For any business to be successful, it needs to not only survive but thrive. However, challenging economic times brought on by a global pandemic have made that more difficult than ever. This is especially relevant to contractors who need to deal with multiple sub-contractors and suppliers. Supply chain disruptions have driven up the cost of materials and productivity has taken a serious knock. However, even in difficult times, there are things every contractor can do to increase their profit margins. It’s all about controlling what we can control in an uncertain world and ensuring there are no unnecessary profit leaks.
Strategies to Improve Profitability
If you’re a contractor, you can’t afford to have low margins. Why not consider some of the following strategies to help improve your profitability?
1. Improve Communication
Communication is a vital part of any project. You need to ensure that your field and office teams can communicate effectively and that they are able to collaborate with the clients they are working for. Lines of communications should always be clear at the outset of any project. You need to know who to contact in the event of an issue and how to get in touch. It also helps if you can plan regular meetings, be it face-to-face or virtually, to ensure that everyone is up to speed with where you are at, and any potential issues can be dealt with before they have a chance to escalate.
2. Manage Risks
When it comes to contracting, it is vital to know what you and your client are responsible for. Today, workplace health and safety is more important than ever and rules and regulations can change according to different jobs you may be working on. As a contractor, you have a duty of care for your workers when they are on-site under WHS legislation. It is no good to rely on your client for risk management. You have a responsibility to mitigate risks and create accountability and responsibility within your workforce. By ensuring health and safety on-site, you can reduce the chance of injury and your chance of liability in the event of an incident.
3. Gain Visibility
As a contractor, you may well have multiple projects running at any one time. If that is the case, then finding a way to have visibility of your projects is a must. You should ensure you have the processes and technology in place to deliver up-to-date information at all times as well as real-time insights. Being able to see an overview at a glance is vital. By doing this alongside on-site audits and inspections, you can keep track of your budget on each project, understand if anything is slipping and ensure you stay on track.
4. Embrace Technology
As your business grows, it’s easy to end up with lots of paperwork, manual processes and time-consuming tasks. And these processes that run behind the scenes can have a major impact on your profit margins. Technology isn’t just for front-line operations such as machinery and materials; there is an awful lot it can do behind the scenes too. Technology can enable you to automate processes, receive notifications to keep you on track and communicate more effectively. Ultimately, the more efficient you can become, the more resources you will have to put towards generating income.
5. Stay Competitive
In a competitive market, it is easy for you to feel that you only have price to play with when it comes to winning business. However, this results in contractors undercutting each other and clients ending up with sub-par results. When it comes to hiring contractors, clients want a competitive price, but there is plenty more that they are looking for too. Consider what makes your business special, your values and your approach to policies, procedures and workplace health and safety. All of these things come together to make you a worthwhile prospect to new clients. Don’t settle for low-cost contracts. It is better to have less work but at higher margins if you are to increase profits.
6. Invest in Training
While there may be some initial cost to account for, investing in training your workers properly can make all the difference in the long run. By ensuring everyone is up to speed with the skills and equipment to do the required work at the right moment, you will avoid unnecessary delays. What’s more, by investing in workplace health and safety training, you can ensure your business remains compliant and mitigate the risks of illness and injury that could severely impact your bottom line.
Looking After Your Subcontractors
If you are working with subcontractors, their profits will be directly related to yours. Don’t assume that subcontractors making money will be at your project’s expense; the more efficient and profitable they are, the more you will be as a result.
Even though they may not be your employees, subcontractors still form part of your wider team and can be vital to the success of your projects. Delays or poor-quality work will have a considerable impact on your success. Select your team well and then focus on effective sub-contractor management and you can all deliver what is needed and be more profitable as a result.
For over a decade, Conserve has helped organisations overcome contractor management challenges. We can help you develop a contractor management service that will be not only effective but will make your organisation safer, while minimising your overall risk. Request a demo now or visit the Conserve page for more great content.
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