The construction industry forms a key pillar of the UK economy. In January 2022, monthly output totaled £14.7 billion – an increase of 1.1% from December 2021 and the highest level since September 2019.
It can certainly prove a lucrative sector, but there are also many costs for construction businesses to contend with. Typically, the vast majority of resources are committed to the essentials, such as paying salaries and acquiring materials and equipment. So, what can you do to help reduce your construction company’s spend and maximize your profitability? Here are a few suggestions.
5 Ways To Reduce Your Construction Company’s Spend
1. Plan carefully
The key to any successful business is having a solid plan in place, including built-in contingencies. If you’re continually taking on work without looking at the bigger picture and how things might play out further down the line, you’re liable to fall behind on one or more of your projects.
The importance of prior planning extends to how you source your materials and recruit staff, too. Take the time to make informed choices, rather than rushing into knee-jerk decisions that could come back to bite you.
2. Compare suppliers
When you’re sourcing materials and tools, make sure to shop around for the most cost-efficient deals. You can always pick up the basics, such as sheets of plywood, from reputable builder’s merchants but the key is to find which of your local suppliers is going to offer you the best price. Ordering in bulk usually proves a prudent choice, but be sure to request just enough for what you need so as to cut down on waste.
3. Stick to deadlines
Delays can prove costly, so don’t take on more work than you can deliver at any one time. If you spread yourself too thin, all you’ll be left with is a collection of unsatisfied customers and unpaid invoices. That is a sure-fire way to see costs spiral, so efficient project management will keep things ticking along nicely and ensure you don’t have to pay for additional labor or equipment hire.
4. Invest in your employees
While you need skilled staff to help you deliver a project promptly, it’s important to invest time and money into employees at all levels. The government offers incentives for hiring apprentices and overall it will cost much less to bring in somebody inexperienced and train them up rather than recruit someone who’s ready-made for the role.
5. Weigh up hire vs purchase
When it comes to sourcing specialist tools or equipment, you need to decide whether hire or ownership is the way to go. If it’s something that you are only likely to need on a one-off basis, a hire agreement will likely prove more suitable. But if it’s a piece of kit that is essential to your day-to-day operations, a purchase may prove more cost-efficient than entering into a succession of rental contracts.