After a long day in the sun, working hard and wrapping up your latest project, you get back to your home or office with your customer’s check in hand. Only…that check doesn’t go quite as far as you hoped it would. That’s the unfortunate reality for many contractors. With costs on the rise for everything from materials to insurance, now may be a good time to reassess your business practices and look for options to increase your profitability.
Close More Sales.
Homeowners who request an estimate but don’t close the deal take up time that could be spent converting someone else. Bring your ‘A’ game to every sales call and project-estimate meeting. Add a little pressure to your sale by offering special promos on financing if your customer signs up within a certain timeframe. You can also let them know that your calendar is filling up fast, but you can fit them within a certain time if they would like to claim that slot for their project.
Improve Your Pricing Model.
Are you charging enough? You pay for products, materials, tools, labor, gas, transportation, insurance and a variety of other expenses. Make sure your estimates account for these hidden costs. You may need to raise your project estimates to ensure your company is getting the income it needs to thrive.
Your customer is already getting one project done. Look for complimentary services you could offer them to increase the project size. Higher quality products can also give a nice boost to your profit margins. Make sure your customers are aware of the benefits of higher quality materials, not just the most common choice, so they can make the best decision for their home and you don’t miss out on opportunities.
Pick and Choose Your Projects.
Some projects have better margins than others. If you have enough customers asking for your help, don’t be afraid to be picky. Choose the projects that will stack well in your calendar, are easy to travel to or that offer you the most profit for your time.
Most home improvement and renovation companies pay for products and labor up front. That means you may not have a guarantee of when (or if) your customer’s check will clear. Have a plan in place to follow up with delinquent accounts and collect the money that you have earned. If your customers choose monthly payment plans through Foundation Finance, you don’t have to worry! You receive your full payment within 24 hours of verification of project completion.