Tag Archives: Construction Builder Software

3 Simple Steps to Improving Your Financials

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In the past couple of years, we’ve seen that the number of new businesses have risen, but at the same time, failure rates are also on the rise. In fact, almost half of all startup businesses fail within the first 4 years of operation.

One of the most common reasons as to why startups are failing is because they can’t really make out the meaning of the numbers in their financial statements. Inability to understand your financial statements means that you don’t know your targets, you can’t see your milestones, and you’re probably not aware of holes in your business. Eventually, this will lead to more bad decisions which then lead to closing up shop.

Of course, our goal is better construction management. So in this post, we are outlining 3 basic steps on how you can improve your company’s profitability.

1. Make Sure You are Charging Enough

In highly competitive markets, it’s very tempting to lower your rates in order to attract more clients and close more deals. But you have to remember that the long-term sustainability of your company depends on profitability. Therefore when creating (or revising) your pricing model for your various services, you first have to determine who your target demographic is. What is their income capcity? How much are they willing (and able) to spend for a new home or renovation?

Investigate what your competitors are charging so you’ll have an idea of the current market prices. Don’t be too quick to lower your rates just to grab more customers though. You may outnumber your client’s projects, but with unrealistic prices, your profits may still be in the red. Consider all of the costs and investments that go into your construction business. Factor in all labor costs. What is your ideal profit margin?

Don’t be afraid to stand up for what your services are worth. Lowering prices might compromise the quality service that you should be offering.

2. Always Have a Positive Cash Flow

As builders, we know that cash-flow is a major issue during slow months. Since most of us get paid based on progress billing, not having enough cash-on-hand can spell big trouble when it’s time to pay your employees, contractors, suppliers, and utilities. Businesses that don’t have enough cash flow usually resort to borrowing, but make sure that all of your current and future debt are well-planned. Study your income and revenue for both your peak and lean seasons. Don’t kid yourself into thinking that it will always be Christmas. In any business, there will be peaks and valleys so you need to prepare your financials for any possible scenario.

3. Monitor Your Expenses

An educated forecast of your income will definitely come in handy, but at the same time, it’s also a must to map out your expenses. Stay up-to-date on your bookkeeping in order to have a clear view of your cost structure. Know your recurring expenses and prepare for variable expenses. Do you have any inventory or long-term investments? These should be taken into account as well.

Remember, getting a good view of your company’s spending habits (and schedule) can give you a lot of information about your big-ticket expenses. In addition, it will give you insight on areas that can be cut-off or limited. Knowledge and planning are the keys to better construction management.

While having an accountant for your construction business is a definite must, it is also your responsibility to know the basics of finance. The better your grasp for numbers, the higher your chances for profitability.

Sometimes, You Have to Say a Nice “No”

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Yes ma’am! Yes sir!

Most entrepreneurs can’t find enough hours in a day to do all of the things they want. Despite this however, we often find ourselves saying yes to even more requests. Maybe it’s because as entrepreneurs we’re optimists by nature. We believe that even the most mundane tasks can still be squeezed into a day. It could also be due to our instinct to always impress other people and avoid causing disappointment. Builders know this all too often. Clients often make unlimited requests and countless inquiries.

What’s at stake?

When you take on too much, you are putting your health, credibility and efficiency at risk. When you over reach and are not able to deliver on all of your promises, not only will it give you stress, it can also cast a negative light on you and your entire company.

Saying NO without hurting business relationships

A successful entrepreneur should be accountable for all commitments. It’s also important to manage the expectations of both your team and your clients. Here are a few things to remember so that you can say “no” without burning bridges or hurting a client’s feelings.

1. Establish boundaries – When you’re dealing with clients, give them a gentle reminder of the scope and limits of your contract and agreement.  Be professional about it. When you’re dealing with your constituents, know your priorities and limits. Don’t say yes when you actually mean no. Don’t break your own rules. Be calm and firm, but never rude nor disrespectful.

2. Ask for some time to check your calendar – It’s an acceptable business practice to review your schedule first or converse with other principals before committing to an answer. It’s not a good idea to quickly say yes when you’re not yet sure that you can deliver. A quick no on the other hand can immediately ruin good ties. Again, be professional. Check your schedule first and see if you can confidently say yes to a request before doing so.

3. Pause – Before saying yes, take a deep breath and think. What do you r instincts say? Should you say yes? Or is your mind screaming, “No you cannot possibly accommodate this!” You can also take a longer pause and give yourself some time to make a pros and cons list. Talk to the client and lay out your situation first. This can lead you both to a nice compromise. The key here is to stop briefly and assess the situation. It also buys you some time!

4. Explain your constraints – Don’t be so quick to dole out the rejection. Make sure to provide the requestor with a clear context. The task they’re asking may be too hard on your current workload, manpower, budget, or strategies. Make sure to keep things encouraging first.

5. Say YES to the person, NO to the task – Sometimes, it’s all about the manner on how you talk to someone. Make sure that the other person understands how positively you feel about them. Even if you may not be able to accommodate the request now, reassure them that it’s not a personal affront. Keep the relationship on a positive note.

6.  Sandwich the NO between a double YES – If you’re sure that you won’t be able to commit to a specific request, you can keep things positive by sandwiching the NO between two yeses. For example, if your client demands that you yourself visit the build site, and you absolutely cannot do it, give them a positive project update first, and then end the statement by saying that you will send your best man to personally inspect their concern. Give them two things to smile about so they can forego the minor disappointment.

Before anything else…

But wait, before you do anything drastic, make sure to have a good scheduling system in place. Something like SAM- The Superintendent’s Automated Manager. Use SAM to coordinate your things-to-do and your project timelines. With its instant reporting tools, you’ll find out immediately just where each project stands. It will allow you to check your schedule in an instant, as well as pass along vital information to your key personnel.

So to conclude, remember that it’s okay to say no sometimes. Delegating the request to a team member could be the better solution. Sometimes you also just need to prioritize. As a leader you have to make the tough decisions, but at the end of the day, you still need to keep your stakeholders happy.