40 Ways to Increase Your Profit
Readers like you give advice on increasing profit without increasing price
"Understand the kind of work you do best and where those potential clients are located.”
11. Let someone else do the driving.
Use the Internet or the phone, not a company car, to check out suppliers’ offerings and prices, and take advantage of any free delivery services your suppliers might provide. Such moves save time, a commodity that remains more valuable than gas.
12. Follow up.
Don’t take delivery dates or subcontractor start dates for granted. One respondent calls a day or two before planned deliveries or arrivals — “just like your dentist does.” These extra nudges keep projects on schedule.
13. Use more subs.
By locking subcontractors into a fixed price, you transfer some of the project risk off of your books. “An iron-clad change-order policy makes this work,” says the contributor of this suggestion.
14. Do more yourself.
As an alternative to the above suggestion, another reader is increasing his company’s profits by reducing its dependency on subcontractors, noting that “adding painting to our scope of work has expanded our part of the job.”
"Join a local trade association to build relationships with industry peers — this can be a great source for referrals, as well. ”
15. Invest in relationships.
Take time to meet with every inspector. As one reader notes, “there are a lot of delays in permitting and re-inspections,” and being on-site at the time to personally answer questions or suggest alternative approaches could keep small problems from growing.
16. Get educated.
Use the time freed up by slower business conditions to invest in training for you and your star workers. You could learn new ways to boost your business now, and be in a better position to lead the pack when the economy gets back on track.
Marketing Management
17. Know your market.
Understand the kind of work you do best and where those potential clients are located. Then focus your efforts on getting that business. As one reader says, “The farther you get from your target market, the less likely you are to close the sale.”
18. Mail it in.
Using a regular e-mail or print newsletter to stay in touch with both potential and existing clients keeps your name fresh in their minds. One reader says he regularly earns at least $1,000 every time he sends out his regular newsletter, which covers information on recent projects and industry news that could help existing customers.
19. Learn to upsell.
Higher grade materials can mean higher margins. One reader’s suggestions include promoting nickel hardware over brass, high-efficiency window glass over standard, heavier gauge steel in doors and 3 1/4-in. casing instead of 2 1/4-in. Focus on the benefits of these items over less expensive options.
20. Look for add-ons.
Taking on other projects while you’re already in the house can cut your costs and increase client satisfaction. One reader makes sure his carpenters have change orders on-site to make margin-boosting upgrades. Another spells out this flexibility with a clever byline — “…because one thing leads to another.”
"Stay in close touch with your clients after projects begin. You will need their input on progress and quality.”
21. Leave your customers happy.
Good word-of-mouth recommendations are your cheapest and most effective advertising, so make sure your clients are happy before you send the bill. Then ask if they’d be comfortable giving you referrals. One reader offers $200 for referrals that lead to work, tapping his advertising budget for the reward.
22 Get involved.
Join a local trade association to build relationships with industry peers — this can be a great source for referrals, as well. Similarly, another reader urges contractors to get involved in local chamber of commerce groups to get your face and name out into the community.
23 Team up.
Explore creative co-marketing opportunities with other construction professionals in related trades. For example, one respondent specializes in cabinetry and has joined forces with a local flooring business; the cabinetmaker now has display space in the flooring company’s retail shop and both get the benefit of any single potential customer’s visit.
