As a contractor, you probably didn’t get into the business because of a love of working with numbers. Working with people, sure. Working with your hands, definitely. But working with columns of figures, probably not. If you’re not managing your accounting properly, you could be unintentionally slowing down your business growth. You can maximize your growth potential with a few accounting secrets.
Give accurate estimates.
An estimate can tank your job before it even gets started. Overestimate the job and you could be eliminated from contention. Underestimate and you could end up operating at a loss. If you underestimate and then have to bill the customer for additional items, your customer might not have it in their budget to pay you. You could end up with a dissatisfied customer, poor word of mouth, or having to chase down payments in collections.
You’ll make your customers happy and grow your business if you use consistent strategies to determine estimates. You may get a discount on supplies if you’re ordering over a certain quantity. If your numbers are close to the price break, it might be better to over-order and save on the materials. Use payroll software to estimate your labor costs so you account for different rates of pay and overtime. Build in some contingencies like damages, loss of time due to weather, and errors in ordering.
Track deposits and invoices.
Getting deposits from customers can be a chore. You can get tied up picking up checks, waiting for them to clear, or dealing with insufficient funds. Taking deposits with credit cards can make your life infinitely easier. The payments will appear on your banking statements and you can integrate them with your cloud accounting software. At the time of final invoice, the credit card will be automatically billed so you don’t run the risk of waiting for your client to pay. Taking the billing time off your hands means you’ll have ample time to do more estimates and win more business.
Track customer demographics.
You can gain a wealth of information by tracking your job demographics. You might discover that you had several jobs in the same neighborhood, which likely means that word of mouth in that area is positive in regards to your work. Targeting the houses in that neighborhood with special advertising is an effective way to market your services.
Builder neighborhoods likely all need similar work because they age at the same rate. You’ll notice people replacing windows and roofs at the same time, redoing dated bathrooms, and replacing siding. Once one neighbor starts making improvements, other neighbors like what they see and want it for their own homes.
Studying your job demographics lets you see which work was the most profitable. If you find, for example, that kitchens are your most lucrative jobs, then you can focus your marketing on kitchen remodels. Maybe you’re spending too much time on home additions and not making enough profit to grow your business. If that’s the case then you’ll need to adjust your prices to reflect that.
You can also see what zip codes your most profitable jobs were located in and send out targeted marketing to generate more business there. People like to see that your work is done locally because they feel like you will be accessible.
Job expenses also play a role in which projects you take. You might find that expenses to travel to certain jobs were not accounted for in your estimates because of distance, gas, tolls, bridges, etc. If you’re traveling to an area that requires extra expenses for deliveries and workers’ travel, you can look to similar jobs that you’ve worked in the area for estimates.
Hire an accounting team.
If you’re still using carbon copy invoices and doing everything by hand, you’re losing valuable time and money that could be spent building your company. JADDE Financial Solutions can set up your business so that your accounting software integrates with payroll, your banking, and your vendors. We’ll get your mobile platform in place so you can update your jobs while on site, simplify your billing, and give you valuable reports that help you grow your business.