Monday, 22 November 2021

How to build a more profitable construction business

Running a profitable construction business is more challenging than ever at present. We work with many construction clients, here are some key points to building a more profitable construction business:

You need to charge for ‘everything’

Give your customer a pricing menu of extras at the beginning of the project

Speak to your customer and make it clear that your initial quote can change as material and labour prices go up

Profitable construction businesses make 20-30% profit per project, so aim for this yourself

When quoting, include a percentage of your overheads in each job, including your vehicles, tools, insurance, and accountancy costs

Ensure you include your own time into the labour costs, including your time that will be spent on the tools, project managing and project planning

Try and agree the cost of the job with subcontractors upfront, rather than paying a day-rate, so you can better manage profitability

Add 20%-30% to labour and material costs to cover your profit

Request 50% of the project cost upfront from your customer. It's not for your business to fund your customers project

Look to achieve a specialism or work in a niche area, like building extensions or loft conversions, as its easier to get to grips with profitable pricing as opposed to being a generalist

Don't quote per metre for materials, if you can only order it in a pallet or batch. Quote for the full amount that needs to be purchased

Ensure you use software to raise invoices and that it links to your business bank account, so that you can stay on top of profit and credit control

If you need any help with pricing or using software for invoicing, please get in touch with us. We are ready to provide all the help you need.

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