Construction Finance Advice: 3 Simple Ways for Saving Money as a Contractor
Construction is big business. And if you’re planning on making it as a construction contractor today, you have to learn how to keep costs low. If not, you’ll run the risk of going over budget, and you might not be able to break even on a job.
Currently, as of 2021, the construction business is in full swing. The demand for buildings is going up and more and more people are getting their contractor’s license, as the industry is booming. And despite the COVID-19 pandemic which has significantly impacted many industries within the last couple of years, there is still a relatively high demand for construction professionals today.
But if you’re going to keep a viable business, cutting costs and saving money where you can is going to be a strategy that you’ll have to live by. And thankfully, there are a variety of ways to save as a contractor today.
If you’re looking to save a few bucks on expenses, the following will provide a few tips for you to consider.
1. Equipment Rentals
One of the biggest expenses any contractor will have to deal with is the cost of heavy equipment and machinery. And if you’ve priced a brand new backhoe recently, you’re probably aware that you could easily spend a cool $90,000 on just one piece of equipment.
Let’s face it, sometimes you have to cut corners. But when you’re in the construction business, cutting corners can lead to major disasters. So instead of draining your savings account, utilizing equipment rentals is actually a very affordable option.
For example, you can rent commercial work vehicles for your workers to use on remote job sites, and you can also rent heavy machinery such as backhoes, excavators, skid steers, front-end loaders, and the like for a fraction of the cost that you’d pay if you bought them used or brand new.
2. Purchase Wholesale Building Materials
Most beginning contractors start out by buying materials at local hardware stores. And this is perhaps the biggest mistake any prospective contractor can make.
Retail stores such as Home Depot and Lowes both markup their prices so that they can make the largest profit possible. And though you may find that sometimes discounts are offered, or buying in bulk can reduce costs, you’ll save much more if you purchase your materials wholesale.
When it comes to saving money, wholesalers cater directly to contractors in order to give the best deals possible. And often you’ll find that you’re able to buy in bulk and keep materials for other jobs. This not only greatly reduces your overall expenses, it puts you ahead by keeping unused materials for future work.
The key takeaway here is that you’ll cut out the middle-man retailer by going directly to wholesalers when purchasing materials for your projects.
3. Hire Experienced Workers
When working on a particular project, depending on the various areas, you may have to hire subcontractors to assist. And while you might think that hiring inexperienced laborers will help cut costs by paying a lower salary or hourly wage, this can also have grave consequences.
Inexperienced workers lack one vital thing–experience. And you may find that you’ll incur more expenses by having to fix a job if it’s not done correctly.
When you hire veteran workers who know how to do the job the right way, you’ll end up with quality results. But if you go for the cheaper route, you’ll end up wasting materials, and possibly have to stay on a job longer in order to get it done properly.
This not only takes time away from your other duties, but it can also damage your reputation as a quality construction contractor. And you’ll end up paying for hiring inexperienced workers in more ways than you might think.
In any business venture, saving money is a primary goal. And even if you’re a seasoned contractor with years of experience under your belt, finding new ways to save money will only benefit you in the long run. Remember, the cost of materials and wages are rising, so the more ways you’re able to save, the better off you’ll be in the future.