{"id":7212,"date":"2021-05-19T00:00:00","date_gmt":"2021-05-19T00:00:00","guid":{"rendered":"https:\/\/bxglobal.wpengine.com\/ca\/9-ways-to-maximize-your-residential-construction-business-profit\/"},"modified":"2023-04-14T00:43:03","modified_gmt":"2023-04-14T05:43:03","slug":"9-ways-maximize-construction-profit","status":"publish","type":"post","link":"https:\/\/stage.buildxact.com\/ca\/blog\/9-ways-maximize-construction-profit\/","title":{"rendered":"9 ways to maximize your residential construction business\u2019 profit"},"content":{"rendered":"

10 minute read\u00a0<\/em><\/p>\n

It\u2019s undeniable that the global pandemic has taken a toll on businesses and our economy. And that includes the construction industry.<\/p>\n

Now more than ever, it\u2019s essential to keep your business alive throughout the economic recovery and into the future by ensuring you\u2019re making a profit and reaching your goals.<\/p>\n

There are many reasons why this may not happen \u2014 in good times and not so good times \u2014 such as poor money management, no marketing strategy, inactive quotes, and inaccurate estimates.<\/p>\n

To safeguard your operation, we\u2019ve outlined nine takeaways from our webinar Setting up your Business for Maximum Profit<\/a><\/em>.<\/p>\n

1. Find a good accountant <\/strong><\/h3>\n

\u201cKnow your numbers.\u201d<\/p>\n

It\u2019s doubtful that\u2019s the first time you\u2019ve heard that advice. As common as that advice is, there\u2019s never been a better time to revisit it.<\/p>\n

If you\u2019re not sure about the information going in<\/em>, then you run the risk of getting the wrong information going out<\/em>. It\u2019s errors like these that can impact your profit and, ultimately, your business.<\/p>\n

Knowing your numbers boils down to how you look at your profits and losses and make sure you go through it each month.<\/p>\n

A lot of business owners tend to spend money without keeping track of it. Then after six months, they meet up with their accountant, only to be taken aback by how much they\u2019ve spent and how it\u2019s resulted in them being a few steps behind where they need to be.<\/p>\n

A good accountant who understands your construction business and who can run the numbers regularly and accurately is crucial to maximizing your profit. An accountant will go through the data line by line and highlight any anomalies and issues so that you can proactively address them.<\/p>\n

Ask yourself: How did I find my accountant? Was it through mom and dad? Through another colleague? Or did I just pick the first one I found?<\/em><\/p>\n

It\u2019s important to go through a careful selection process to ensure your accountant counsels you on accurate information and advice.<\/p>\n

2. Review your hourly rate\u00a0<\/strong><\/h3>\n

Being in business is not just about breaking even; your business needs to be profitable.<\/p>\n

To sustain the life you want and provide for your family, it all comes down to the hourly rate.<\/p>\n

Reviewing your hourly rate is vital in making a profit because most builders quote with an hourly rate in mind.<\/p>\n

Most builders set their hourly rate on a good day when everything is going right. But how often does that happen in your business? You may have times when work is flowing through the door, but there may also be times when it slows down.<\/p>\n

We all face challenges, so these possibilities should always be considered when deciding how much you should charge per hour. Consider factors such as staff vacation, sick leave, and public holidays, plus natural downtime throughout the year. It could mean there are only 45 weeks in a year where you can charge for work.<\/p>\n

Start looking at your overheads and costs, then work out your hourly rates. Otherwise, when the more challenging times hit, you won\u2019t have a security blanket.<\/p>\n

3. Establish your breakeven point\u00a0<\/strong><\/h3>\n

\"\"<\/p>\n

Every business owner needs to know when they\u2019re making money and when they\u2019re not. That\u2019s why it\u2019s essential to identify your break-even point.<\/p>\n

Following that, you should keep track of how much you\u2019re making each day, week, or month to ensure that you\u2019re on track to breaking even.<\/p>\n

If you don\u2019t know your profitability week in and week out, it becomes challenging to make business decisions as you start to move forward.<\/p>\n

4. Learn how to forecast<\/strong><\/h3>\n

It can be a tricky process to forecast your income and expenses, especially if you\u2019re not an expert in finances. But don\u2019t worry, your accountant can guide you through the process.<\/p>\n

Forecasting will help you make sure that:<\/p>\n