How Contractors Lose Money Part 1
No one gets into business to lose money. However, working in construction, while potential lucrative, can be challenging. There’s plenty of competition, plenty of details to deal with, both on and off the job site, and payment isn’t always as prompt as you need it to be. Construction is a tough business, but they are common mistakes that can make it even harder.
As Jacksonville construction lawyers, we have worked with many companies over the years and have seen the challenges they face on a daily basis. In this two-part series, we will give you a few reasons why contractors lose money in their business as well as best practices. For more insight on how contractors lose money, skip ahead to part two.
Inaccurate Estimate of Costs
Some contractors do not have a clear understanding of all the details that go into the cost of a job. They also don’t account for delays that can drive up labor costs or the cost of downtime. You are paying your workers for a full day, but you are rarely getting a full day’s worth of output. To combat this, make sure your employees track time and tasks completed as accurately as possible. Compare this information to your estimates and be realistic. There may be ways to make your staff more efficient, but you also may be undercharging your clients.
Taking Every Job
For small construction companies, it may hard not to take on all comers, but you have to understand the true value of a customer. Certain customers aren’t as valuable as others because of what it may take to complete a specific job. Some jobs, while larger in scope, may come with more extensive costs. Look at all details and costs for every job. Ultimately, the job that provides the most profit is the best one.
Using Inferior Tools
The temptation may be strong to cut costs by not using premium tools for your work. While there may be an initial cost savings, you may costing yourself in the long run. Poor work created by inferior tools may need to be redone. It may also hurt your reputation and lead to delays and conflicts with clients. While a Jacksonville contractor lawyer can help you if a claim is filed against your company, purchasing better tools can save you a huge headache.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.