Avoid financial risk in construction industry with these 5 builder tips

As ex-builders (45 years in the building trade) we at Bizprac have made a commitment to our building industry.   This commitment is to partner with more builders.

Our vision is that our builder partners will use improved processes to make sure they take minimal financial risk in their business.  Our builder partners will create wealth for themselves and their families by managing their construction business with Bizprac construction management software. Ultimately, that provides us at Bizprac with a huge sense of fulfilment.

Helping builders and contractors to build their business

Too often good builders & contractors focus on their work in the construction industry, rather than the business they are in. Furthermore, an unfortunate fact of life is that too many of us do not fully utilise our skills and talent to create the success we desire.

Bizprac staff are committed to understanding what makes builders & contractors successful as a business and financially.  We regularly talk to many great builders who have not yet transitioned into great business people.

A mindset of minimal financial risk in construction 

Many Builders and Contractors don’t yet realise that by adopting a mindset of minimal financial risk in construction they will help their clients by delivering buildings on time and to cost and they will also maintain their own margins.  Bizprac understands this and therefore provide a solid backbone for any builder’s business.
To help you enjoy your successful construction business  we’ve identified the Top 5 Builder Mistakes to avoid financial risk in the construction industry.

1. Know the base costs for construction

Stay well informed of your current costs for materials, labour and overheads.  Wealthy builders understand the cost structure of the business, the quotes and jobs/projects.  Moving forward, this type of knowledge sets the right path.

2. Establish a network of trusted subbies 

A builder by themselves can’t do all the work. As a  business grows it gets multiple jobs and lots of projects on the go.  Multiple projects create a need to step up and oversee the projects.  Inherently, these projects become the business brand, as well as the future of the business.

Building a network of sub-contractors who can be trusted, and treating them well is imperative.

3. Build relationships with Suppliers – These guys are critical

Many builders see themselves as the suppliers’ customer.  Then adopt a mindset of “the supplier should treat me right”.

Suppliers might even treat the builder like a customer.  To think of this relationship in a transactional manner is a mistake.  The builder needs to think of the suppliers as business partners.  

Engage the supplier as a partner and plan well with them.  Be clear, honest and trustworthy with them. The supplier (most of the time) will give the builder what he needs when he needs it.

4. Know that Profit is king – to avoid financial risk in construction industry

Accountants might say “cash flow is king”.   It is important, however, to realise that managing cash flow is not necessarily making money.

Wealthy builders understand the need to have a minimal financial risk and will, therefore, focus on the margin in the job.  Builders who do this recognise the interdependence between estimating, purchasing, invoicing and accounting.  On the other hand, builders who are running an estimating software package and a generic accounting package will realise, there are gaps in between the two systems.

5. The mistake of not using integrated construction software

Successful builders will agree that in business the greatest financial risk in the construction industry comes from using a separate estimating and accounting system.   Using separate estimating and accounting software means the bookkeeper will need to manipulate data.  This manipulation is required to gather enough information to see whether or not profit has been made on the job.

The downfall to this process is that critical information and knowledge is, quite often, unavailable to the business owner, until the job is completed.   Remedial action is very limited as a consequence of information usually not being available until a much later stage of the actual construction process.

Total builder business management

As a good builder, you want to build wealth for yourself and your family. So you need to get your head around the running and managing the business side of building.

Accomplished builders understand “profit is king”. The extraordinary builder recognises that the aim is to have a minimal financial risk in their construction business.   To avoid financial risk in the construction industry and become a wealthy and accomplished builder –  You need the right management tool to get the job done.