If you’re getting in the construction business, then you know that it can be extremely profitable. It is a high ticket service by nature, but the downside to this is that it can be a very costly business to run and the startup costs can be high. You may have a million dollars in the bank and if you do, good for you, but you will still want to reduce your overhead costs in this industry because you will run into some unexpected costs you may not have predicted as is the case with most businesses.
We have you covered with these 8 ways to reduce your overhead expenses.
FInd Multi-Purpose Workers
Hiring a worker with multiple skills is always great, especially in this industry. You will not need to hire as many workers and you can also reduce downtime by assigning your worker to another task. This can also help you get the job done more quickly.
Try new technology
This can be a significant up-front investment but can save you money in the long run. That new equipment may seem pricey now, but you will be happy when it cuts costs on materials and allows you to get the job done more efficiently.
Create a good change order process
It is not unusual for unexpected conditions to pop up in the construction industry. Your natural instinct may be to fix the issue first and then get compensated for it later. However, make sure you have a change order process that ensures that this work will be documented and approved before you rack up any extra costs.
Take a look at equipment that you are not using
Construction equipment is so expensive and its values only depreciate with time. So, if you have any equipment laying around that you know you will not use. You may want to consider selling it or auctioning it off.
Consider renting your vehicles
Vehicles are a necessity in this industry, but also an expensive recurring cost. Tack on repair costs and insurance and the costs go through the roof. The worst part is that you’re paying for this whether you have a business or not. With a commercial van rental, you can just pick up the vehicle when you have a job to do a return it once you’re done without those annoying recurring expenses.
Deduct all of those tax-deductible purchases
This may be obvious for some, but just too important to leave out. Taxes are a major expense for any business and construction materials can usually be purchased tax-free. This is a definite way to cut down on your expenses.
Consider the lifetime value of your purchases
Think about how much money a purchase decision will make you in the future and make your buying decisions based on that. If the cheap equipment breaks in the middle of a job, is the money you saved worth the time and inconvenience of going to buy another piece of equipment? All of your purchases are investments.
Reuse and conserve everything you can
Reducing, reusing and recycling when possible can be a very effective way to save money in this business. If you have a half-empty bag of materials, don’t throw it away, keep it and reuse it.
Also conserve your materials when possible as well. Do not leave equipment running unless it is actually being used.
Those are the 8 tips to get you started on the right path to saving money and cutting costs for your construction business. This will help you keep more of that green in your pocket.