Large contractors have obvious advantages. However, that doesn’t mean that smaller construction companies, or even single-person enterprises, can’t make money over the long haul. With a thoughtful approach and the willingness to take on multiple roles, you can make small-scale projects profitable.
The industry giants can make their bread and butter through elaborate, big-money projects. You don’t have that option. You need to earn cash through small-scale construction gigs.
That doesn’t mean you have to suffer. You can thrive on these tinier assignments. You just need to leverage your natural advantages as a smaller provider. Meanwhile, you have to keep your eye on the bottom line and get the most out of every aspect of the business.
Here are 10 specific tips to make small-scale construction projects more profitable:
Hire the Right People
A slow or lazy or unreliable employee can cost you a lot. And when you have a small organization, one unproductive worker can cause outsized damage to your financial health. After all, going overtime on a job, or having to redo a sloppy finished product can turn what should’ve been a profitable project into a money loser.
For that reason, you careful who you hire. Take time to find the right people. Don’t be afraid to fire someone if the relationship isn’t working out. Over time, you should be able to form a tight, reliable team.
Incentivize Your Workers
Once you find good workers, do what you can to keep them. By paying a little more than market rate for your top employees, you can keep them around longer. Properly paid, their above-average productivity will more than make up for the higher salary.
Meanwhile, offer rewards for hitting certain targets. The more productive your workers are, the more profit you earn. However, it’s hard to reach peak productivity just with threats and begging. A better way to get the most out of your workers is to give them a positive reason to outperform.
Plan More, Work Less
You get a job. You show up, and figure out what you were going to do on the fly. This strategy creates a significant chance that you will end up wasting some of your time.
Instead, plan out each of your assignments in detail. Know what you were going to do before you get there. That way, you can finish the job as efficiently as possible.
Choose Projects Carefully
Sometimes, any work is better than no work. However, you have to remember the concept of opportunity costs. Taking one job means you can’t take another. Keep this in mind as you select the customers you sign up.
Also, watch out for potential hidden expenses. Four instance, a particular job might seem profitable on the surface. However, the location sits pretty far outside your normal area. You would have to drive a significant distance each day to get to the site. You need to take this travel time into account when determining whether or not the money is worth the effort.
Leverage Your Special Skills
Large contractors can deliver hundreds of workers and finish large construction projects in a relatively short period of time. You can’t rally that kind of man power. However, you have your own advantages. Don’t lose out by trying to beat the big guys on their home turf. Find your own competitive advantages and exploit them.
One example comes from a specialty skill. Having hard-to-find abilities allows you to charge more. It’s simple supply and demand. If you can do a job that other people can’t, you can earn premium dollars for your time. Look for ways to specialize, and set your prices accordingly.
Quantity vs. Quality
Places like Walmart can sell cheap, because they can make up for the lower cost with more volume. It’s a strategy that works when you’re a large-scale operation. It gets more difficult when you’re working on a small scale.
As a smaller enterprise, you should aim more for quality than for quantity. Develop a reputation for delivering high-quality work and it will help you earn more for the work you do.
Use Technology to Boost Productivity
Efficiency is the key to profitable enterprise. Whatever you can do to increase efficiency ultimately falls to the bottom line.
Technology provides a great way to get there. The right software can help you get more out of your resources. These products allow you to improve your workflow and get more out of your time and money.
Many of these programs are specifically suited for small construction firms, or single-person proprietorships. They remove many of the expensive back office functions, helping you reduce overhead.
Look for Upsells
Every time you go to a fast food place, they try to upsell you at the counter. Would you like fries with that? How about a large Coke?
That may seem far away from the construction business, but it’s really not. You can use the same strategy to boost your revenue and, ultimately, your bottom line.
Once you find a customer looking for you to complete the project, look around for other services you can offer. They may need other services you can provide. Or, you can find ways to upgrade the project they initially contracted you to do. Look out for opportunities to use different materials or more elaborate designs – in other words, chances to increase value for them, and profitability for you.
Know Your Price
Sometimes, it’s tempting to present a lower bid to ensure you secure a job. Then, you just have to hope you make up for the lower revenue later by cutting corners.
However, this strategy usually causes trouble. You end up selling yourself short and you put yourself in a position where you have to compromise quality and workmanship to keep the job profitable at all.
Don’t put yourself in this position. Know your bottom price for any particular job. Hold firm to this level as best you can, making sure you can do the kind of work that will make you proud and satisfy the customer.
Focus on Customer Service
Getting repeat business isn’t just a matter of providing the best final product. You also want to create good experience for your clients. Small upgrades and stellar customer service make a big difference.
This is especially true in the construction business. After all, let’s be honest: many providers in the industry have a reputation for poor customer skills. You can differentiate yourself by bucking this stereotype.
Take steps to deliver a high level of customer service. Sign up for an answering service, to make sure people can always contact you by phone. Respond to messages as quickly as possible. Train your staff how to interact with customers in professional and courteous manner.
Ultimately, becoming a profitable provider of small-scale production services comes down to these small details. By improving customer service, and taking the other relatively minor tips into account, you can set yourself up for growth over time.
Marie Erhart is a Success Manager at FieldPulse, creators of field service software that lets you run your entire contracting business from a single app. She works with contractors to help them grow their business using best practices.