These days, the construction business is on the rise! New homes and apartments are being built and older homes and apartments are being renovated. That means there is plenty of opportunity for a good general contractor. Whether you are an all around general contractor or specialize in a particular area, there is plenty of work to go around. Homeowners and property managers need renovation experts, plumbing, roofing, painting, carpentry, and electrical. With all this work, it would seem like running your general contracting business should be a breeze. But like any business, you’ll need a little business sense to really get things going. With that in mind, here are some tips to grow your contractor business.
If you are just starting out, a license is one of the first things you will need. If you are running a general contracting business without a license, you are severely limited in what you can do. Most states require some form of license or registration to perform commercial or residential construction projects. Here in Georgia, any commercial or residential construction work worth more than $2,500 requires a license. So unless you are only working very small jobs, a license is absolutely critical.
Some contractors think they can work “under the table” without a license. While you may get away with this for a while, trying to build a business on that model is risky. If you are found to be doing construction work without a license you could be in for some hefty fines. In addition to fines, a contractor who isn’t licensed cannot apply for or receive building permits. That would make any legitimate construction projects nearly impossible.
To sum it all up, you need to be licensed if the state, county, or city ordinances require it. There is no way to get around it. Plus, being a licensed general contractor gives you access to a much broader range of projects and customers.
Be Bonded and Insured
Any worthwhile contractor needs to be bonded and insured. This provides protection both for the client and the contractor. If a contractor fails to perform the services agreed upon or doesn’t complete a job, the property owner could be looking at a financial loss. If the subcontractors are not paid, the property owner could also be on the hook. Property owners generally don’t want to assume that risk, which is why they prefer to hire a contractor who is bonded.
When a contractor is bonded it means that have paid a surety company for a certain type of coverage for the property owner. Should the contractor fail to perform the agreed upon service or pay subcontractors, the property owner can file a claim. If they win the claim, they are entitled to coverage to cover any financial losses. So you can see why the word “bonded” is so valuable to property owners.
When a contractor is insured, it means that they carry the appropriate insurance to cover themselves and their workers and subcontractors in case of injury or other damage on the job. Without that insurance, a contractor, worker, or subcontractor could sue the property owner in case of damage or injury. That’s an unwelcome prospect for property owners, which is why they want to work with contractors who are insured.
If you can say that you are licensed, bonded, and insured, you will get a lot more work. It means that you are trustworthy and legitimate and not a financial risk to customers.
In addition to being licensed, bonded, and insured, all of which are pretty much absolutely necessary, there are many available certifications. While certifications are completely optional, they can help set you apart from the competition. There are probably hundreds of certifications, ranging from the very technical to the more casual.
One example of a technical certification is LEED certification. LEED stand for Leadership in Energy & Environmental Design and is a certification for energy efficient and environmentally friendly buildings and contractors. To earn LEED certification you need experience working on a LEED certified building. You also have to pass an exam, among other qualifications. While it is not a simple certification to acquire, it opens you up to more and higher paying jobs.
On the opposite end of the spectrum are simple certifications like becoming an Angie’s List Certified Provider. Usually these types of consumer based online certifications are less rigorous to obtain. However, they can still be valuable in acquiring new customers and documenting your quality and reliability. You can also look for local certifications in your city or county.
Maintain Your Cash Flow
One of the biggest reasons new businesses fail is poor cash flow. No matter how much you are worth on paper, without cash everything grinds to a halt. Even if you are flushed with work, without cash you can’t place orders for materials, pay subcontractors, obtain licenses, pay creditors, and fill other functions vital to your contracting business.
If you find yourself struggling to may payroll or you find you don’t have the resources to take on new work, you probably have cash flow issues. Luckily, there are some pretty simple steps you can take to improve your cash flow.
- Ask for deposits up front: You need to pay contractors and suppliers as you are getting the work done. Asking you customers to help defray those costs is a reasonable request.
- Shorten the payment terms for customers: If you are struggling to make payroll while your customers are taking their sweet time to pay you, your payment terms are too long. Asking customers to pay you more quickly will help keep the cash flowing.
- Ask creditors for extended payment terms: It never hurts to ask. You may be surprised at the willingness of creditors to extend your payment terms, giving you smaller regular payments. This may cost you more in interest, but if it can improve cash flow it may be worth it.
- Accept more forms of payment: If you are still only accepting cash and checks as payment, you may want to reconsider. Consumers today are used to paying with credit cards, and accepting credit cards can get you paid more quickly. There is some expense involved, since credit processing companies take a cut, but for larger payments it’s well worth it.
Use Construction Management Software
A successful business is a business that can run efficiently. Using the right construction management software can help you run your business more efficiently and more professionally. If you are spending time manually managing work schedules or tracking the status of jobs, you need to be using better tools.
Needo produces technology that can help you manage your general contracting business much more efficiently and easily. From the first time you encounter a potential customer to the final invoicing, Needo’s software can help you do your job better.
The benefits of Needo’s software begin with preparing an estimate. Our software comes populated with the various specialties you will need for your job (painting, electrical, etc.) All you have to do is assign the cost to each job. Our software will create a professional estimate you can use to plan and can provide to your potential customer.
Once your project is underway, you can use Needo’s software to manage every aspect of your project. It will let you schedule out all of your subcontractors and keep track of individual jobs. You laborers and subcontractors can access the software online to update their schedules and the status of their work. This gives you full knowledge of the status of your project at any time. You can use that information to streamline your building process and to keep the customer informed.
When all the work is done, Needo’s software can help you produce a professional, itemized invoice to provide the customer. That reflects well on your business and can help promote referrals and repeat business.
So if you are still working the old-fashioned way, we need to talk. Contact Needo today to find out how construction management software can improve your business!