Published: May 2, 2020
If you want to reward yourself with an expensive toy for all the hard work you’re putting into your Perth construction business, there’s one sure-fire way to do it: INCREASE PROFIT.
You know that solid foundations are the key to anything you build. It’s the same with planning to increase profit in your business. You need solid foundations to do that too.
Any successful business advisor will tell you that there are three basic ways you can increase profit in your construction business: by increasing your revenue, cutting your expenses, or a combination of both.
After a tough period in recent years, the Perth construction sector is predicted to have an upswing in 2018 and beyond, especially in commercial property development. The increase is being fuelled by major shopping centre approvals/redevelopments, the Forrestfield Airport link, as well as and several hotel and apartment towers that will soon be dotting Perth’s skyline.
This upswing provides a great opportunity for your construction business to get more lucrative work to increase your revenue and increase profit. Billions of dollars are being poured into these Perth projects.
Other ways that you can increase profit include finding a profitable niche to focus on, whether that be in the commercial or residential Perth construction markets. You need to devote your time, energy and resources to the most potentially lucrative areas where you’ll generate more money. Examples of niches are renovations and new constructions.
You don’t necessarily have to focus on one niche. For example, depending on the size of your construction business, you could have dedicated teams for different niches in different Perth markets. The main thing is that you identify potentially lucrative niches to focus your revenue-generating efforts.
Cutting your expenses is another way to increase your profits and it mightn’t be as hard as you think. You don’t have to cut corners. For example, it’s no secret that there is a lot of waste on many construction projects that ends up going to landfill. Imagine if you could reduce that waste and keep more money in your pocket instead?
Ways to reduce the cost of waste include:
- Planning and ordering the correct quantities of materials.
- Designing your constructions to use the materials you buy in their existing dimensions wherever possible.
- Negotiating supplier buy-backs of unused materials if you can.
- Ensure that you store your building materials securely to minimise the risk of theft or damage.
Equipment downtime can also cost you time and money. Make sure you keep your equipment well-maintained to minimise downtime and the need for costly repairs.
Bad debts are also a problem for many in the construction industry. You need to minimise your exposure to bad debts by taking proactive steps such as:
- Setting strict payment terms and conditions upfront.
- Communicating regularly with your debtors. Make it easy for them to pay you by sending payment reminders well before the due date and give them as many easy payment options as possible (such as electronic funds transfer).
- Pursuing any outstanding debts quickly.
- Consider taking out trade credit insurance. While this is an expense, it can cover your losses if any of your debtors fail to pay you.
You can increase profit the most by both increasing your revenue AND cutting your expenses. And that’s an achievable goal, especially if you can focus on minimising waste, equipment downtime and bad debts as the level of activity in the construction sector picks up.
But if you’re feeling overwhelmed and that there aren’t enough hours in the day for you to put the necessary time into this aspect of running your business, a business advisory service may be just what you need. Experienced and well qualified business advisors can help you put the foundations in place to help you maximise your profit. They can also help you with the ongoing monitoring and management of your business. Imagine if you had a business advisor by your side to make life easier?
How we can help
At Quarles Business & Financial Strategists, we have the most professional and experienced business advisors Perth has to offer. We run business improvement programs that will help you to improve the performance of your construction business. Our business advisors focus on helping you increase profit, leaving you to focus on what you do best – building high quality Perth constructions.
We know that it’s highly competitive out there and tough to increase profit on your own. We also know that many people running construction businesses simply don’t have enough hours in the day to focus enough time on their financials. That’s why we have a team of business advisors with extensive experience in the Perth construction sector to help you. They can customise our program to the specific needs of your business.
Our business advisors work with you using FUTRLI is the all in one forecasting & reporting tool to help you increase profit in each of three ways identified in this article: increasing your revenue, cutting your expenses, or a combination of both.
We’re well qualified and have over 40 years of experience servicing the needs of our clients. We’re happy to answer any questions you have via a FREE initial consultation. Our Perth office is conveniently located in Inglewood.
In addition to our business advisory service, we offer a broad range of additional services. These include:
- Tax and accounting packages to help you manage both your business and personal taxes.
- Individual financial planning advice to help you develop and implement strategies to secure your financial future.
- Self-managed super fund advice and packages (if you want to take control of your retirement investments).
Contact us today, you have nothing to lose and increased profit to gain from getting our high-quality business advisors to help you. We’re here for the long haul and can help support your business every step of the way.