Think for a moment about your construction firm’s mission and vision statements. Do they talk about building for customer satisfaction or creating safe solutions? Maybe staying ahead of design and construction trends? While your mission statement may inform your market strategy and help define your corporate culture, it’s not why your construction firm exists.
Your business exists solely for the purpose of building wealth.
It then follows that the best foundation for your construction firm lies not in your skill for building structures or laying out roads; the strength of your foundation depends on how well you use your finances to generate wealth.
Making money and building wealth are two different things. When building a financial foundation for your construction firm, you need money to build wealth. That means knowing your numbers.
Know Your Numbers, Measure What’s Meaningful and How to Track It
Several critical areas can help build a wealthy foundation for your construction firm.
Savvy construction leaders commit to working smarter by relying on software and apps that streamline processes. They also mitigate risk by managing subcontractors and employing secondary and tertiary lenders if the primary lender falls through.
Knowing the bottom line can help you devise financially-savvy strategies like these:
- Investing in your employees’ future by building a solid management team. Show them finance basics like committed and variable costs, and the difference between revenue and profit. Reaching the goal is easier when everyone understands how to get there.
- Replacing yourself with systems and structure. A business that runs well only when the supervisor is present is not effective.
- Knowing and tracking the numbers. Determine which metrics are the most critical to building wealth, such as a 13-week rolling cash forecast, contract completions, and how backlogs affect productivity.
- Seeking high-margin, negotiated work with loyal customers. Working with repeat customers saves time and money; you already know each other’s expectations.
Other meaningful financial strategies include
- Offering a discount to customers who pay their invoices within 30 days
- Charging a high interest payment for late payments.
- Leasing equipment instead of purchasing it
- Coordinating materials delivery so that it arrives on time for use but not too early to incur storage costs.
Hire and Retain the Best Talent Available As a Foundation for Your Construction Firm
Talent acquisition and retention are essential components for getting on top of your finances and building wealth in the construction industry. Your willingness to invest in their future guarantees yours.
The most profitable construction firms have prioritized understanding their finances, and they share this understanding with employees in the field by providing them with training.
They also work with recruiters to attract the top talent necessary for enduring growth and abundance — and most importantly, a strong foundation for your construction firm.
If you’re ready to optimize your recruiting strategy, connect with Raymond Search Group today.