Freelancers in all industries deal with the same problems due to the nature of their work. Most of you came from the skilled craftsman trades; some worked as construction company managers and have now started or thought of starting your business.
If you just did, congratulations, you have decided to own and operate a construction company. Practically, solo contractors manage every aspect of their business, but we are here to help you navigate it. Here are the things you need to consider (especially when you are on a limited budget) to keep it running.
Making your construction business fit your finances
Starting your company on the tiniest of budgets means working harder to ensure your business doesn't implode from a lack of funds. Even if you don't have funds, you probably have something that many established companies don't have - time. You can build income and cash flow from your hard work if you have time.
Remember that the easiest businesses to get off the ground with limited capital don't require plenty of resources or initial outlay. These are generally service-based businesses, such as handyperson and residential home-improvement services.
Minimizing costs and eliminating expenses
It goes without saying that if you have a limited budget, you will need to direct your spending where it has the most significant impact on your business. Here are some tips to make your money go further.
- Harness free business support. Business support or advice doesn't need to cost a fortune – there are plenty of ways to get help and build your knowledge for free. Use the Internet to research success stories in your chosen industry and find out if there are any government business mentoring services you could access. You could also approach your network of friends and family or industry associations to put you in touch with someone in your industry who could share their knowledge.
- Do it yourself. Almost any business task can be completed by yourself, depending on how much spare time you have. If you don't have the design budget for an expensive-looking website or are unsure how to design advertising material, consider learning how to do it yourself. For example, you might be able to attend a free or low-cost course on how to use design software or use Internet resources to teach yourself.
- Work from home or lease low cost. Working from home can be a great option; you don't need to meet clients at your premises, as most will invite you to their property. If you need a physical office to meet clients, leasing a room in a shared office or splitting the lease on a property with another business is an excellent way to minimize costs. Shared office spaces often have shared amenities such as meeting rooms and coffee break areas, which are great for meeting clients.
- Order only what you need. Avoid the temptation to order large quantities of stock from suppliers in anticipation of large orders. Less supply means you save on storage costs and reduce the risk of theft or damage. The downside is that you may have to pay more for items, lowering your margins, but you can order in bulk once the business is booming.
- Minimize fixed costs. The more fixed costs you have, you are financially tied down. Some fixed costs like power and telephone line rental can't be avoided, but other costs such as transport costs or office supplies will vary each month. Think carefully before financially committing to services that may not be necessary, such as expensive mobile data plans or a private mailbox.
- Use free or cloud-based software. Rather than paying for bundles of software, download software off the Internet instead. A variety of websites offer free word processing software, accounting platforms, and budgeting tools, either as a limited-time trial or completely free. There are also free or low-cost cloud-based versions of many commonly used programs. Cloud-based programs are stored on the Internet, so they don't require as much processing speed or physical space as those stored on your computer's hard drive.
- Use social media as a marketing tool. Creating a Facebook or Instagram account is free and provides you with a platform to market your business to your local community. Facebook also features a low-cost paid advertising feature you could use to drive potential customers to your pages. Social media pages can also be a free substitute for a website until you have enough money to create your own. You will need a significant online presence to gain customers and generate sales through social media, which takes time.
Directing profits back into your business
It may have taken a lot of hard work and determination, but you are now making sales. Spending money on yourself or some new gadget to reward your persistence is tempting. Avoid splashing out unless it will make a big difference to your business by improving productivity or operational capacity. It's generally best to put the money straight back into growing the backbone of your business – either by purchasing a piece of essential equipment or growing your client list.
Know when to spend
Like any start-up business, there will be times when you need to make big decisions, such as pursuing expansion opportunities or new markets. You might need to spend most (or even all) of your savings or consider borrowing to take advantage of new opportunities.
Final thoughts
Many aspiring to self-employment do not have any idea what freelancing entails. Contracting services to homeowners or individuals require lots of time and effort to earn a profit immediately. Employees tired of their own work lives idealize those of business owners and often ignore the difficulties faced in this environment. Before counting on notions of optimal freelancing experience, consider your own life, strengths, and abilities. Ask yourself these questions: "Am I ready to begin a long-term career in contractor work?" and "What do I want to achieve through my contracting business?"
f you are a new, struggling construction business owner, tackling these problems from the bottom up streamlines the path to success. If you ever become discouraged, remember that everyone starts at the beginning and that you can achieve your desired level of success if you put in the work to attain it. Again, you are not alone. Let me know how I can help you today by filling out the form on the right.
About The Author:
Sharie DeHart, QPA, is the co-founder of Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com
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