Since it’s typical for contractors to be churning along at or near capacity, the question of how to generate more profit, can indeed be perplexing. Finance experts remind us however that it is possible and has been done, even without big investments. Perhaps it’s time for smarter not harder? Here are insights to consider.
Growth=3×3
If you are already operating at 80-90% of capacity, what’s the best way to get the growth going? At For Construction Pros, Garry Bartecki points out that there are basically 3 ways to make more money, and when used in combination, they are particularly effective:
● Cut costs.
● Produce more with what you have.
● Increase your backlog by bringing in new business.
While considering these tactics, Bartecki also challenges contractors to figure out how to compete in a new environment, as the industry is finally taking technology very seriously: “Ask yourself if you will make it in this new environment. And ask yourself if you can make strides to move up the technology ladder.” Finding answers to these questions requires looking outside our own bubbles and toward that end, Bartecki’s suggestions include:
● Collect industry metrics to compare your results to.
● Review the systems available that will take you up a notch.
● Find an outsider who can help find out what others are doing.
● Meet with your business partners to see what plans they have and how you can provide data as they need it.
● Get your employees involved.
● Pick a metric or two to follow and analyze. Then pick another.
● Buy a share of stock from every public company that provides services, materials and products for your type of business. When things change, they will explain why and provide valuable info for you to use.
● Find three to five other non-competitive contractors to share business models, operating results and metrics.
● Take steps to grow the business and as a result, have additional revenues to cover fixed costs.
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- a private digital dashboard;
- a daily snapshot of single and aggregate limits
- the ability to update work on hand—and increase the aggregate.
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Smarter Not Harder?
Though technology has been “coming” to construction for a long time, it often feels like it has never quite arrived, with some observers going so far as to say that slowness to digitize and innovate means: “Construction sites in 2023 might in many ways resemble those of 1923, with manual bricklaying, paper blueprints, and scaffold towers.” Nonetheless, recent massive investments in contech, as well as a combination of current dynamics, seem to indicate that the time to get on with leveraging technology has really arrived. Factors driving the shift include:
- Demand for long-term projects brought on by stimulus money.
- Need to decarbonize.
- Shortage of skilled workers
- Regulatory changes to move into a more connected industry.
Summing up these trends, GB Financial Services points out: “the industry will be forced to consolidate to get maximum benefit from…new technology, and those that do adopt…will find themselves in a much better competitive position.” Don’t forget: The Partnership Account® for Contractors will also give you a competitive edge. Position your company to bid more and win more today:
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Founded in 1930, Colonial Surety Company is a leading direct seller and writer of surety bonds and insurance products across the USA. Colonial is rated “A Excellent” by A.M. Best Company and U.S. Treasury listed. Let’s connect today: Colonial Surety.