If you are running a construction business, then you will already know how tricky it is to maintain a solid profit margin. While this can be said of all business models and industries, it is particularly difficult in construction. This is because so many moving parts (often literally) need to be paid for, factored into budgets, and, as a result, sliced into the profit margin.
What’s more, there can be no doubt that running a construction business can be highly unpredictable. When you are building properties or machinery, there is always the potential for unexpected problems or the chance of straying well over the original budget. As a result of this, your profit margins can shrink and expand at a maddening rate, never predictable enough to enable you to scale your business or set the right price for customers.
Thankfully, you can take a few different approaches to make your construction business more profitable. Whether it is developing long-standing relationships with suppliers, specializing in a certain type of construction project, or working out how to cut staff costs, there are always ways to make your construction company more profitable.
Here are a few potential solutions that might help.
Bulk buy materials
One of the best ways to ensure that your construction business is more profitable is to bulk-buy materials from a trusted supplier. When you have to spend huge amounts of money on materials, tooling, and other supplies, your profit margin will be decimated if you can’t buy them for bulk, wholesale rates.
After all, you can only mark up your services so much, and if a competitor can offer the same job for less, then you are dead in the water. Therefore, start developing relationships with suppliers, and strike a deal that gives you the materials for trade rates.
You could also bulk-buy items you need for most projects. For instance, if you need din rail enclosures for most of your construction clients, you could buy a huge quantity of them at cheaper rates, which could help you become more profitable in the long run.
Work on similar projects every time
Another great way to ensure that your construction business is more profitable is to specialize in certain types of construction projects. For example, you could focus on domestic home projects like new builds and home extensions. By doing this, you will develop more expertise in that particular area, enabling you to bulk buy more supplies and tooling that can be used repeatedly.
Focus on hiring managers, then use day staff
Finally, you may need to take a look at your construction teams and see whether there is a smarter way of employing people. This is because you do not know when or if your next project is coming. If you pay a huge team a full-time income, you are decimating your profit margin.
Alternatively, you could simply pay some trusted and experienced managers a full-time wage and then hire the rest of your team as day staff to save yourself money.
