There are really only a couple of ways to increase your profit on a job–you can increase the sales price or reduce the costs. We help with both!
As a business owner, there are many things you can to to help with both sides of the problem. With contractors, one of the best ways to be confident about the amount of profit you will make on a job is to move away from per-unit pricing (square feet, yards, linear feet, face feet, per valve, per section, etc.). I would be happy to come to your office and show you several examples of why you might be nervous with this method of bidding if you were to be awarded the largest job of your career.
Not too long ago I came across a book named “A Simple Guide to Turning a Profit as a Contractor” that addresses the problems most contractors have with profitability on jobs. We now use many of the techniques in that book to help our clients increase profit.
Some of the tools we use include:
- Guidance and training on profitable estimating
- Process improvement for timely information when tracking jobs
- Custom dashboard creation to more easily track jobs
- Custom QuickBooks reports to more easily track jobs
- Chart of Accounts and Item list (QBO calls it ‘Products and Services’) clean up and improvement
- Managing increasing labor and material costs
- Negotiating better terms with vendors
- Inventory and bulk purchasing to decrease prices
If you would like to know how much money you will make on each job if you stay within the budgeted amounts for materials and labor hours, call now for help and a free consultation.
Benefits of the Profit First Methodology
Improved Cash Flow: Keep the Money Moving
Cash flow is the lifeblood of your construction business. With our Profit First strategy, you can learn how to manage your income and maintain a healthy cash flow. Imagine a world where bills and payroll are a breeze. Sounds like a dream, right? It’s time to turn that into a reality, and we are here to guide you every step of the way.
Increased Profitability: Building More Than Just Structures
You’re in the business of building things, but wouldn’t it be nice to build up your profit margins? Our Profit First approach ensures that your hard-earned money is put to work, growing your profits instead of slipping through the cracks. No more worrying about making ends meet—we’re talking about thriving. With our profit enhancement solutions, you’ll learn how to keep more of what you earn, turning every project into a stepping stone toward greater financial success.
Financial Stability: A Foundation That Lasts
In the construction industry, a strong foundation is everything. The same principle applies to your finances. With our Profit First strategy, you will be given the tools to lay the groundwork for your long-term financial stability.
At the end of the day, we’re in the business of helping you build a future you can count on. We’ll help you structure your finances so it will support sustainable growth in your construction business.
Profit First FAQs
What is Profit First, and how does it apply to my construction business?
Profit First is a financial management system that flips the traditional accounting formula on its head. Instead of the usual “Sales – Expenses = Profit,” we prioritize profit by structuring your finances as “Sales – Profit = Expenses.” This approach ensures that your construction business puts profit first, so you get paid before anything else. Applying this method will improve cash flow, profitability, and financial stability.
How can Profit First help improve my cash flow?
Profit First helps you manage your cash flow by allocating your income into specific accounts for profit, owner’s pay, taxes, and operating expenses. This system ensures that sufficient money is set aside for essential expenses. The result? You’ll have a clear picture of your cash flow, allowing you to make smarter financial decisions and avoid the stress of unexpected shortfalls.
Will implementing Profit First require a lot of changes in my current financial practices?
While Profit First does require a shift in mindset, the actual changes to your financial practices are straightforward. We’ll guide you through setting up the necessary accounts and adjusting your financial habits. The process is designed to be simple, intuitive, and easy to integrate into your existing business operations. The payoff is well worth the effort because you will gain greater financial control and a more profitable business.
How does Profit First increase profitability for my construction business?
Profit First increases profitability by ensuring that a portion of every dollar you earn is set aside as profit. This disciplined approach helps prevent overspending and encourages smarter budgeting and expense management. Over time, this approach leads to healthier profit margins, allowing you to grow your business and reinvest in your success.
Can Profit First help my construction business achieve long-term financial stability?
Absolutely! One of the key benefits of Profit First is the long-term financial stability it provides. You will see a strong financial foundation develop by consistently prioritizing profit and wisely managing expenses. This stability helps your business weather economic fluctuations, unexpected costs, and other challenges that may come up.
What kind of support does Foundation Accounting & Consulting offer when implementing Profit First?
We provide comprehensive support throughout the entire process. From initial setup to ongoing guidance, our team is here to help you every step of the way. We offer personalized profit enhancement consulting to tailor the Profit First system to your unique business needs, ensuring you achieve the best possible results.
How quickly can I see results from implementing Profit First in my construction business?
Many of our clients begin to see positive changes within just a few months of implementing Profit First. The system is designed to create immediate improvements in cash flow and profitability. However, the full benefits will become more and more apparent as you consistently apply the Profit First principles over time.
Is Profit First suitable for construction businesses of all sizes?
Yes, Profit First is a flexible system that can be adapted to all construction businesses. Whether you’re a small contractor or a large construction firm, the principles of Profit First can help you manage your finances more effectively, increase profitability, and build a stable financial future.