Building and growing a small contracting business can be challenging: employee issues, customer service, building material problems, bad cash flow, vehicle breakdowns, and more.
We collected 10 key tips from experts to help you to build a more profitable and sustainable contracting business.
- Build A Solid Marketing Plan
Marketing is about communicating your value proposition and make your clients understanding it. In doing so you should expect two major benefits: getting new projects and having a solid pipeline of potential future projects.
While developing the marketing plan, you should consider who your customers are and what type of service you want to provide, how you want to reach them, and what the cost to reach new and existing clients is. Typically the cost of acquiring a new client is 10 times higher than the cost of retaining an existing customer.
Serviis.com provides you multiple benefits in developing a successful marketing plan: an online profile that is optimized for search engines, the opportunity to add pictures about your previous jobs, to focus your marketing spend only on the job requests that best fit your skills.
- Define The Right Pricing
Defining the right pricing is not easy. First of all you need to make sure that the price of the project covers your costs. You cannot get a job if you already know that you will lose money. Second, you need to identify the potential risks of this project and add a contingency factor to the costs. Third, you need to define your margin.
Several factors should be considered in defining the margin
- What are the typical benchmarks?
- Are you offering a unique service? Or are you offering a commodity?
- What is the level of competition? If low, the margin can increase.
- What is the margin required to deliver an adequate return on investment?3. Plan and Control Every Activity
To build a successful business, you should have a long term view of your business and a clear day to day plan for each activity, as this is what drives efficiency, and profits.
You should build a plan for your manpower, a plan for your inventory, a plan for your budget, a plan for your sub-contractors, a plan for your designers.
But planning is not enough if you do not put in place also a control system that allows you to check on the daily and weekly basis if all activities were completed as planned.
- Document Everything
Your daily activities are a lot easier if all the details of your projects are written down, entered on your tablet, or put in your phone’s job tracker app. You need to start to have a well-documented scope of work, approved and signed off by your client. Then once you start a new job, it is typical that customers start to ask for changes. Documenting those change orders become even more important because this is where the real money is.
Remember – the devil is in the details, and if few details drop through the cracks, a proper execution of the job might become impossible, the cost will be uncontrollable, and your profits will become smaller.
- Have Systems And Procedures For Your Operations
All businesses should have procedures and systems to facilitate execution. For small businesses it is critical to have procedures to on boarding, training, expanding skills, few procedures to control operations, and in particular costs and work progress, and a process to manage change order.
A project management tool and a basic enterprises resource management system (such as intuit, focus) are also critical tools to properly manage a project and control costs and manpower, and manage the financials of your company.
Serviis.com can allow you to recruit the right set of professionals to support you in setting up a basic ERP and accounting system to manage your resources and your financials.
- Hire Talented Employees And Develop Them
Your employees are the backbone of your company, and they can allow you to succeed only if they’re well-chosen and brought in, and well-trained.
Recruiting is not an easy task. Let’s start from the CV. You should first check and verify the credentials of your candidates. During the interview, you should ask details of their previous jobs and then simulate real cases. If you are interviewing a tradesman, you should test on the job his skills by providing a test environment. (e.g., test a painter by painting a wall)
As the owner of the business, you should also continuously invest in developing your employees through class training, certification, on the job training. The more your employees know the more successful will be your business. Finally, you should show commitment and care of their personal lives (including their families).
Serviis.com can help you to engage recruitment firms that fit your needs, and potential HR consultants that can provide advice on training and retain your talented employees.
- Outsource Only What Makes Sense For Your Business
When taking a new job, you need to think about the most efficient, least expensive way to execute the project.
There are tasks you outsource because an external provider can execute those better and less expensively than you can. This will allow you to increase your profitability of the project. The typical functions you should consider to outsource are: vehicle maintenance, marketing, accounting, payroll, and office cleaning.
Serviis.com can help you to find the right subcontractors at the right price through its innovative bidding system.
- Focus Your Expenditures on What Maximise Your Return on Investment
As the owner of the business, you should focus on the expenditures that deliver the best return on investment. The experience has shown that customer services, and training of your employees have always provided the best return on investment
Great customer service is an excellent marketing tool and a good business practice. Training and developing your employees allow your business to deliver a better quality and in a most efficient way.
- Monitor Your Cash in And Out
A profitable business can go bankrupt if you do not manage carefully your cash flow. There are key rules to optimize cash flow that you should always consider:
- Bill your work to your client in a phased approached
- Follow up on your bills regularly
- Offer incentives if your clients pay on time
- Provide your customers all documentation required to process the bills
- Make sure that the bills’ collection period is aligned to the payment requirements of your suppliers
- Continuous Improvement
You should take note of all your best and worst practices by leveraging clients’ feedbacks, employees’ feedbacks, and benchmarks
You should continue to invest in your best practices and master them. Your best practices should also become your best marketing tool that you should promote through your communication campaign. At the same time, you need to identify and implement solutions for things that do not work well. Addressing those issues will allow to continuously improve the performance of your business, and deliver a better quality.
Help your business growing to next level with Serviis.