Top tips for builders on keeping hold of profit
Tuesday, September 07th, 2021
Builders across the UK are losing out on hundreds of thousands of pounds worth of profit resulting from mismanagement of building projects. You’re missing a trick if you don’t manage your building firm efficiently in order to avoid costly mistakes. And every day you delay your profit leaks will get bigger and spring up more frequently.
Not keeping a close eye on your accounts is the number one mistake
It’s not enough to think that being busy equals money in the bank. And you can’t wait for a quarterly (or annual) meeting with the accountant to find out – that’ll be too late.
If you don’t keep an eye on the balance you could overspend. Cashflow is your business oxygen. Are you bringing in more money than you’re spending each week and each month? You need to know. Have you agreed staged payments with the customer?
If you don’t want to take it on yourself, then employ someone else to look after the books on a weekly if not daily basis – and use estimating software to give you a real time profit analysis.
You’ll feel in control when you can dig deep into each job – keeping on top of cost and price to the client by types of material, plant, resource, trade, sub-contractor and more – as bar charts, pie charts or spreadsheets.
Before taking on a job all builders need to know whether they will make a profit
Every job must cover your overheads and give you a profit – an estimate is so much more than materials and labour. Some jobs – maybe most jobs if you’re an ambitious building firm – aren’t worth taking on.
Cost each speculative job thoroughly – every last tube of mastic, tub of screws, hour of labour. Don’t forget anything. (If you do it’ll be your pocket you’ll be dipping into). Then if you can add a decent profit margin and it’s not looking like a b***ache of a job then put your quote in.
BUT and it’s a big but…
Even if you win a great job on paper – not managing it efficiently will see your profit disappear
Great, they accepted your quote. Don’t squander your hard won profit. You have to protect it. Put barbed wire round it and don’t let anyone go near it.
That means the material prices you totted up have to be matched (or beaten). A material schedule produced at the same time as the quote will make this more doable. Better still use a tool that keeps on top of rising prices. You only have to read articles like this one from the Builders Merchant News to appreciate how volatile materials pricing is right now.
The labour hours you calculated can’t go over – so your workforce needs to know how long they’ve got and stick to it. The plant hire hours can’t be exceeded so materials and people need to be in the right place at the right time. And if all that sounds daunting then a build programme that you can easily adjust will make the job ten times easier.
And don’t let building problems cause financial nightmares
If you stay on top of your projects you’ll anticipate issues before they become problems. But if they do occur they should only be ones that are out of your control and chargeable! And that can only happen if you’ve been on the ball, and kept the customer in the loop at all times, making it clear where the goalposts are. A detailed quotation and a cast iron contract will help with this.
What next for builders who want to make a decent profit?
Like all builders you want to make a profit. And we can help. Take a look at EstimatorXpress for starters. It has a whole load of valuable project management features. A Build Programme (Gantt Chart), material schedules, labour schedules, cashflow forecasts, inflation tools, the latest material prices (Price tracker+) are just some of the tools you’ll find in our award-winning software.
So give us a call on 0117 916 7898 to have a chat and arrange a short 1-2-1 online demonstration, which could lead to a 14-day trial, and an outright purchase or 12 month subscription… EstimatorXpress Core costs just £399+VAT p.a. So don’t miss another trick!