Keeping costs in check is important for any small business, but in the construction industry, it’s vital to your profitability and longevity. You need to practice efficient cost control to be successful.
Cost control is defined as reducing your expenses to increase profits. This starts with your budget but has to take into account all your financials. When you bid on a job, you expect to make a profit based on the costs of labor and materials. If your books aren’t showing a profit, then you need to figure out why.
Why Isn’t Your Cash Flow Going As Expected?
When you’re not doing as well as expected, you have to try and figure out why. Look at your budget against the costs. Did you go over on materials, equipment or payroll? What tapped into the profits you expected?
Your cash flow may be impacted by payment turnaround times. If customers don’t pay until 60 days after you’ve finished the job, you probably have a lot of money laid out in project costs. Consider accounts receivable financing or changing your payment terms.
Heavy equipment can really eat into your budget. Maybe it’s time to purchase some of the equipment you use all the time instead of renting it. We offer heavy equipment financing and leasing to give you options.
One aspect of cost control is effective project management. Are you considering all the variables that could slow you down, such as weather, safety, availability and timelines? If you have to pay fees for going over the deadline, it might help you to hire a project manager to help you manage your timelines.
Get Financing for Your Business
Contact Integrity Financial Capital for financing options when you’re having a cash flow problem. We’ll help you get through your hard times to have better cost control over future projects.