While job satisfaction will be high on your list of must-haves within your business, there is something else that will be of priority to you: Money!
The more money you have, the greater opportunity you will have to grow your business, and that will ensure a greater chance of long-term success within your industry. So, the last thing you want to hear is that your business might be losing money. But sadly, this might be the case, especially if you can relate to any of the following. At a time when you’re looking to improve the profitability of your business, it’s important to consider the money leaks we suggest here. By knowing why money is being wasted, you will be in a better position to halt any more losses.
Causes of money leaks in the construction industry:
Damaged equipment
As a construction owner, you will be reliant on the machinery and tools you use on your various site projects. They will improve the efficiency of your projects and will ensure quality work is being done. But if they are damaged in any way, you will lose money. This is because:
- You will need to replace or repair any faulty pieces of equipment
- You will take longer to finish a project and this will prevent you from taking on new clients
- Quality of work might suffer and this will affect both your reputation and your bottom line
Your equipment can become damaged because of incorrect handling. Damages can also occur if they are stored incorrectly or if they are subject to contamination if not given adequate storage. Another reason for damage is the quality of the equipment in question. As a general rule, the cheaper your equipment was to buy, the higher the likelihood of reduced quality.
To fix this common money leak, there are a number of things you can do.
Firstly, ensure your employees are fully trained in equipment usage. The tools and machinery you buy will then be handled properly, and there will be a reduced risk of damage. There will be less risk of your employees becoming injured too!
Secondly, make sure your equipment is stored correctly. There are some tips here on handling and storing construction materials so take a look for some good advice.
Finally, make sure your equipment is protected from the weather. Keep them under shelter when possible, even when working on construction projects, to prevent weather damage. Be sure to make any repairs to your storage sheds too, perhaps with the services of a roofing company akin to https://jrcousa.com/repair-service/, if there are problems overhead.
On-Site injuries
Health and safety is obviously of prime concern to construction owners, as the chances of an injury taking place are high. When somebody is injured on-site, money can be lost because of:
- Legal costs and fines
- The need to replace injured employees
- Reduced productivity because of employee absences
If you have the right insurance, many of your costs will be covered if an injury takes place. You might also be covered in a legal battle if it can be proved that it wasn’t your negligence that caused the injury to happen in the first place.
So, take the appropriate steps to avoid losses. Research the types of insurance needed for constriction businesses, including general liability insurance which can protect you against injury claims. Make sure you are following all health and safety procedures to protect your employees from harm. And when employing new workers, make sure they are all fully trained to take on the jobs they are being employed to do, as this will further reduce the risk of injuries taking place. By taking such steps, your employees will be at a reduced risk of harm and consequently so will your business finances.
Inaccurate quotes
When pricing up a job, your client will expect a reasonably accurate quote. If they are later stung with a bill that they weren’t expecting, your reputation will take a hit. You might also have a legal situation on your hands if you agreed on a fixed price at the beginning.
Therefore, it’s important to be as thorough with your initial quote as possible. This way, you are less likely to make a mistake, and there will be less need for the client to pay more than they expected. There will also be less need for you to bear the brunt of any extra expenses if you decide not to charge the client for the extra costs that you have incurred.
When coming up with a quote, factor in both labor and material cost and account for any potential problems that might happen after the project has started. Use this construction quote template if you think it will help you and take your time assessing the costs that will make up the final price you charge.
Of course, there is another reason why you might give an inaccurate quote, above and beyond the mistakes you might make when tallying up the costs involved. You might also give an inaccurate quote on purpose. Why? Well, you might overprice the job to make a profit, but by doing so, you might lose your client if they realize they are being cheated in some way. You might even underprice the job in a bid to stand out from your competitors, but by doing this, you will make a loss if your expenses are higher than the final bill. So, don’t be tempted by either route. Charge what is reasonable and use other tactics to beat your competitors, perhaps by doing more with your marketing, and by making your trade business greener.
Theft
According to the Great American Insurance Group, industry experts have estimated annual losses at roughly $400 million within the construction trade because of theft. Equipment and materials are sometimes stolen by members of the general public but employee theft is also a problem. Should you lose any of the essential items needed for your construction projects, you will lose money due to the drop in productivity and the need to replace any stolen items.
To prevent theft, there are a number of things you can do. These include:
- Hiring on-site security personnel
- Encouraging security awareness among your employees
- Securely storing away tools and other pieces of equipment
- Installing security cameras, nighttime lighting, and alarms on your premises
- Maintaining an inventory system so you know what equipment you have and where it is kept
- Installing security fences around your construction site
- Running criminal background checks on new employees
In the event that anything is stolen, you will reduce financial risk if your equipment is fully insured so compare insurance prices online. You might also have the chance to retrieve stolen items if they have identifiable marks on them or if they have a GPS tracking system installed.
Finally
We haven’t mentioned every type of money leak here but those we have highlighted are common in the construction industry. Thankfully, as we have also highlighted, there are ways to plug these money leaks. By taking the necessary steps, you will be able to prevent further losses and improve your chances of making a profit if any of what we have said has related to you.
So, take heed of all we have said here. The construction industry is very competitive so you already understand the risks to your finances. You need to work hard to win over new customers to ensure profits are made and you will also need to prevent any losses. Follow our suggestions and then continue your research online and around our site for more advice on protecting your construction business.
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