you will use over the next year can be a big factor in the profitability of your business.
2. Change Finance Companies
One of the ways to grow your business is to offer contractor financing. The ability to provide your customer with a reasonable financing option can help you close deals and stand out from your competition. It can also allow your customers to purchase extra services from you and enable them to fully realize the vision that they are having you create in their home.
As the loan broker, you need to be associated with a finance company that understands the needs of a contractor and is willing to work with you in order to make it easy for your customers to obtain the financing they need.
Many finance companies will charge per-loan fees, which can add up over the course of a year. Hearth Financing is different and does not charge a per-loan fee. A low monthly fee gives you access to their attractive financing options which can be utilized by your customers. This can turn into sizable savings for your company if you provide financing to your customers.
3. Preventive Maintenance Schedule and Equipment Inventory
Your equipment is a valuable resource for your contracting company and you need to keep it in top-notch working order. According to forconstructionpros.com, preventive maintenance can extend the life of your equipment and reduce downtime.
Creating a schedule based on the manufacturer’s recommended intervals for oil changes, belt replacement, tire pressure checks, and lubrication are well worth the time and effort spent. You will find you are replacing less equipment and incurring fewer delays caused by malfunctioning machines; which adds up to more work getting done for less money.
A simple inventory and check-out system for all tools and equipment is another way to reduce your capital costs. You want to trust your employees, but you also need to hold them accountable for the equipment that they use. The cost of replacing “mislaid” tools can add up over time and is an expense that you should not encourage.
4. Invest in Technology
Though it may not sound right when you first hear it, investing in technology can save you money in the long run. According to notevault.com, though the contracting industry on a whole has been slow to adopt technology, mobile devices are finally being used more regularly and for various uses.
After an initial capital investment in mobile devices, the benefits can be enormous. They allow remote management of worksites and can be critical in minimizing errors and the duplication of work; realizing immediate gains to your bottom line.
There are many mobile apps that can be used to streamline your business by enabling you to collect data from the field, manage projects, and develop a customer relationship management (CRM) system. These technologies will more than pay for themselves over time. You owe it to yourself to see how technology can benefit your particular situation.
5. Smarter Scheduling
Scheduling can have a major impact on your bottom line. And doing a better job of it can substantially cut your costs. There are two types of scheduling to be considered for a typical contractor.
First is the scheduling of contracted work. Keeping good records and being able to estimate the time to complete a job is critical to using your resources wisely. You want to roll from one job to the next without long gaps. Incorrectly scheduling your jobs can lead to downtime for the whole crew, which is not good for anyone.
A related aspect of scheduling is the day to day personnel needs of jobs that are currently in progress. Keeping tabs on the state of a particular job can help you call off some workers whose skills are not yet needed. Why pay them to hang around and wait? Watching the weather can also help you make a decision to have your crew take the day off due to an impending storm. Personnel costs are a major part of your overhead; so anything you can do to minimize them will benefit you greatly.
These are just a few tips that contractors can use to cut costs. Taking advantage of them will move your bottom line in a positive direction without the addition of a single new customer.
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