When you start a contracting business, it’s not always clear how you should run it to make it successful. There’s a high likelihood that you’ll make a few mistakes, especially as you gain experience. Some mistakes are worse than others, because they make it hard for your business to survive from month to month. With these tips, you’ll know the most common problems to avoid.
You Bid Too Low
One of the worst things that you can do as a contracting business owner is to cut deep into your profit margins. And yet, that is exactly what plenty of contractors do on a regular basis. When money is a little tight and you have a lot of competition, it’s easy to drop your bid in order to secure more work. But the less you earn, more work you have to do in order to keep going. And over time, clients who are accustomed to choosing the lowest bid will be less likely to pay higher prices. You should attempt to stay competitive, but don’t forget what you’re worth.
You Don’t Attract Employees
When you work for yourself, you might find that you develop a kind of tunnel vision about the running of your company. After all, you probably became a licensed contractor so that you could make your own decisions. But eventually, you’ll need to work with other people:
- Other contractors
You can make this a lot easier by setting up a business that you can be proud of. Think about what you would like to see if you were evaluating a subcontractor or a business you’d like to work for. Having processes in place, like business management or safety, make it easier for you to present as an ideally-functioning business.
You Can’t Manage Price Shifts
Shifts in prices for supplies and services are common. They’ve been particularly volatile over the last couple of years. The last thing that clients want is a contractor who isn’t prepared for this eventuality, and has to change prices or back out of the project halfway through. Most experienced businesses establish margins for fluctuating prices, so that they can meet the terms of the contract without having to work for free. It may take you time to figure out the best way to do it, but it’s well worth the effort.
You Don’t Learn New Technology
The construction field has been around for thousands of years, but we don’t build things in exactly the same way we did back then. In fact, building technology and best practices have changed significantly over the last 20 years. If you’re unwilling to adapt, you’re going to make it more difficult for your business to thrive. When you see new technology in your field, you can either embrace it or run from it. Learning more about the developments that relate to your specialty can help you stay current and discover new things that you can incorporate into your business. You might even figure out ways to complete a task more easily or efficiently.
You’re Not Investing in Your Business’s Future
When you are swamped with work or even desperately looking for work, it’s a lot harder to think about the future of your business. But in a year, you’ll be in the future for your business. It doesn’t take long for you to realize that you should have made an investment to make your business run better as you get more established. Making an investment doesn’t necessarily have to involve lots of money. You can invest into your company by learning new skills, improving your business management, or finding employees who can help make your business everything that it could be.
There are lots of ways that you can shortchange your contracting business, but you can learn to avoid them. To find out what you need to run a contracting business, contact CSLS today!