Set a Foundation for Increasing Profits
According to IBISWorld the market size, measured by revenue, of the Remodeling industry in the US is $104.4bn in 2023.
The Home Improvement boom is slowing down but private remodeling is still in demand. Homeowners are challenged with finding reputable and knowledgeable home professionals in a sea of contractors ranging from one-man bands to huge corporations. Homeowners will spend big bucks on repairs and remodels with trustworthy companies. Home Improvement professionals are in the drivers seat to be very profitable. However, contractors need to be careful not to have labor and material expenditures take away their profits. Here’s some guides to increase profits.
Raise Your Rates – Homeowners are willing to spend more for a quality job. How much would your customers be willing to spend? Raising your rate is a sure way to increase your profit. Need to stay competitive with the big sticker price, then increase the price of your smaller services, products, or enhancements.
Trim the Fat – Simplify and eliminate extras. This can cover full-time employees that may not be busy all year long to services such as office cleaning that can be done daily by staff. Look at your inventory for materials and labor. Perhaps you could have a longer lead time to acquire materials and have less in the warehouse? Maybe you can subcontract out projects you don’t do as many of? Price check your suppliers. Maybe you can get your materials for less? It’s a good idea to research vendors every few months to make sure you are paying the going rate or to negotiate lower rates.
Upsell – Sell extras to your customers. This can include service warranties or regularly needed items like pool filters or cleaning products. You can also offer add-on services like maintenance or annual checkups or inspections. It’s easier to get a client that already knows you to say yes to more.
Accurate Accounting – Use a fast and accurate estimating system that integrates with billing. Make sure all the incidentals are listed. A lot of money can be lost by not properly accounting for all charges on a job.
Monitor Your Business – You need things in place to measure how well aspects of the business are going. Identify what the business needs to measure and how it will be measured. Then you will be able to track your business and make adjustments as needed.
As a home improvement specialist, you can implement these practices to improve your bottom line. Remember, it’s not all about how much you make, but how much you keep.
Here’s to much success and revenue growth this year!