Wise Up Wednesday: Making A Profit Is Not A Matter Of Luck!
After 20 years as a Specialist Contractor and 30 years of advising Specialist Contractors, Trade Contractors and Subcontractors I can confidently say that whether your business makes a profit or not, profit isn’t luck.
Nor does it require you to be the best in your field or have some ground breaking new technology at your disposal, or have amazing people that are all superstars.
Instead making a profit as a construction subcontractor requires the application of good management and effective decision making in 7 key areas of your business.
The 7 Key Areas To Manage For Profit – Profit Isn’t Luck
It’s easy to get caught up in the daily business and firefighting that is an inevitable part of running a business, but here’s a brief check-list of the key things you need to control in order to to ensure you make a profit.
Know Who You Are Contracting With!
It might sound like the most obvious thing in the world, but you would be surprised at the amount of Specialist Contractors who don’t do their research before getting into projects with a Main Contractor they have never worked for before.
You need to know if they are good to work with and fair payers, and are they in a secure enough place financially that they will be around to pay you at the end of it all?
And don’t be flattered by a big Contractor coming to call, there might be a very negative reason why they are looking for new subcontractors!
What’s The Scope Of The Works?
Disputes about the scope of the works are rife. It might be a bit of a chore, but you must check this carefully, because you can almost guarantee that what you agreed verbally and what is written into the contract regarding scope will be different.
And please watch out for the weasel words that extend your scope, or remove all the qualifications and clarifications you so carefully put into your tender!
What’s The Time Frame?
Time frames are a tricky issue to get right. Depending on the project you may have one start and finish date, or multiple starts and finish times if the work is to be completed in sections.
Do not accept “as and when required” type clauses.They will cost you dearly.
And if you are delayed you must issue notices. It isn’t “getting contractual” it’s what you must do to save getting clobbered for delays later on!
Understand The Payment Terms
Payment or rather the lack of it, is one of the biggest cause of disputes for Specialist Contractors and has been the cause of many going under, and cost many more a small fortune.
There are so many variables that understanding payment terms can be difficult even for practioners like us. So, don’t be afraid to get our professional advice.
How Far Does Your Design Liability Stretch?
As Specialist Contractor you will be liable for any design you provide if that design subsequently proves to be faulty. Even if you are not supposed to be doing any design!
You need to be very clear that your design liability is restricted to reasonable skill and care, and that the far more onerous standard of fitness for purpose does not arise to void your PI cover!
Amendments And Bespoke Terms Are Never There For Your Benefit
Contracts have and always will be a minefield of sneaky tricks and onerous clauses that are placed there by Main Contractors to reduce their obligations and increase yours!
Being vigilant and checking over the contract before entering into it is the best way to prevent yourself from being caught out. It can be tricky, so don’t be afraid to get our professional advice.
Take Effective Action As Soon As Problems Arise
If you asked me if there was one single thing that could make the most difference to whether or not your firm makes a profit, I would say that it has to be taking effective action as soon as a problem arises.
This might range from getting yourself out to site to see first hand what is going wrong, or seeking professional advice much sooner. But, the faster you take effective action the sooner the problem can be fixed.
And please do not think that if you are the boss you should automatically have all the answers. This is simply not the case, you need to take professional advice sooner rather than later.
Profit Isn’t Luck. Please Help Spread The Word
In the meantime, remember that profit isn’t luck, so please help to spread the word within your own business and with your colleagues in other businesses. Specialist Contractors are the backbone of the industry and we are here to help you all stick together.
You can find me on LinkedIn so why not connect up, and we have a LinkedIn Group with over 2,200 members so why not come and join us.
And if you want to get your contract checked or you need help with; Acceleration, Adjudication, Applications and Payments, Business Development, Contractual Advice, Delay and Disruption, Dispute Resolution, Extension Of Time, Retention… etc., or any of your business issues, please don’t hesitate to pick up the phone and give our Helpline a call.
You can also contact us on 01773 712116 or email firstname.lastname@example.org