How Relationships can Improve Your Margins

How Relationships can Improve Your Margins

Just like any other business, contracting firms are bound by a fundamental law of economics: their profits must grow in tandem with their business. You simply cannot expand with stagnating profits. But, on the other hand, improving profit margins is no easy task, especially in the construction industry.

Working with others is seldom a bad idea, and having reliable partners supporting your projects can be mutually beneficial for all involved. But relying on one-sided or subpar relationships can backfire, so choosing wisely is essential. As such, we’ve put together this short guide on using business partnerships to maximize profits.

Stay on Schedule

Labor costs are one of the biggest operating expenses that contractors face. In a competitive trade with unpredictable booms and busts, finding reliable, skilled workers who fit into a project’s budget can be a massive challenge. Large jobs are built on the contributions of a range of professionals, including carpenters, electricians, masons, plumbers, and often many other specialist tradespeople. These labor costs reflect their necessity and quality, so unless you’re okay with shoddy work, the only way to reduce this expense is hiring them for the shortest possible term. It’s crucial to make sure that every dollar paid is translated into progress on the project and not into idle waiting.

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This is a matter of planning. Skilled workers need to be organized with an efficient schedule that puts them in the right place at the right time. There are many ways to optimize scheduling, such as setting up a way for everybody on a job site to check-in, submit their work, and stick to a schedule. Coordinating workers’ schedules to ensure they aren’t running up against each other helps the project advance smoothly and prevents errors and inefficiencies from snowballing into an avalanche of avoidable labor costs.

Get Materials Delivered on Time

The saying “time is money” is sheer truth for contractors. Meticulous planning goes a long way to help save time and bump profits as a result, but even the best project schedule is useless without the materials to follow through on it.

Waiting for deliveries to job sites can set progress back drastically. If a late delivery ends up delaying a project’s completion, the contractor is often left no choice but to offer discounts to placate an angered client. As a result, workers get sent home as the wait drags on, advancement stalls, and momentum and morale falter. Then, inevitably, profits take a crushing blow.

Preventing these delays is all about choosing the right partner to handle deliveries. A building materials distributor can make or break a project. If they are communicative, trustworthy, and capable, then virtually every order will arrive on time. Even in rare cases where they don’t meet the deadline, good communication ahead of time allows for adaptation and adjustment. Writing contingency plans into contracts is always a great idea; it prevents misunderstandings about penalties for delays, what materials may be substituted, and other details.

That’s where the search begins. Checking independent review sites and asking local contractors, developers, and facilities managers about the company are the best next steps. Do your homework.

Select a Distributor With a Range of Products

Depending on the jurisdiction, working with local construction regulations is vital for doing business. For example, states like New York, New Jersey, Connecticut, Pennsylvania, and Delaware have laws requiring that certain structures use materials that pass the Janka hardness test (measuring the force taken to embed an 11.28 mm steel ball 50 percent or more into the material) with at least 1560 Newtons. So if a building material distributor suggests that balsa or silver fir can meet that standard, then they shouldn’t be your supplier.

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A distributor should know what their customers require, and they should have a wide selection of products to fit those different needs. Likewise, the building materials supplier should be familiar with local regulations, climate, architectural styles, and other considerations that matter to the contractors they serve.

Create a Partnership With Your Building Materials Distributor

Delayed orders aren’t the only way a mediocre distributor can impede contracting firms. Delivering the wrong product, misrepresenting or misunderstanding material quality, and all sorts of other errors and bluffs can sink profits for even the best contractors.

If a supplier’s staff cannot provide detailed specs and information on their products, it’s a problem. Every setback in materials is a setback in the whole project, so it is crucial to partner with a well-informed distributor that plays an active role in the scheduling and logistics processes. Test them out by calling their sales reps and asking about a product you’re highly familiar with and take it as a red flag if they get the basics wrong.

The benefits pay off exponentially when you consistently work with a building materials distributor and forge a genuine partnership. As they get to know you, they can proactively recommend solutions that help you minimize costs and maximize profits. Having a go-to distributor makes you a priority for them, leading to better deals and more customized service. And if they have partnerships of their own with top brands, those connections can be life-savers when projects run into unexpected problems that require sudden changes.

Embrace Value Engineering

Value engineering is a complicated business management concept, but the fundamental idea is maximizing value (the ratio of quality to cost). For contractors and developers, that might mean using materials that are just as good but cost less. The inverse example would be finding better materials for the same price. Cutting corners isn’t an option since the end goal is maintaining or improving factors like safety, functionality, aesthetics, and durability.

Effective value engineering results in the final product being as good or better at a lower price. This almost automatically translates into better profit margins. And while value engineering is best considered before projects start, it can be beneficial when applied at any stage. One example might be when a building materials distributor works with a contractor to substitute their order with a higher quality product for the same price or when they offer a lower price for an alternate solution that works just as well. Experienced sales reps should guide you through their offerings and help you get more value–and therefore more profit–from their materials.

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For nearly 40 years, Metro Interior Distributors has been dedicated to the success of our clients. We know our brands inside and out, and our experienced sales team is ready to find you value engineering solutions that boost your profits and make your job easier. Contact us today to find out how we can help on your next project.