Capital-heavy businesses such as construction are often hit the hardest during periods of economic downturn. Along with the rise in the cost of goods, there’s an increase in competition and a noticeable decline in the number of projects. But, by creating a financial plan and making sound decisions regarding money, your business can continue to thrive and take advantage of the economic upswing which is bound to come shortly. In this article, we’ll explore the best practices contractors should follow to maintain strong finances.
While cutting back on costs will be necessary, it is important to do it the right way. Consider using accounting software that helps you make a deep dive into business finances and find areas of overspending. Common types of expenses to focus on include:
The key to maintaining a healthy business cash flow is to receive payments on time. Use your accounting software to set up an automated payment schedule for each project. For instance, if the client has agreed to make monthly payments, the software will share invoices before the due date and ensure you receive the money on time.
Another way to avoid late payments is to provide customers with a variety of payment methods. Along with cash and check, allow clients to make payments online through their cards and digital wallets, which as reported by McKinsey & Company is becoming an increasingly popular method among consumers in the United States.
Overbidding an estimate can lead to you losing out on bids, while underbidding costs will eat into profits and harm the business. Additionally, when costs of goods are high, it is important for your estimates to be accurate and include reasonable profit margins. The best way to create reliable estimates every time is by using estimating software.
Here are three ways, how an estimating software will help you design accurate estimates for each project:
Marketing a construction business can be a challenge, but there are a few key strategies that can help to get the word out. First, consider investing in some advertising. Print, radio, and television ads can all be effective ways to reach potential customers. You can also use online directories and listings to make it easy for people to find your business. Also, don’t forget the importance of personal relationships. Get involved in your community and network with other businesses.
Social media is also a powerful tool for marketing a construction business. Create a Facebook page or Twitter account and make sure to post regularly. You can create a custom banner on your social media pages to grab the attention of potential customers. Choose a banner template and personalize it with your own text, images, and designs.
While the current economic situation is challenging, there is still a steady demand for construction projects in the market. Making the most of each project will require a strong focus on keeping costs low, efficiently managing labor needs, marketing effectively, and creating a reliable payment system that ensures your business receives funds from clients in a timely manner.
Marissa Perez, author of the above article, has spent the last 10 years honing her marketing skills and now she wants to share her knowledge with those who have decided to take on entrepreneurship. She co-created Business Pop to provide insight and advice to those who aspire to succeed in owning a business.
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How to Ensure Your Construction Business Remains in Good Financial Standing
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