Starting a construction business is one of the oldest business ideas in the book. When done correctly, it can lead to lots of profits, helping you lay the foundations of a construction empire. Unfortunately, lots of small businesses in this sector struggle to generate profits year in year out. They keep losing money, and on further reflection, it’s easy to identify why this is the case.
If you currently own and operate a small construction company, here are three common ways you could be losing money right this second:
Poor supplier relationships
Construction businesses rely on suppliers to gain access to all the different raw materials and equipment needed to run the company. You can’t perform construction work without all of these things and there are various building company suppliers out there that provide them for you.
The problem is that you are choosing bad suppliers for your business, meaning you’re paying too much money for the goods. As a result, this whittles away at your bottom line, making it harder for you to make a profit. The solution? Find better suppliers at more affordable rates, lowering the cost of overheads.
That’s right, on-site crime is a genuine issue that affects construction companies and can mean you lose money. It can happen through employees or members of the general public stealing things from your site. What tends to happen is someone outside your business sneaks onto a construction site when you pack up for the day, looking to take things for free. This can include some of the supplies we were just talking about, meaning you have to spend more money replacing them.
This is actually a bigger problem than you think, but it can easily be addressed by improving the security on your site. Start by installing mobile construction site cameras to deter both employees and members of the public from stealing anything. Something simple like this can keep your supplies at their standard levels, saving money.
Construction site accidents
Finally, a lot of small companies lose money due to construction site accidents. An employee gets injured on the job, leading to disruptions. This has a two-fold effect on your financial situation as a business. Firstly, you need to cough up money for any medical bills your employee encounters, seeing as they were injured on the job and therefore you’re technically liable. If you don’t, they can sue you for more money anyway.
Secondly, it can delay your operations, meaning you might have to discount your service for not completing it on time. Or, you could get bad reviews from clients, making it harder to find more work and to make more money. As such, improving construction site safety needs to be a top priority to prevent your business from losing a lot of money.
As you can see, construction businesses can lose money in ways that you may never have thought about. If you find that your business struggles to make a profit, it could be down to one or all of these three issues.
Related content from StrategyDriven