You’re running a building firm and you want to make money (not many are in it for the back ache and sore knees…).
If you think success is measured by doing lots of work – always being busy – then think again. It’s not about how many construction jobs you estimate and win – it’s about how profitable they are.
In other words don’t chase turnover – it’s all about the profit you make on a project.
Meet Geoff. Geoff thought that he was making good money based on the jobs he was trying to rattle through. If only Geoff had had a conversation with Simon from The Better Business Group, one of our valued network partners.
You see, busy doesn’t always mean successful. If you’re doing it to keep subbies in work whatever the cost, well that isn’t sustainable. A full order book for the next 12 months isn’t necessarily a good thing. If you’re winning 7 out of 10 jobs you’re too cheap. In the opinion of Simon, you shouldn’t be winning more than say 5 out of 10 jobs.
SIGNS OF SUCCESS
Simon has been mentoring building firms for over 30 years. He’s turned struggling businesses into successful, profitable building firms. So how does Simon measure success?
- Money in the bank
- Reserves for set backs (there always are)
- A pension
- A private life – weekends, evenings
- Off the tools – no more back ache, dodgy knees…
- A succession plan for the future.
Not that Simon believes all of these need to be on your wish list for success, and there may be others to add as well. But if you’re not hitting the top two at least, then as Simon puts it, “you’re probably an employee in your own business, drawing a wage – after everyone else has been paid.”
You should charge what the job is worth, not what you need to stay afloat. You need additional funds to withstand problems and better still, plough money back into the business.
SIMON’S TIPS FOR BUILDING FIRMS WHO WANT TO MAKE MONEY
#1 Climb out of the recommendation rut. Stop doing referral work that forces you to continue charging the same low price. Year on year you will make less and less money – unlike your suppliers and subbies who will up their costs year on year…
#2 Go after a high value project and quote for every last penny – all the materials (every last nail), labour, plant, wastage PLUS a percentage of your general running costs; the van, loans, insurances. Then add a proper profit margin – a good 15% if not more.
#3 Deliver the quote. And do it promptly. Be professional. Show your insurance details. Explain your commitment to health & safety. Demonstrate your expertise. Make suggestions. Follow up. Win the work on merit.
Bottom line, you need to demonstrate the difference – how you present yourself in emails, on your website, social media. Your appearance (not straight off the site), how you come across on the phone and in person. Explaining the quality of your service, showing examples, sharing testimonials…
It won’t happen over night, but the hard work will pay off.
Get it right and people will be beating a path to your door. People are crying out for good builders.
Don’t make the mistakes that Geoff has. If you’re a building firm that wants to make some proper money for a secure and better future – then get your strategy for success in place – it can be life changing. And don’t forget HBXL can help get the quote absolutely right with our estimating service. Call the team on 0117 916 7894 to talk about estimate packs. To talk to Simon at the Better Business Group call 01707 859900 or drop him a line at email@example.com, don’t forget to mention HBXL!