First, we always ask our clients to decide what they want from
their construction company. Do you want to get rid of the boss? Do
you want to work in a more structured environment? Are you sick and
tired of working for the boss's son or daughter? Do you want to
make much money? Do you wish to make enough money to pay the bills
and enjoy a vacation now and then? There are no wrong answers,
whatever is right for you is the correct answer; however, you need
a reason to do it otherwise when the going gets tough, and it will,
you will either win or lose depending on your purpose. With a big
enough reason, you will find a way to win.
For many small construction companies, the best way to improve
profitability is to increase turnover, as there's no limit to
sales, but there is a limit to how much you can reduce your
Let's look at how you can focus on each of the five ways in
our profit increase calculator to achieve your goal of improving
1. Increase your
By interacting with a higher
number of people, you'll increase your chances of turning more
website visitors and callers into clients – or at the very least,
having them lead you to potential customers.
So what can you do to
increase leads or make more people aware of your business? A few
tactics you might consider using to increase your leads
- Advertising – set a budget
and increase how much your business is promoted.
- Direct marketing – work out
your target audience and market directly to them via
- Network – attend industry
events and conferences to meet potential customers. These may be
moved online in the meantime.
- Create a website – to open
online opportunities and increase your local reach.
- Develop new distribution
channels – think about partnership and collaboration with other
2. Convert more of your
leads into clients
How many potential customers
walk out of your store, leave your website, or inquire about your
services without hiring your services?
Just imagine if you could
convert 10% of those people into clients. How many extra sales per
day would that be?
A few tactics you might
consider using to convert more leads into customers
- Arrange training for
employees – on sales conversion and sales closing
- Personally attending a sales
- Running demonstrations – for
potential customers to see what you have to offer and how they
- Highlighting your services'
benefits – through promotional material, your website, blog advice,
social media platforms, and free trial offers.
- Preparing incentives – for
your staff to offer to potential customers, hopefully encouraging
them to purchase or hire your service.
3. Increase the number of
items you sell per client
If you can entice your
customers to purchase just one more service from your business each
year, your sales (and hopefully your profits) will
A few tactics you might think
about using to increase the number of items you sell to each
- Widening your service range
– by asking customers what else they would be interested in hiring
- Bundling products and
services together – like adding after-sales help to certain
- Increasing capacity and
capability – for example, purchasing extra equipment to increase
your capacity while hiring additional staff to enhance your
- Researching your
competitors' offerings – to find product or service
4. Increase your average
Can you come up with some
ways of increasing the average value of each sale you make? Rather
than hiking up prices, see if you can raise rates by small margins
(like 1-3%) or find ways to sell higher-priced items more
A few tactics you might think
about using to increase your average sale include:
- Training your staff – so
they're confident offering complimentary items and upselling more
- Increasing prices across the
board – would your customers notice a small price increase?
Consider informing them and trying it, as the extra money will go
towards your bottom line.
- Advertising your
higher-valued services more often.
- Developing a premium product
or service – and encouraging your regulars to go for
5. Increase net profit
An easy way to increase your
net profit is by lowering your fixed costs (business overheads).
Identify your top five expense items and track any changes before
taking steps to reduce them.
A few tactics you might try
to increase your net profit percentage include:
- Identifying and monitoring
your top five expenses in your budget reports.
- Finding out where you can
make savings and reduce costs.
- Concentrating on
higher-margin services or products.
- Looking at alternative
suppliers with cheaper supplies.
The best way to do this is by
incorporating LMOS Cost Codes into your accounting system for easy
tracking of costs and as a foundation piece of Job Costing
In our Construction
Accounting Academy, we have a class devoted entirely to teaching
our LMOS system.
It goes into detail how to set
up LMOS in QuickBooks desktop.
Review these five ways of increasing your profits at least
every year. By using simple, practical steps, you can improve
your business's profitability.
You get the best contractor bookkeeping services company on
your side by working with us, which means you will substantially
improve your chances of success. We are not Jack-Of-All-Trades,
Master-Of-None accountants or bookkeepers who take anyone who
contacts us. We are construction accounting specialists, with one
purpose and only one purpose; serve construction contractors in the
business and those who are preparing to get into the business.
Contact me today for your no-charge, one-hour consultation.
About The Author:
Sharie DeHart, QPA is the co-founder of Business
Consulting And Accounting in Lynnwood, Washington. She is the
leading expert in managing outsourced construction bookkeeping and
accounting services companies and cash management accounting for
small construction companies across the USA. She encourages
Contractors and Construction Company Owners to stay current on
their tax obligations and offers insights on how to manage the
remaining cash flow to operate and grow their construction company
sales and profits so they can put more money in the bank. Call
1-800-361-1770 or firstname.lastname@example.org