Understanding and managing your gross profit margin is crucial to ensuring the sustainability and profitability of your business as a construction contractor. This key financial metric not only reflects your company's financial health but also helps guide your pricing strategies, project management decisions, and overall strategic planning.

Profit is the money left in your business after all your expenses have been paid. An income statement (also referred to as a profit and loss report) reveals what profit your construction company made last month or last quarter. Your profits are detailed in two figures, namely:

• Gross profit is what's left from sales after deducting the costs of goods sold or services provided.
• Net profit is left from gross profit after operating expenses (your business overheads) are deducted.

Note that net profit isn't the final 'bottom line' profit until all taxes have been paid.

Gaining more significant profits depends on accomplishing all the little things better rather than making one huge change.

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Topics: Accountant, Ten Minutes A Day To Increased Construction Profit, Construction Profits, Profit And Loss Reports, Profit and Growth Strategies For Contractors, Systems And Processes, Boost Construction Profitability, Gross Profit Margin

Navigating the world of finances can sometimes feel like trying to build a house without a blueprint. Between managing budgets, keeping track of expenses, and ensuring you're compliant with tax regulations, it's easy to feel overwhelmed. That's where your financial dream team comes in! 

 

Having the right people by your side can make all the difference in staying organized and achieving your business goals. In this blog post, we'll chat about the key players you need on your financial team, what each role brings to the table, and how to find experts who truly understand the ins and outs of the construction industry. 

 

Whether you're a seasoned pro or just getting started,  building a reliable financial team will be a game-changer in achieving your financial goals and securing the future of your business.

 

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Topics: Accountant, CPA Vs Construction Accountant, Bookkeeper Vs. Accountant, Accountant Vs. C.P.A., Systems And Processes, Winning Teams, Construction Systems And Processes

If you've been a long-time reader or a contracting company owner, you've probably heard about "Cost of Goods Sold" (COGS). But what does it really mean, and why is it crucial for your construction business's success? Understanding COGS isn't just about accounting—it's about making smart decisions for profitability, pricing, and more. 

 

1. What is the Cost of Goods Sold (COGS)? 

 

COGS represents the direct costs of creating the products/services your business sells/provides. These include materials, labor hours, and even manufacturing overheads. Any expense that contributes directly to a product's creation is included in COGS.

 

COGS provides critical insights into your business's efficiency and profitability. It's a fundamental metric showing how much you spend to produce inventory relative to your sales. 

 

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Topics: Systems And Processes, Cost of Goods Sold Vs. Expense, Construction Systems And Processes, COGS, Contractor Chart of Accounts, QuickBooks Chart of Accounts

When valuing a business, most people think straightforwardly about profits. While financial success is undoubtedly critical, it's far from the only factor determining a business's actual worth. Understanding valuation complexities can offer small business owners and entrepreneurs a clear roadmap for sustainable growth and long-term success.

 

While financial metrics are undoubtedly important, they do not provide a complete picture of a construction company's worth. For contractors and builders, understanding the nuances of business valuation can pave the way for sustainable growth, effective investments, and successful transitions, whether selling the business or attracting stakeholders.

 

Here is a fresh perspective on what makes a business truly valuable. We'll discuss traditional valuation metrics, the non-financial factors influencing worth, and practical strategies to enhance value. 

 

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Topics: Systems And Processes, Winning Teams, Construction Systems And Processes, Value of Construction Contractors, Core Values, Business Valuation, Construction Business Valuation

Social media can feel overwhelming. With so much noise and so many platforms, where do you start? The truth is that a great social media strategy can transform how you connect with customers and help you grow your contracting business.

 

Social media platforms' reach and accessibility are unprecedented. They connect businesses with a vast audience in real-time. Besides their broad reach, social media platforms also serve as valuable tools for businesses to listen to what their customers say about their brand, competitors, or the industry.

 

Social media allows for active engagement. Construction companies like yours can post questions, respond to comments, and forge stronger customer bonds. Unlike traditional marketing channels, it's a great leveler. All businesses – whether big or small, have equal access. This means smaller companies can compete effectively against their larger counterparts.

 

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Topics: Marketing Tracking, Construction Marketing, Systems And Processes, Contractor Marketing, Winning Teams, Construction Systems And Processes, social media for contractors

Change is inevitable in any business, but it's rarely easy—especially when managing morale. Significant transitions can leave employees feeling uncertain, disengaged, or even overwhelmed, whether you're restructuring your team, implementing new processes, or pivoting your business strategy. 

 

As a small business owner, you probably ask yourself, "How can I guide my team through this while maintaining morale?" You're in the right place. Maintaining high morale within a construction team is crucial for productivity and overall job satisfaction. The construction industry can be challenging, with tight deadlines, physical demands, and unpredictable work environments. Supporting and motivating your team is essential. 

 

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Topics: Construction Bookkeeping, Systems And Processes, Winning Teams, Construction Systems And Processes, Boost Construction Profitability, Construction Team

Did you know that 39% of projects fail due to budget issues? For small businesses and entrepreneurs, the stakes couldn’t be higher. Managing a project budget is not just about numbers; it’s about ensuring your business is profitable. By understanding the essential steps of project budgeting, you can turn potential pitfalls into opportunities for success.  Whether launching a new service or expanding your services, mastering project budgeting is invaluable for achieving your construction business goals.

 

Understanding Project Budgeting

 

Project budgeting is a crucial component of successful project management. At its core, a project budget is the total estimated cost of all the tasks, activities, and materials associated with a project. It serves as a roadmap for project managers, offering a framework for allocating resources and tracking expenses throughout the project lifecycle.

 

Budgeting is essential for several reasons. A well-prepared budget helps control costs, ensuring that project expenditures don’t exceed available funds. It also improves resource allocation by identifying potential bottlenecks and enabling more informed decision-making. Additionally, effective budgeting aids in risk management by setting aside contingency funds to cover unforeseen expenses, thereby reducing the likelihood of project failure.

 

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Topics: Construction Bookkeeping, Systems And Processes, Construction Project Managment, Bookkeeper, Project Management, Construction Systems And Processes, Construction Bookkeeper, Project Budgeting

If you ask 100 business owners what they like least about running a business, bookkeeping will likely rank high. It's an annoying and frustrating chore that takes up much time and is easy to put off until tomorrow.

 

Avoiding your bookkeeping is dangerous, however. Not knowing your construction company's financial situation can result in missteps that could ultimately cost you your business.

 

When starting bookkeeping as a construction business owner is challenging, a good first step is to break the process down into manageable tasks.

 

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Topics: 10000 Hours of Bookkeeping Practice, Construction Bookkeeping, Systems And Processes, Bookkeeper, Construction Systems And Processes, Construction Bookkeeper

It's amazing how some books stand the test of time. We usually refer to one of our most recommended, Stephen Covey's The 7 Habits of Highly Effective People, when we mentor our contractor clients and employees. Although it was first published three decades ago, its lessons are still incredibly relevant for business owners. You might wonder – how these habits fit into today's landscape of changing trends, tight deadlines, and constant distractions. The short answer is that they're timeless because they focus on principles that help you stay grounded while growing your construction business.

 

Below, we'll break down some of Covey's key habits and explore how you can bring them to life in your business today. Think of this as your blueprint for thriving in the chaos, not just surviving it.

 

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Topics: Construction Bookkeeping, Systems And Processes, Reading List, Construction Systems And Processes, contractor habits, Good Construction Business Owner Habits

We are witnessing a remarkable transformation driven by Artificial Intelligence (AI) and automation. While these advancements promise to enhance efficiency and speed, business owners must recognize the enduring importance of soft skills in their teams for long-term success and competitiveness.

 

The construction industry has also experienced a significant transformation in recent years, driven by technological advancements. From project management software to drones and Building Information Modeling (BIM), construction business owners leverage these tools to enhance productivity, improve safety, and boost profitability. 

 

This blog post will explore how you, as a construction professional, can thrive in today’s tech-driven environment and what skills you can build upon to remain adaptable.

 

 

Access to the best available tools and information is vital in almost any operation but is especially crucial in the competitive construction and home service industry. To help with your year-end bookkeeping tasks, take advantage of our exclusive 40% discount on Bookkeeping Templates (consulting, bookkeeping review, and outsourced accounting subscriptions excluded) and Construction Accounting Academy classes through January 6, 2025. you can use our promo code YEAREND40.

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Topics: Systems And Processes, QuickBooks Year End Closeout, Technology For Your Construction Company, Happy New Year, Construction Systems And Processes, Year End Tips For Construction Contractors