A successful contractor does everything possible to run a lean, financially sound company. Finding ways to save money while increasing margins, improving cash flow and operating more efficiently is key. Following are 12 financial strategies contractors can implement to stay financially healthy.
Prevailing business wisdom holds that the way to reduce credit risk is to limit credit lines, be stingy in allowing credit and freeze orders on past due accounts. This line of thought posits that it is generally impossible to lower “bad debt” losses without adverse consequences to sales and business expansion.
How to Make the Best Decisions for New Company Leadership Construction Contractors Need to Evaluate Values to Select the Best New Leaders
Business leaders have always been scrutinized for their decision making. In 1914, Henry Ford was both denounced as a fool and praised for doubling wages of factory employees from $2.34 to $5 per day. In 1987, Merck & Company decided to give away a cure for river blindness for free, an unfathomable choice for most pharmaceuticals, because they recognized the cost of the drug would be too high for impoverished international markets.
Regain Lean Momentum and Maximize Results Focusing on Lean Can Help Construction Contractors Generate Strong ROIs
Streamlining projects and improving performance are worthy goals for any company, but particularly for the construction industry, where meeting deadlines and budgets are essential keys to success. Since its development in the 1990s, the Lean methodology has helped companies across a wide range of industries increase profitability and productivity.
GDP growth in 2017 is expected to experience a cyclical rebound before returning to a rate more in line with long-term potential, according to economist Bill Conerly. In other words, some experts believe that real GDP growth in 2017 will outpace last year, but will stabilize in the years following. Is this good news for small construction companies?
It would be nice if every construction project not only got off to an orderly start, but also proceeded in a steady fashion all the way through to completion. Unfortunately, this is not always the case. When it comes to manufacturing facilities or other system-intensive building projects, circumstances can change—and change quickly—because the business case for capital expenditures can shift drastically in a short amount of time. It’s not uncommon for work in progress to come to a complete stop.
Construction can be a thin (or no) margin business if costs are not constantly monitored and controlled. For example, a recent hospital project in the Midwest experienced serious cost overruns, with the original projected final cost of $600 million rising to more than $1.5 billion
Corporations operating on a global scale are on the cusp of major transformation. During the next decade, smart assets will continue to enter facilities, offices, factories and homes in numbers never seen before, creating new user experiences and improved efficiencies at the same time.
The New Year is a time when we collectively decide to improve from last year. It’s the time for resolutions and, perhaps most importantly, it is the time to implement change. For many, change involves losing weight, eating healthier, quitting smoking or making smarter financial decisions. In fact, it is estimated that 45 percent of Americans regularly make New Year’s resolutions. However, only 8 percent actually achieve their resolution goal, according to Harris Interactive.
Many closely held construction companies do not have succession plans for continuing the business when the major (or sole) shareholder wants to retire. If family members are unable or unwilling to take over—or if the existing management does not have the financial means to buy the business—an employee stock ownership plan (ESOP) can provide an internal market to buy the closely held stock.
Every day that value is added to a business without a plan for future transition increases the owners’ financial risk. Ideally, the co-owners of every multi-owner business put in place a buy-sell agreement at the time the company is formed as part of the startup process. A buy-sell agreement protects the remaining business owners and the co-owner who leaves the business.
The construction sector is showing signs of recovery nationwide, as total industry spending rose 7.8 percent over the same period last year, according to the U.S. Census Bureau.