There are three types of contractors: contractors whose businesses fail, contractors who get by, and truly successful contractors whose businesses boom and make large profits. Hopefully, you are not the first type. However, the majority of working contractors are that second type, just getting by and earning enough to keep their businesses going. So how do you become that third type, the contractor who’s making money hand over fist with a booming business? There’s no magic. Instead, you need to learn how to run a successful contractor business and then put that learning into action every day. With hard work in the right direction, your contractor business can be a major success.
What Contractors Need to Know
Being a contractor is very different than being a tradesperson. A skilled worker can do a job and do it well, but becoming a successful contractor requires a lot more than just mastering a trade, or even several trades.
It is vitally important that a contractor understands construction and the construction process. This is not the same as knowing a trade or two. Instead, it means having a general understanding of how construction projects work. You need to learn about the full lifecycle of a project. That includes everything from the initial planning and bidding to the completion of the job and the final payment.
Of course, no contractor can be an expert in every field. Therefore, it is essential to work with good people. Hire people with different skill sets than you whose knowledge and experience compliment yours. Finding good, reliable people and then trusting them enough to delegate is an absolute necessity for a successful contracting business.
The Importance of Communication
Contracting is not a business for people who like to work alone. A successful contractor is dealing with people all day long. The people you have to deal with are from all walks of life. There are your clients, bankers, supervisors, and business types. Then you have your laborers, tradespeople, suppliers, and vendors. Everyone is different, and every interaction is important to your business.
Learning how to communicate effectively, both in writing and in person, is vital to your business’ success. Don’t be afraid to learn. There are many resources to improve both your written and verbal communication skills. Successful contractors don’t just wake up one day knowing what to do. They take the time to learn the necessary skills, and that’s not just construction skills.
As part of communication, you will want to make sure that any important communication has a paper trail. We’d all like to think that we can work on a handshake, but when people become forgetful or when issues arise, if it’s not in writing it didn’t happen. You don’t have to take notes on every conversation, but when a conversation involves financial arrangements, work commitments, or any changes to existing agreements, let the person know that you will follow up with a quick email. Having a written record will make it easy to go back and see what was discussed, either for reference or if a disagreement should arise.
Keep Good Records
Many great contractors are terrible record keepers. Too many contractor’s offices are messes of papers. Stacks of invoices, receipts, schedules, contracts and other paper records cover every surface. If this sounds like your office, it’s time to make some changes. This is one area where Needo can help. When you use Needo’s construction management software, you can keep all of your important information in one place. To learn more, contact Needo toay.
Know Your Finances
The ultimate goal of your contractor business is to make money, right? Well, then you’d better learn a little something about finances. The first thing you can do to improve your finances is to improve your organization. It’s amazing how many contractors don’t invoice properly or don’t follow up on unpaid invoices. When you do that, you are basically working for free. Of course, working for free is not how you build a super profitable business.
Another way that contractors give away free work is by failing to charge for changes in the job. If a customer wants to do something different than what was in the original contract, you will need to update the contract. Updating the contract should almost always include extra charges. If you have to do more work than originally planned for, you should be getting paid more. Never give away free work. This is, after all, a business.
If you find that you are not keeping track of your invoices, Needo can help. Even if you seem to be doing fine with invoices, Needo can make it easier and more professional.
Learn About Contracts
When it comes to contracts, you need to know how to read and follow a contract. You may need a little extra education to really master contracts, and that’s okay. There are courses both on and offline that will teach you in a relatively short time the basics of contracts. The contract isn’t just about how much you will get paid. The contract exists to protect both you and the customer. It lays out exactly what the expectations are. This includes precisely what work will be done, when it will be done, and how much the customer will pay for it. There may be other provisions, too, about how the work will be done, what happens if there is a disagreement, and many other important points.
Make sure you read the contract carefully before you being work. It’s important to know exactly what your obligations are. Knowing your precise obligations is the only way to meet those obligations. The contract is your only agreement with the customer. Anything else that you agreed to is not really relevant. So if you want to make another agreement that is not in the original contract, update the contract. Just like your communications, if it’s not in writing, it doesn’t really exist. In case of a disagreement, or even if you just want to recall exactly what the agreements were, having a detailed written contract will make everything clear.
Make a Great Bid
A great bid on a project isn’t just the lowest bid. In fact, the lowest bid might be a terrible bid for your project. To make a bid, you need to know what has to be done, when it has to be done, and how you will do it. Without that information, you are just guessing. If you bid too low, your job is doomed from the start. You can end up doing an entire job and make little or even no profit. That’s not how to run a successful contractor business. Instead, you need to know what it will cost you to get the project done on time, then add your overhead and your profit, and bid accordingly.
The only place where you can change your bid is on that last piece, profit. You absolutely must cover your costs and overhead. After that, you can adjust your bid to make more or less profit, as you see fit to get the job. But be careful. If you negotiate away too much profit, you end up spending lots of time making very little money. You are better off walking away from jobs with low profits and holding out for more profitable work than just taking any job you can get.
Use Needo to Make Life Easier
Bidding can be a fraught process, full of stress and unknowns. One way to make the process easier, smoother, and more accurate is to use Needo’s construction management software. With Needo software, you can keep track of all of your expenses on a job. You can track each skilled person and laborer, all of your materials, rentals, and vendors, and any other costs. Then, when it comes time to place a bid, you will have all of the information you need to price out the project before you bid. You can create a professional bid document and change it quickly as needed.
If you are ready to start working with the power of Needo software, contact us now to find out how Needo can work for you!