Many contractors hit roadblocks that limit their success and cause unexpected financial stress and managerial difficulty. Those challenges can usually be solved by understanding and implementing a few best practices, especially five of the top tips recommended for anyone who owns a contracting business.
Hire Team Members Who Think Like Owners
Contractors are the ultimate do-it-yourselfers. But running a successful contracting business demands a team effort and the ability to delegate. That’s how contractors who own their own businesses expand the number of crews and projects they can simultaneously handle. Recruit well-rounded, multitalented employees who are capable of helping manage key facets of the business. Then incentivize them so that they feel personally invested in the success and reputation of the business.
Proactively Manage Cash Flow
Contracting companies need healthy cash flow for everything from building materials and equipment purchases to emergency repairs and payrolls. Crunch the numbers to make accurate monthly cash flow and expense forecasts, and be vigilant about collecting outstanding invoices. The shorter the collection cycle is, the easier it is to run a smooth business, do consistent marketing, and avoid cutting corners in an attempt to stay profitable. It’s usually wise to employ a bookkeeper who will make sure that side of the operation is expertly run and isn’t a distraction for the owner.
Make it Easier to Get Paid
There are turnkey systems that can accelerate the revenue cycle by enabling digital invoicing and online payments while also generating customizable financial reports. A well-designed digital payment system with a variety of flexible features is like a handy, all-purpose multi-tool. That improves customer service, too, because more that 80 percent of clients want to pay online. Accept encrypted and secure credit card payments, as well as 24/7 payments from mobile devices. Track expenses, generate instant receipts for clients, and share data with accountants. Reduce the time and effort spent doing paperwork and writing checks, while also gaining the peace of mind of cloud-based accounting security. Some platforms even have the ability to let clients create their own payment plans on a fixed schedule. Or use a recurring payment feature for those clients who have long-term service contracts.
Take Help from Attorneys
Contractors generally know that to avoid problems and miscommunications, it’s important to put everything in writing. But those agreements need to be able to stand up under the scrutiny of potential lawsuits and judges. Use a capable business lawyer to review all contracts before signing off on them. An attorney can also offer expert guidance regarding workman’s compensation claims, state and local contractor regulations and liability, and the most suitable legal business structure for a growing contractor business.
Sweat the Small Stuff
Haste makes waste, and it’s always beneficial to slow down enough to pay close attention to the minor details. That extra care and quality control will make every project run more smoothly with fewer cost overruns, inspection red flags, and unplanned do-overs that erode employee morale and profit margins. Attention to detail is almost always the difference between a mediocre contracting business and one that’s highly reputable. Higher-paying commercial and residential clients will line up far in advance for the opportunity to work with a contracting business known for extraordinary results and superior customer service.