8 Profit Leaks to Stop Now

You work too hard to let your profits be list to mistakes, inaccuracies and neglect. Review these tips and be sure you’re capturing every dollar you can!

  1. Improve your bidding accuracy. Don’t leave money on the table by bidding projects using bad data. Update your job cost history to reflect rising costs for materials, labor, labor burden and overhead. Use an estimating checklist to avoid forgotten items. Make use of Central’s take-off services to get accurate materials lists.
  2. Hold crew leaders to production estimates. Use a scorecard to compare budgeted hours to actuals so you can address concerns while the job is underway. Give crew leaders the data and the decision-making authority to hold their crews accountable.
  3. Stop trying to work too many projects at once. Many contractors fall into the trap of saying “yes” to every opportunity. Suddenly your schedule is stretched, you’re paying lots of overtime and efficiencies go out the window. Manage your workflow so it’s a level, sustainable pace.
  4. Turn off marketing when you have too many leads. It’s expensive to generate sales leads with Google AdWords and other advertising. If you’re getting too many leads and not following up on them immediately, you’re wasting money. A general rule of thumb: the first contractor on-site to give a quote has the best shot at the work. If you can’t keep up with quotes, put ads on hold.
  5. If your gut tells you it will be a problem project, don’t take it. Your experience and intuition mean a lot. If the project seems risky or if the customer seems flaky, pass on it and go somewhere else. Keep a written list of criteria you use to determine the best customers – the ones who seek your professional advice, don’t ask for price cuts, and who pay on time. When a customer doesn’t fit, don’t take the job.
  6. Stop doing work for free. Avoid being the “nice guy” who forgets to write down and bill for all of the extras you do for clients. Those extra trips to the site, change orders and freebies add up to additional hours and costs for materials that can really be a drag on your bottom line.
  7. Fix quality problems that cause call-backs. Track warranty calls and causes so you can address field mistakes that lead to warranty work. Costly problems repeat when workers lack training or cut corners. Track down and eliminate root causes.
  8. Bargain brands can hurt your profits and your reputation. Avoid “off-brand” materials that have poor track records for quality. The small percentage savings from knock-off products can cost you dearly in free labor to do the warranty replacements.