7 steps to maximising your building firm profits
Have you ever wondered if you should be making a better margin on the building work you carry out? If so, you’re not alone. Many small and medium-sized building firms in the UK are failing to make the profit they deserve for the amount of effort they put into their projects. The reason? Usually it’s nothing dramatic, just small amounts of profit leaking here and there. In this article, we look at ways you can ensure you hold onto of every pound of profit on every building project, with very little effort. Taking these steps will help you grow your building firm into a robust, profitable business.
Read our seven top tips for maximising your profits.
How to increase the money you make on every job
1 . Think about the value of your time
How much is your time worth? Is spending hours estimating every week the best use of your time? It’s a necessary task but you can significantly reduce the time you spend on each estimate if you enlist the help of estimating software. And the time you save can be put to better use, doing other key tasks which keep your business running smoothly.
2. Don’t miss anything out of your estimates
Missing elements from your estimates is quick way to slash your own profits. You literally can’t afford to leave anything out. This is where estimate software shows its value. Estimating software itemises and calculates everything so there’s no chance of forgetting anything – down to the tile nails, the gutter clips or the last tube of sealant. The market-leading software solutions have been developed by builders and building engineers – EstimatorXpress and Take-off & Estimate Kit are two such examples. They’ve done all the head-scratching for you so you don’t have to hold everything in your head!
Ensure you’re using the latest material prices in your estimates
3. Use current material prices in your estimates
We might be teaching you to suck eggs here but it’s an important point so we’ll say it anyway. Estimating with out-of-date prices could lose you thousands on every project. We know that keeping up-to-date with the latest prices is a big drain on your time. The quick solution is to use construction estimating software. The best estimating software products release regular material price updates which means you can estimate with current prices without doing any of the leg work. The result is accurate estimates which will protect your profits.
4. Include a percentage for wear and tear and wastage
Sadly, it happens on every building site… Equipment gets damaged. Tools go walkies. Materials get broken or wasted. Screws disappear down the cracks. To ensure you’re not left out of pocket, you need to add a percentage to your estimates to cover wear and tear and wastage. Luckily, estimating software will do this for you, automatically.
5. Don’t forget to cover your overheads
Van leases, laptops, accountancy fees, and so on, should not be paid for out of your profit margin! Overheads should be accounted for separately from your profit. And - you guessed it - estimating software offers a solution. The top estimating software products will prompt you to add overheads to your job, once again protecting your hard-earned profit.
6. Take inflation into account
With inflation spiralling, it’s a tough environment for builders to work in. Inflation has recently hit 10%. Estimating software has a role to play in protecting you against inflation, allowing you to pass on rising costs to the client. With software such as EstimatorXpress, you can estimate a project’s costs with today’s prices then use the in-built inflation tool to calculate how much it’s likely to cost when the job begins in 3- or 6-months’ time.
Add a decent profit margin to your quotes
7. Include a generous profit margin
Decide on the profit markup you want to achieve. Successful building firms achieve 20-30% - and if you undertake high-quality building work you should aim for that too. Set the profit margin in your estimating software and the profit will be automatically added your quote. Remember, the clients you want to work for will be willing to pay the right price for the high standard of work they’re receiving. Beware any customer who haggles at the beginning of a project – they’re probably the kind who will quibble the final amount too!
How to make the changes
If you use a spreadsheet or other manual process, you can apply these suggestions to your usual way of estimating method. However, the quickest route to ensure you’re pricing your projects accurately and covering ALL of your costs is to use estimating software.
The stand-out products on the market are EstimatorXpress and Take-off & Estimate Kit. With EstimatorXpress, you can estimate a simple extension in less than an hour using a pre-loaded quote template. There are also templates for garages, new builds as so on. Take-off & Estimate Kit is the best offering for builders whose business involves taking off customers’ building plans. This smart bit of kit allows you to trace over the plan for an almost automatic estimate.
To check out these estimating software solutions, check out the trials below: