As a home improvement professional, you know that keeping track of your finances is one of the most important parts of owning your own business. When you’re pitching a project to a new or existing lead, it’s crucial to communicate a clear and comprehensive pricing plan that will satisfy your clients while maximizing your own profit. If the financial side of business isn’t your strong suit, don’t worry. Here are 6 simple steps that will give you a more profitable estimate every time.
Itemize your spending
If you’re looking to decrease your spending across the board, or if you just want a clearer view of where your money goes during a particular build, it is essential to keep track of every last detail of your finances. Setting up a spreadsheet that includes all of your regular costs—including labor, materials, and other incidentals—will help you get a better idea of your financial situation and therefore make more accurate estimates. It’s a good idea to keep a record of your past average spends for these items (for builds of similar types and sizes) so you can more accurately forecast costs with each new building project.
Whether or not you love technology, most modern businesses use some type of online platform or program to help them get a handle on their finances. You can make this part of your job much easier by putting all of your data into an integrated business program or app designed in order to cut costs, maximize profits, and make accurate estimates. Here are some of the top programs pros like you are using:
- QuickBooks: perfect for logging and calculating your spending and profit margins
- Asana: a timekeeping app that tracks work and keeps you in touch with your colleagues
- Xactimate and ProContractor Estimating (among others): comprehensive, industry-specific programs that help you estimate projects and provide support from start to finish
Keep orders to a minimum
Once you’ve compiled a detailed list of your running costs and average spending (and maybe even enlisted the help of a web-based estimating program), you can more accurately tailor your material orders to cut down on overspending and help minimize waste. While only you know exactly what you need for a particular building project, we recommend only purchasing materials you know you will use. It’s often easier to purchase more materials later on than it is to dispose of excess items after a build is finished. After all, only some companies accept returns, and this often only applies to certain types of materials.
Recycle whenever possible
As accurate as your purchasing may be, there are times when you will have materials to spare after a building project. There are several ways to deal with this excess:
- Find ways to reuse your excess materials: basic building materials can be used again, as they are common to most building projects
- Sell back unused items: as explained above, only certain suppliers will accept returns and this will depend on the type and condition of the material
- Recycle your offcuts and unused materials: you can do this at your local recycling center, or hire an industry-specific professional recycling company to take your unwanted items away (but remember that this will cost you).
Set up a fixed price scheme
If you complete the same types of jobs often, a fixed price scheme will make your estimating much simpler. By striking a deal with suppliers, subcontractors, and even clients, you can maximize both your profits and everyone’s satisfaction. Just make sure to factor in wastage, timescales, and any other incidentals; hidden costs such as unforeseen issues in remodeling projects and the availability of materials can drastically alter the cost of a build. It’s also worth noting that a fixed price scheme may not be the best way to go with bespoke projects and complicated builds, so including a caveat for individual pricing when necessary will help you keep everyone happy.
One of the best ways to help your business grow is to keep your clients and the professionals you do business with informed about your prices. Posting an updated and accurate pricing structure on your website and across all social media accounts will make everything crystal clear and eliminate any gray areas. Potential leads will especially appreciate your honesty here. After all, most homeowners are looking for companies that either advertise their prices or have clear lines of communication (including web forms, email addresses, Facebook Messenger, to name a few) to quickly answer their pricing questions.
An accurate estimate is a key component of a profitable build. By following these simple steps, you can become better acquainted with your financial situation and make every building project better for your business.