9 Effective Tips to Protecting Your Construction Business from a Financial DownturnOctober 31, 2022
9 Effective Tips to Protecting Your Construction Business from a Financial DownturnBy Karyn Winrich, email@example.com
Construction businesses are exposed to many risks, which can be challenging to recover from when unprepared. You can survive a financial downturn and save your business with these helpful tips:
Keep your best employeesAccording to a 2016 State of the Industry Report by the Association for Talent Development, businesses spent an average of $1,252 per employee on training. Building good relationships with employees by offering them competitive pay and more work can save you the hassle and expense of recruiting and training new people.
Ensure an accurate estimate of job costs.You can increase your profit margin by implementing an estimating app or software for your construction business. This software is highly effective at calculating complex measurements and estimating job materials and labor costs.
Improve your invoicing to get paid quicker.Take advantage of invoice templates to make the process faster. Offering your clients more options to pay for your services will make it quicker to get paid promptly. Better yet, consider setting up a CRM that includes billing functionality.
Use technology to your advantage.Embracing technology can help your employees work efficiently. For example, investing in Customer Relationship Management software can help generate more revenue by helping you better categorize leads. You can understand your customers better, allowing you to provide better services.
Provide excellent customer service.Exceeding your client's expectations is a surefire way to get repeat business. Communicate consistently on the project's progress, handle customer requests quickly and consider giving discounts to your top clients.
Cut expenses and reduce debt.Implement energy-efficient practices and maximize your resources to cut expenses. If you have debts, repay them on time to avoid paying the interest. Don't take on more debt, especially with creditors that set high-interest rates. If you must take out a loan, be sure to check your credit report before applying to review your creditworthiness and ensure you’re not taking on high interest rates.
Build strong relationships.Whether working with subcontractors or directly with clients, go the extra mile by exceeding expectations. Complete the project on time or in advance and always within budget.
Keep cash on hand.Should there be unexpected costs or equipment that need to be purchased, having significant cash reserves can help you meet your funding needs. When your construction projects are not enough to cover debt payments, the cash on hand can cover these expenses.
Reconsider your business structure.Register your construction business with the proper business structure to save on taxes. With an S-corporation, you can skip paying the self-employment tax. However, a limited liability company or LLC will reduce your personal liabilities, and the paperwork is not as extensive. Either way, you don't have to pay legal fees on registration by using a formation service or by filing it yourself. To ensure you're doing it correctly, check the rules for forming a Wisconsin S corp.
You can prevent a financial crisis by improving your business processes and taking care of your customers and employees. Take steps like adjusting your business structure, cutting expenses, and investing in helpful software. And join the Oregon Area Chamber of Commerce for opportunities to network with businesses in the city of Oregon, Wisconsin.