The success of the construction industry is tied to the economic climate as a whole. During a downturn, people will be trying to cut costs and they won’t be spending money on expensive home extensions or other construction projects. Your company will be hit hard during a financial crisis so you need to take measures to keep yourself going until things start to improve and the work starts coming in again. Most companies cut costs when they’re starting out but they neglect to do the same once they’re established. If you don’t watch your expenses, you risk folding before you get the chance to bring in more money. But don’t worry, just follow these simple steps to keep yourself afloat until things get good again.
Repair Your Own Equipment
Buying new equipment is one of the biggest outlays for a construction company and when money is tight, it will eat into the already small amounts of profit that you’re making. When something breaks, instead of just replacing it go to an HW Part Store and get the bits you need to fix it. This is a good skill for your team to have in general because if something goes wrong on site, you don’t have to wait around for it to be replaced. Even after the economic downturn has ended, you should carry on this practice anyway.
Having to go back to make changes to a job that you thought was finished is going to cost you a lot. The price will already have been agreed and the customer won’t pay you more to come back and sort any problems that you’ve left behind. That means you’ll have to pay labor costs that will eat into your profits. To avoid this, you just need to make sure that you’re paying attention to detail when you’re finishing up a job and make sure that there are no problems that you’ll have to go back and fix.
Build Relationships With Suppliers
Cutting the cost of materials is a great way to keep costs down when you’re struggling. If you build and maintain good relationships with suppliers, they’ll be more likely to be sympathetic to your position and give you discounts when you’re struggling for cash. The larger suppliers aren’t likely to change their pricing structures for you but smaller ones will be more flexible so try to buy from local suppliers when times are good and they’ll return the favor when you’re struggling.
Hiring a separate guy for each job that you need doing is going to cost you a lot, and half the time they won’t be doing anything. If you hire more experienced workers that can fill a couple of different roles, you’ll massively cut your labor costs. In some cases that won’t be possible, you’ll need to hire specific electricians and carpenters but when it comes to general labor you’ll be able to double up on things a bit more.
An economic downturn can spell disaster for your construction company but if you take the right measures, you can keep yourself going until you can find more work again.
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