These days construction companies are reporting a boom in revenue! People are starting to get on the property ladder once more. And that’s despite the issues surrounding last decade’s global economic crisis. Although there are plenty of homes for sale, many buyers want to live in brand new houses.
And why wouldn’t they? “New builds” are energy-efficient, well-built and attractive. The plots of new houses are also in desirable areas. As you can imagine, that’s good news for people in the construction industry.
But, some firms are struggling to make a profit despite that fact. If that scenario paints a familiar picture, the good news is you can do something about it! Check out the following tips to illustrate what I mean:
Overestimate for profit
It’s a term that causes some controversy between industry officials and house buyers. However, one classic mistake building firms make is to underestimate how much it will cost to build a new property!
It makes sense to offer a higher price that will take into account any fluctuations in materials and labor costs. There isn’t anything wrong with overestimating. In fact, it’s better to do that than to give your clients an unwelcome surprise when the final bill gets drawn up!
For example, when you order in the bricks to start building a house, you always order more than you need so that you don’t run out. The same goes with ballast and cement.
Negotiate on materials prices
The next thing you need to do is barter on the cost of your bulk purchases. To use bricks as another example, you should pay less than the list price – especially if you are buying in quantities of a few thousand.
Suppliers will often add a big markup to their prices, and so there is always leverage for negotiation. After all; they’d rather sell you the bricks at a discount than have them sitting in their yard for a few months!
Keep your plant machinery maintained
Fixing problems on heavy machinery can sometimes put small construction firms out of business! That’s why it’s crucial to take the time to have those items serviced as per the manufacturer’s schedules.
You should also only use high-quality parts. For instance, if you need to have some bearings replaced, only use ones from manufacturers like CCTY Bearing. Don’t “cheap out” on parts to save on cost. It’ll only come back to bite you later!
Another top tip is to take the time to clean your machines before you close your building site for the day. Dirt and dust can clog the air filters in engines. And if body panels are damaged by flying debris, exposure to rain can accelerate the corrosion process.
Keep your staff costs low
One of the issues many businesses have is the cost to hire employees. There are all kinds of hidden costs like taxes and insurance to account for and they can sometimes be crippling. One way to lower your staff overheads is to only hire self-employed workers.
That way, the responsibility for accounting for such costs lies with them rather than you. Now that you know how to boost the profit of your construction company, it’s time to get busy. Good luck!