How Can You Possibly Build A Construction Business If You're Hemorrhaging Money In These Ways?
But that’s not to say that construction is a foolproof field. In fact, as we’ve seen in the US a lot recently, the industry is plagued by labor shortages, and that’s just one of the ongoing issues to consider. Rising materials costs and other creeping expenses are also taking their toll, and they’re resulting in industry-wide closures across any company that doesn't handle finances properly.
As such, it’s never been more important to watch each cent in construction. You’ll certainly struggle to build a long-standing company if you make the mistake of hemorrhaging cash in these key ways.
# 1 - Improper Material Handling
Construction material costs are one of the major expenses faced by construction companies as the costs of key materials like lumber and steel continue to rise. These materials are literally becoming industry gold dust, which is why you should always avoid improper material handling to ensure your business succeeds.
Mistakes including inefficient storage and shoddy handling practices can all result in damaged, unusable materials that you’ve already paid a fortune to secure. The result? Losses like you wouldn’t believe. Hence why improvements like proper storage and training are key to keeping materials shipshape and cost-effective.
# 2 - Failure to Collect
Late payments are a notable problem in any industry, but this is becoming especially the case in construction where, not only do companies wait an average of 94 days to receive payment, but they’re also left facing payment delays from over half of their clients.
These collection issues spell obvious bad news, especially when you consider that ongoing issues can result in additional costs like the need to seek the help of a construction lawyer or repossession company for the eventual recovery of that money.
But how can companies prevent this? Clear communication, especially regarding payment dates, can make a huge difference, as can simple, automated processes that include automatic reminders, and simplified payments when the invoice date comes.
# 3 - Overlooking Planning Elements
Sometimes, financial losses fall directly into managerial laps. In construction, that’s especially true when it comes to key planning elements. The insufficient analysis of site conditions and requirements is endlessly problematic, as it can result in costly and ultimately avoidable project delays or setbacks. Equally, failing to consider all elements while scheduling a project timeline can result in undercharging, and overpaying on each build.
Proper due diligence and research is the only way to overcome these issues. Site managers should personally visit each project site before work begins, during which time they can implement proper planning procedures that never cost more than expected.
Construction might look like a sound choice compared with many tech-led jobs right now, but you’ll never build a truly viable construction company until you plug these financial holes!