Jan 19, 2018
Two Construction Companies
do similar work for the similar customers using similar labor,
materials, and subcontractors yet Company "A" earns twice the
profits over Company "B."
To paraphrase Sun Tsu "If the Strategy is correct, then a large number of tactical errors can be made, and the enterprise will be successful; however, efficient operations cannot overcome bad strategy."
Harsh Words - And yes I know you are a tough contractor who is accustomed to people trying to sell you something and get in your pocket all the time, so you learn to ignore a lot of crap!
You Are Right I Am Trying To Sell You Something - I am trying to sell you to you and the importance of taking care of your construction company profits so they can take care of you.
Let's Get To It - There are 100's of improvements that can be made in any construction company and 20% of the improvements will have the most impact. 80% will have the least impact. See The 80-20 Rule For Construction.
The owner Hires A Cheap Bookkeeper part-time for $15.00 an hour 10 hours a week in an attempt to save money without understanding the actual cost is $25.29 per hour. See the chart below:
Costs Your Company $273.93 Each Year
At 10% Profit, You Need To Sell $2,739.30 More To Maintain The Same Profit Margin
In Some Cases, we can do more work for less money by providing you with construction bookkeeping and accounting + payroll processing + monthly and quarterly tax reports + year-end W-2, W-3 + profit and growth management consulting + financial and job costing reports + paperless data storage and more. As a bonus, we can show you how to use simple strategies to make more money faster!
Profit Drain #2 Cheap Tools And Equipment Invest in the best tools and equipment you can afford because in the short run you will save money. Construction workers who take pride in their work and will produce better results faster with fewer repairs if they have quality tools and equipment.
Make More Money Faster with productivity gains. See the chart below:
For Employee #01 Costs Your Company $1,544.42 Each Year
At 10% Profit, You Need To Sell 15,544.20 More To Maintain The Same Profit Margin
Highly Profitable construction company owners will ask their construction accountant to calculate the projected the Return on Investment (ROI) is and then consult their Strategic Business Plan to make an informed decision.
In This Example, it may make sense to finance the purchase even if it means using a credit card with a 12% interest charge because the Return on Investment (ROI) is $3,289.36 or 245% ROI. See the chart below:
Two Contractors Doing Similar Work for similar customers with the similar direct and indirect construction costs will have massively different net profits for the year. Their KPI Reports will be more favorable which means a more stable construction company. Size matters when it comes to piles of money and bigger profits!
When You Become A Client - Then we can tap into our resources of knowledge and strategy banks. We use the reports hidden in your QuickBooks in order to diagnose and understand your construction business and develop plans and help you implement a path to success for you and you alone because every contractor has unique Strengths, Weaknesses, Opportunities and Threats (S.W.O.T. Analysis) that when understood can lead to a Strategic Roadmap which cannot help but make a lot of money.