Protecting Your Construction Company From a Financial Crunch
Construction companies can face financial difficulties ranging from fewer projects to clients not paying on time. Taking steps before a downturn happens can help protect your cash flow in Largo, FL. These ideas from Rose Building Contractors can help.
Become an S-Corporation
If your construction company is an LLC, registering it as an S-corporation offers tax benefits since you eliminate self-employment taxes. To save money on attorney fees, consider using a formation service. You can register a Florida S corp online or print and mail the form if you want to do the paperwork yourself.
Retain Talented Employees
Keeping your best employees lets you give your clients the best results. It helps you stay fully staffed with reliable employees. Reducing turnover also reduces costs for recruitment, hiring, and training. It costs an average of $4,700 to hire a new employee.
Create Accurate Estimates
Accurate job estimates help boost your company's profit margins. Using estimating software or apps helps you improve your estimates. For example, roof estimating software can help you accurately calculate the roof area and materials, even on complex roofs. They let you customize estimates with local pricing data for accurate material and labor costs. Plus, you can create personalized templates for easier estimates.
It's tempting to outfit your construction company with new equipment and all the latest technology. However, excess spending can strain your budget and make it difficult to pay the bills during a downturn. Evaluate your costs to determine if you can cut spending in some areas. Paying off debt faster can also free up more money.
Choose Affordable Marketing
Using inexpensive marketing strategies helps you keep your costs low while attracting a new stream of clients. Start with a professional, attractive logo or banner on your website that you can also use on social media and print materials to build brand awareness. Some banner templates are free and let you customize the design, text, fonts, colors, and images to fit your branding. Engaging with customers on social media is another inexpensive option.
Stay on Top of Your Finances
Monitor bank statements and financial accounts regularly. If you wait until the end of the month, you might miss unauthorized charges or have lots of late payments from clients to manage. If you don't look at your finances until months later, you can't take action quickly on cash flow issues. You can also outsource your accounting for expert financial advice.
Diversify Your Business
Target different client types to avoid a sudden drop in business. If you only work with clients in a certain industry, you could lose customers if that industry suddenly dries up or has a downturn. Working with clients in different industries as well as both commercial and residential clients gives you more diversity if one group is affected by the economy.
Expanding your work area beyond Largo gives you more potential clients, but working too far out of the St. Pete-Clearwater area can increase your travel costs. You can also diversify your construction company with alternatives such as renting out the equipment you're not currently using or hanging holiday decorating during slower winter months.
Protect Your Business Now
Taking key financial steps to protect your cash flow can help strengthen your construction company. Visit the Rose Building Contractors blog for more helpful content.