Accurate Time Tracking Is So Much Easier With Workyard
The average profit margin for Construction companies is 5%. That leaves very little room for error.
With 64% of all small businesses failing within the first ten years—and 82% of those due to cash flow mismanagement—you need to know how to increase profit margin in construction to build a better, more resilient company.
Depending on the type of construction, profit margins range from 4.3% to 6.2%. And that makes sense: construction is a lean industry, and no one’s giving work to the highest bidder.
Construction companies only see as little as five cents of profit for every dollar they bring in, which doesn’t provide a lot of cushion when something goes wrong.
Since you can’t just charge more, managing profitability largely means managing expenses. And that starts with your most significant cost—your labor.
About half of the money a construction company brings in goes right back out to labor. And that labor isn’t always used effectively. If you can reduce your labor costs, the savings become pure profit.
So, what’s holding you back? We’ve outlined a few common issues below—and a fix.
Common Roadblocks To Improving Time Tracking
Fix: Use construction timesheet software to more accurately track your crews hours and location. Many contractors save tens of thousands of dollar per month just by implementing a time tracking software package.
There are only 24 hours in the day. By eliminating wasted time, you can focus on growing and strengthening your business.
Efficiencies are lost in construction because for many companies it’s nearly impossible to get everyone on the same page. You know what I’m talking about—the same fragmented conversations seem to need repeating every day. As your company’s most important resource, your team’s time should be dedicated to productive work, not endlessly trying to figure out what they’re supposed to be doing.
Fix: To eliminate all of that wasted time coordinating work, leverage a job scheduling app to consolidate communications into one place.
Finally, if you’re still scribbling down notes on paper, you’re losing money.
From the initial project costing to late-stage re-works, your processes are what define your profitability. By replacing paper processes with a digital solution, you can:
Fix: With streamlined processes for data collection and entry, you can reduce mistakes and re-works, minimize your overhead, and increase your profit margin.
Let’s be realistic. Increasing your profit margin in construction isn’t just about making more money. It’s about securing the future of your business.
Approximately 50% of small businesses fold within the first five years, and the rate among construction companies can be even higher.
When your profit margin is slight, your business is vulnerable; any incident can become a catastrophe. By improving your cash flow and building a buffer, you’ll create a more resilient business.
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Workyard provides leading workforce management solutions to construction, service, and property maintenance companies of all sizes.