Building trade companies such as plumbing and HVAC often try and focus on two things, building things and making a profit. If you feel as though the profit you are making isn’t as good as it could be, then this is the guide for you.
Improving Productivity
Productivity is quite possibly the measurement of effort. If you are able to maximize the productivity of your workforce then you may find that you end up working efficiently to try and control costs. If you want to boost your productivity, then you have to make sure that you plan carefully and that you also schedule your work. General contractors have to work together to make sure that things are completed in a logical sequence. If your field workers are not working with one another very well or if certain tasks are getting done two or three times, then this certainly shows you that something needs to change because all of this will be impacting your overall productivity.
Know your Costs
If you want to be profitable, or if you want to boost profitability then you have to understand the costs that are associated with every project that you complete. This includes your job costs and your overhead costs too. If you don’t have a sense about the projects that you intend to complete, then there’s truly no way of you knowing how much profit you are making on each job. Job costs include everything you need to complete a project, whether it’s the cost of buying equipment from sites like Thompson Rock or whether it’s bonding premiums, permits, fuel and materials. These costs can vary drastically across different projects, so you have to make sure that you stay up to date on your job costs as this will impact your profitability overall.
Estimate Profit
When you bid on any project, you expect to win. When you win a bid, you will then expect to make a profit. If you want this to happen, then you have to make sure that your estimates are accurate. You also need to make sure that you put a lot of thought into your process. If your estimates are too low, then no amount of management or productivity gain will make you profitable. This is why it’s so important that you have a very accurate idea of how much your job is going to cost and how much overheads you are going to have. If you can make sure that this is the case, then you can add the right markup so that you can hit your margin goals. A good bid is based on the concrete data you should be collecting and not guesswork. You have to consider the risk of each project as well.
This will give you the chance to set your own contingency plan so that you can absorb any extra costs without having to worry about risk becoming reality. If you can do this well, then you will soon see that your total profitability rises more than before.
Join the conversation: