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The One Word That Can Make Your Construction Business More Profitable

By: Steve Ball

Construction contractors often benefit by saying “no” more often. “No” to certain jobs, and “no” to certain customers.

It’s Hard to Turn Down Work

When a new project presents itself, it’s hard to turn it down. As business owners, we’re hardwired to go after new work and close every deal. While it’s good to be entrepreneurial and aggressive in growing your business, it’s not always smart to take on every new project that comes your way.

Why? Because some jobs just aren’t going to be profitable. And – I’m not going to win any popularity contests for saying this, but I’m being honest – some customers aren’t going to be good for your business. Let’s dig into those two items a bit.

When to Say “No” to New Work

With more projects available today than in the past ten or so years, it’s time for contractors to be more selective in the work they choose to take on.

When evaluating whether to take on a job, ask yourself:

  • Do I have the staff, experience and time to meet the customer’s expectations?
  • Will I actually make money on this job? (Pro tip: you have to understand your fixed and variable costs before you submit an accurate bid. This burdened hourly rate calculator will help.)
  • Do I have the time to spend on upfront project planning before the job starts? (Pro tip: you make most of your money on upfront planning.)

The first step toward profitability is knowing when to walk away from a project before it even starts. While it’s tempting to cave to a customer’s request to lower your prices, know the value of your work and what it’s worth. It’s better to walk away from a job than to lose money on it.

When to Say “No” to Customers

Can we talk about the elephant in the room?

Anyone who has been in business for more than a few months knows what it’s like to deal with difficult customers. One thing I have learned in my 30+ years of working with clients is that it only takes one bad client to do a lot of damage to my most valuable asset: my team of talented employees.

One of the joys of being a business owner is developing lasting relationships, some that evolve into friendships, with clients from all walks of life. But every once in a while, a client can wreak havoc on morale.

Over the years I’ve severed ties with a few clients who have run my staff into the ground for various reasons, including using disrespectful language around my employees, being perpetually tardy for meetings and employing nefarious business practices. While it goes against our nature to “fire” a customer, does it really make sense to continue a relationship that isn’t mutually rewarding, profitable and respectful?

When a client’s behavior repeatedly wears down my employees, it’s time to say “no” to the client. That’s not to say my employees aren’t expected to work hard and deal with difficult situations and people. But when the same customer never shows up for meetings or verbally abuses my employees, it’s time to say “enough” as a business owner.

Saying “No” Has to Be a Strategy

Knowing when to say “no” has to be a strategy for making your construction business more profitable. If you’d like help understanding your company’s profit margins, identifying fixed and variable costs, submitting accurate bids and evaluating jobs, contact us online or call 800.899.4623.

Published July 26, 2019

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