Running a hotel or motel doesn’t mean you have to navigate everything alone. What truly counts is having a dedicated team of financial experts to elevate your establishment to the pinnacle of the hospitality industry.
Many good contractors and tradespeople dream of starting their own business – and many do – but because of some mistakes, some fold at a cost both financially and emotionally. However, while we do encounter companies running into financial woes, many also do well, expand, and make lots of money. What is the magical solution to successful contracting then? Here are some of our client observations.
Firstly, know the basics of your industry’s processes and employ people or consult experts with the appropriate knowledge to cover the areas you’re not an expert in. Understand the basics to avoid mistakes and employ a good team to fill the gaps. This can include accountants *wink wink*
Management is 90% communication – from marketing, negotiations, project management, team management, compliance, etc. To be successful in your contracting business, know how to motivate, persuade, listen, explain, negotiate, and mentor through a golden voice.
Accounting for contractors
You also need to be good at planning! Not just project schedules, but more importantly, in your company methodologies, resources, and coordination. You must plan first before starting and do this daily and weekly. Remember that not everything will go as planned, so you would always need to map out your plan B, plan C, etc.
Let’s admit it – many contractors are superstars in their own right but often not in the financial side of their business! They may forget to invoice or follow up with unpaid ones and can easily work for free. If you’ve done extra work, make sure you get paid as they add up! Unhealthy cashflow sinks companies, you know. Regardless of how profitable the projects are, if the money coming into your company doesn’t exceed the money going out of it, you might go bankrupt. Check your cashflow first before expanding and learn to manage your cash.
Another important tip is to understand your contract and consult an expert if in doubt. Don’t just check the contract when there’s an issue. Read the contract before working on your pricing and starting a project. Know all your obligations and make sure to comply, just as your clients need to comply with their obligations too. If you don’t understand your contract, it might cost you money.
Note – if it’s not in writing, it doesn’t exist! Any verbal agreement must be followed up in writing. You may be surprised at how appalling you are at managing records – lost receipts, work without contracts, money disappearing from your pocket. In this age, losing a document or not having one is an absolute no-no. Implement filing systems where you can find all your documents. To check if you’re doing it right, ask yourself: if you disappear now and somebody takes over your job – will he or she be able to see where all the important documents are?
We can go on and on, but for now, our last topic is pricing. A lot of projects are doomed even before they start! Make sure your projects are priced correctly – not too low that you lose money and not too high that you don’t get the job. Understand what you need to do, how to do it, and when to do it. Check in with us and see if we can do the benchmarking for you!
Whether you’re just about to start your contracting business or you’re a seasoned contractor looking to further improve, we’re rooting for you and we got your back! If you want to chat about it, we’ll let you in all the tips and tricks of the trade. Give us a buzz and let’s get cracking!