How to: Maximise Your Business’s Profit Potential
A sign of a successful business is profit. When it comes to being profitable, especially in the construction industry, it is important to think about all the costs involved in running your business, even the small ones.
This guide highlights 5 tips to maximise your business’s profit potential:
1) Get accurate labour costs
Good estimating starts with accurate labour costs and with more accurate estimating you only take on projects that will be profitable.
When it comes to labour costs it is important to consider tax, overtime, insurance etc. in order to get a more accurate picture of labour costs. It is also useful to understand how many workers you will need to finish the project on-time. This, again, will help you estimate labour costs more accurately and can also help you minimise the usage of overtime.
2) Calculate equipment/plant costs
Equipment can often be a hidden cost that you may not realise. For each piece of equipment/plant add the purchase price, interest, depreciation, maintenance, servicing, repairs, insurance and storage costs. This is a much more accurate overview of the price of your equipment/plant.
In some cases, you may find it cheaper to rent or hire as that comes with less of these hidden costs. Once you understand these hidden costs you can account for them and make any changes accordingly, to increase your business’s profitability.
3) Good project management
Good project management is key when it comes to boosting profitability. When managing a project it is important to know where materials and workers are needed at every stage. This can help boost efficiency and ensure that your project does not go over budget or schedule.
4) Monitor overhead costs
To boost profitability, it can be helpful to fully understand your overhead costs. This includes everything it takes to keep your business running, such as office staff, utilities and rent. By understanding your overheads you may be able to find ways to increase your profitability.
Overheads should also always be included when estimating, as this will help improve the accuracy of your estimate and can therefore help to increase profitability.
5) Shop material prices
A key tip to improving profitability is to shop around when it comes to materials. Don’t just stick to the same suppliers as you could be getting better deals elsewhere. Getting quotes from different suppliers may be more time-consuming at first but it can definitely help you save money in the long-run and can help make your business more profitable.
This can be made easier by using estimating software that includes pricing libraries. This will make it easy and quicker to compare suppliers and purchase your materials at the best price.
By following these tips, you can start to maximise your business’s profit potential. You can do these manually or you can use estimating software to help you with the process.
Our software, esti-mate, makes it easy to produce accurate estimates that include labour, equipment and overhead costs. More accurate estimates can give you the confidence to only take projects that you know will be profitable.
Our software also comes with the option to add pricing libraries, which will make comparing material prices much simpler.
If you’re interested in finding out for yourself how esti-mate can help maximise your business’s profit potential then you download a free 20-day trial here.